Universal healthcare coverage could be a reality in Colorado a few years from now, although it admittedly has some significant hurdles to overcome in the meantime. Supporters need to gather 99,000 signatures in order to get the ColoradoCare initiative on the 2016 ballot. And then voters would need to approve the measure in order to get the ball rolling. If both those things happen, Colorado could have a universal healthcare system in place by the start of 2019.
Healthcare reform is working
It’s no secret that we’re in favor of expanding healthcare coverage to everyone, and making coverage affordable. We’ve supported the ACA from its earliest days, and we’re happy that Colorado has made great progress in reducing the uninsured rate – from 17% in 2013 to 10.6% in the first half of 2015 (according to 24/7 Wall St, the rate has dropped from 14.7% in 2012 to 6.4% this year).
We like seeing our clients obtain health insurance through Connect for Health Colorado with subsidies that truly make coverage affordable. People who have employer-sponsored health insurance have long received subsidized premiums, both in the form of direct employer contributions to the premiums, and also the fact that employer-sponsored health insurance is paid for with pre-tax dollars.
For people who buy their own health insurance, there’s no employer paying a portion of the premiums, and the premiums are only tax deductible for those who are self-employed. So the ACA’s premium tax credits are a welcome relief for those who would otherwise have to pay the full cost of their health insurance premiums.
And of course, guaranteed-issue health insurance has been a game changer in the individual market. Prior to 2014, a big part of our job was helping people find the coverage that would work best with their pre-existing conditions. But “work best” usually just meant the carrier that would impose the smallest underwriting rate hike – usually at least 25% – on the applicant’s premium, based on their particular pre-existing condition. Pre-existing conditions do still come up in conversations with clients, mainly because of drug formularies (each carrier has its own list of covered drugs, so people who are taking certain medications often want to check to see if the plan they’re considering will require them to switch to a different drug). But the days of having to tell clients that they’re going to be paying 50% or 100% more for their coverage – or that their only option is CoverColorado (the now-closed state high risk pool) – are long gone. And that’s a good thing.
So we’re certainly on board with the idea that healthcare should be available and affordable for everyone, and that nobody should go broke because of a medical condition, nor should they have to forego treatment because they can’t afford it.
Concerns about ColoradoCare
But that said, I do have some reservations about ColoradoCare after reading the informational booklet that explains how the coverage would work and be funded. We’ve been self-employed since 2002, so we’ve long since gotten used to the idea that we pay both employer and employee taxes on our own (FICA taxes are split between employees and employers, but if you’re self-employed, you’re both the employee and the employer). ColoradoCare would charge a tax of 3.33% on gross pay for employees, but employers would also pay 6.67% of payroll. So for self-employed people, that amounts to a 10% income tax (there’s also a 10% tax on non-payroll income).
10% of our income would certainly be more than we pay in premiums now – which is a bit alarming – although who knows what premiums will look like four years from now with our current system. The ACA limits premiums at 9.56% of income for people who earn between 300% and 400% of the poverty level, so 10% isn’t out of the realm of reasonable, by any stretch. And for people who currently choose to have high-end coverage (gold or platinum plans, for example) and earn a little more than 400% of the poverty level, premiums easily surpass 10% of their income.
But the reason we currently pay a lot less than 10% of our income for health insurance is because we have a grandmothered plan that we obtained several years ago with medical underwriting. It has a maximum out-of-pocket of $7,500 per person, and $15,000 for the family. That’s above the limits allowed under the ACA, and our plan is not compliant with the full suite of mandates required under the law. We’re among the 190,000 people in Colorado whose grandmothered plans will terminate at the end of this year, and we’ll need to obtain new, ACA-compliant coverage with lower out-of-pocket limits.
We’re ok with that. We understand that we’ll be paying more for our coverage, but we’ll also have better coverage than we have now. And most importantly, we know that the rest of our fellow Coloradans are now able to obtain coverage without medical underwriting – a huge benefit, and one we don’t mind paying for.
But we’ll still pick the highest deductible we can find when we’re selecting new coverage this winter. If copper plans were available, we’d certainly consider buying one. We use our health insurance for preventive care, and that’s pretty much it – there have been two times in the last ten years when we’ve needed anything more than preventive care: when Jay needed knee surgery in 2008, and when our son needed stitches in his finger in 2010. For Jay’s knees, we paid our deductible and our health insurance paid the rest, and for our son’s finger, we paid the whole bill, as it was less than our deductible. Other than that, all four of us have only used preventive care (well, there was also the time our son got a rock stuck in his nose… but that ended up having a DIY solution, suggested to us by the friendly front-desk staff at the local urgent care clinic).
We maintain an accident supplement that would cover our deductible if we were to have a repeat of either of the two circumstances that caused us to use our coverage in the past. Other than that, we’re willing to roll the dice when it comes to having a high deductible. We prefer to save money every month on the premiums, and know that if a serious illness were to strike, we’d be on the hook for a significant out-of-pocket. We’ve crunched the numbers, and we’re ok with the risk. And especially now that the ACA allows for an annual open enrollment period and guaranteed-issue health insurance, nobody is stuck long-term with a high deductible plan. In the old days, if you had a high deductible plan and then got diagnosed with a chronic condition, you didn’t have any feasible options for lowering your out-of-pocket exposure in future years. That’s no longer a problem however, thanks to the ACA.
We like having the option to pay lower premiums in trade for higher out-of-pocket exposure. We know that not everyone does – plenty of people prefer to pay higher premiums in trade for a lower out-of-pocket exposure. And that’s fine, because the currently-available ACA-compliant plans offer a wide range of premiums and out-of-pocket limits. There’s really something for everyone, unless you’d prefer a copper plan… in that case, you’re out of luck.
So it was a bit of an eyebrow raiser when I saw that the ColoradoCare plan has no deductible. That’s a red flag for me, because it appears to be pushing everyone towards a very benefit-rich plan, regardless of whether they want that level of coverage or not.
Don’t get me wrong – regulation is very much needed when it comes to insurance, and we’re certainly better off now that things like mini-med plans are no longer available – those are essentially worthless, since they leave you holding the bag just when you need coverage the most, as they have no limit on out-of-pocket exposure (instead, those plans had benefit limits – low ones – which is the opposite of how insurance should work).
But I take the position that while unlimited out-of-pocket exposure is unacceptable, it’s ok to allow people to obtain a policy with an out-of-pocket exposure that’s higher than someone else might want. And to allow them to pay less for that coverage than they would otherwise pay for a plan with lower out-of-pocket limits.
Instead of ColoradoCare’s universal coverage with no deductible, I would much rather see a system that allows people to choose health coverage that costs less in premiums (or taxes, or however you want to pay for it) in trade for higher out-of-pocket exposure. I understand that it’s complicated to work that out if you’re going to pay for it via taxes, but maybe the proposal could include a provision to let people agree to have a deductible on their plan, in trade for a partial refund of the taxes paid to support the plan. Obviously, that’s very simplistic, but it’s something that I’d like to see ColoradoCare consider. When it comes to healthcare – like most things in life – one size doesn’t really fit all.
