Several health-care bills — including two scheduled for their first hearings this week — are set to reignite the debate this legislative session on whether the benefits of greater coverage mandates are equal to the greater costs they’ll bring.
And it won’t be just insurance issues that will occupy legislators’ discussions on health care this year. Regulation of a federal drug-pricing program, Medicaid-generated budget problems and the fate of the state’s largest workers’ compensation insurer all are on the table, causing legislators to have to think deeply about why health-care spending is rising and what impacts they can have on businesses and consumers.
On Wednesday, a House committee will discuss a bill that seeks to require health benefits for behavioral health treatment be no less extensive than those for physical health care. And on Thursday, a Senate committee will debate for a third year in a row whether to study implementation of a single-payer health-care system in Colorado to replace the current system that Gov. Jared Polis and legislators have spent years regulating.
Both bills seek to curb the influence of private-sector health-insurance providers — particularly in the study in Senate Bill 45 that asks the Colorado School of Public Health to suggest legislation to do away with that private sector in favor of a single-payer system. But that is true too in the parity bill, House Bill 1002, which would create a “medical necessity” definition to ensure carriers aren’t denying needed mental-health and substance-abuse treatment and would require that criteria for such denials are transparent.
“Gaps in coverage”
“Despite existing parity laws at the state and federal levels, many Coloradans continue to experience gaps in coverage for mental health, behavioral health and substance use disorder treatment — even when these benefits are promised by their health plans,” said Adriana Hidalgo, executive vice president at nonprofit group Healthier Colorado.
Kevin McFatridge, executive director of the Colorado Association of Health Plans, argued that in redefining standard care, though, the bill could allow behavioral-health organizations to push to mandate expensive treatment without need for prior authorization. And it could also authorize providers to send patients to facilities of their choice that may or may not be within an insurance network, boosting costs of care for everyone.
The debate over costs versus benefits is even more apparent in SB 48, a redux of a failed 2024 effort that would require insurers to cover treatment for chronic obesity and pre-diabetes, including pricey drugs like Ozempic and Wegovy. Last year’s bill failed to make it out of the House Appropriations Committee because it carried a $200 million price tag just for the Medicaid program to administer it, not to mention the cost to private insurers.
Colorado state Sen. Dafna Michaelson Jenet speaks on the floor of the Senate on Tuesday.
Sen. Dafna Michaelson Jenet, a Commerce City Democrat who authored both bills, argues that while the costs of those drugs or bariatric surgery are large up-front expenses, they will reduce the costs of treating diabetes and other obesity-related conditions over a lifetime. SB 48, whose first hearing is scheduled for March 13, directs the state to pay for Medicaid benefits within existing funding — likely a tough order given that the state employees’ own health plan just limited use of the drugs to save $17 million, according to the Colorado Sun.
New mandates affect all insured Coloradans
A study commissioned on last year’s bill found that the newly mandated benefits would cost private health-insurance providers about $140 million annually within five years and raise average per-person premiums between $18 and $24 a month. While that number alone may not sound enormous, McFatridge noted that it equates to more than $250 per person per year being added onto already rising health-premium costs for just one drug that each patient may or may not use.
“While these medications can be beneficial for specific conditions, mandating their coverage without any flexibility for employers and without study of their effectiveness could be very expensive,” he said. “It’s a great idea to have these medications covered. But at the same time, we are always concerned about rising health-care costs. And when you do mandates such as these, that’s almost a guarantee of rising health-care premiums.”
Polis weighed in on the issue five years ago, telling legislators that his goal is to bring down the cost of health care for Coloradans and that he is not particularly interested in signing new mandates that will cause it to go up. Still, he has continued to sign some mandates in recent years, even as he’s been more vocal about avoiding large costs like this in SB 48.
340B program fight looming
Prescription drugs are at the heart of the debate around the 340B program.
It was notable too that in his State of the State Address, the Democratic governor seemed to pick sides in the biggest health-care battle of the coming session and say that he backs efforts by hospitals to keep a federal drug-price discount program as expansive as possible. And that long-discussed battle began to take shape when Michaelson Jenet and Republican Sen. Janice Rich of Grand Junction introduced SB 71 on Jan. 22.
The bill would bar pharmaceutical manufacturers from limiting the number of pharmacies through which hospitals can receive discounts on drugs if the hospitals serve a certain percentage of uninsured and publicly insured patients. Those drug makers have been imposing such limitations in recent years as the number of hospitals and clinics utilizing the federal 340B program has grown significantly, raising its national costs from $43 billion to $66 billion just between 2021 and 2023.
When the bill got introduced, the Colorado Hospital Association called it “crucial” to safety-net facilities at a time when labor and supply costs have exploded, leaving many hospitals with unsustainable operating margins and needing the drug discounts. The Pharmaceutical Research and Manufacturers of America retorted that the program has become “a back door for tax-exempt hospitals to profit at the expense of Colorado’s most vulnerable residents” and said few patients see the direct benefit of discounts.
On Monday, a bipartisan quartet of legislators introduced a bill that seeks to rein in another part of the industry — the third-party pharmacy benefit managers who administer prescription drug programs for private-sector health insurers and self-insured employers. HB 1094 would allow PBMs to earn income from flat-dollar service fees on prescriptions, but it would bar income based on the cost of prescription drugs and prohibit PBMs from using formularies designed to favor certain, often more expensive branded drugs.
A theme to health-care debates
All these discussions will come back to cost versus benefits. And they likely will have a special urgency this year, as health-care costs are a major reason that legislators face a $670 million revenue shortfall for their budget year that begins on July 1.
A major contributor to the shortfall has been the unexpectedly rising costs of Medicaid, the publicly funded insurance program for low-income Coloradans that is seeing a big increase in the acuity of its members’ conditions and thus higher-cost care, often at hospitals. In another debate on costs versus benefits, Polis recommended freezing reimbursement rates for Medicaid providers — a move that hospitals fear will leave them losing more money on treatment of those patients and that health-care advocates worry will cause fewer doctors to take Medicaid, sending more patients to hospitals for their care.
And all of this will happen against a background of debate over the future of Pinnacol Assurance, the state-chartered workers’ compensation insurer that Polis recommended privatizing to generate a budget-balancing payment from the company. Company leaders say this also would allow them to grow sales to workers in other states at a time when the majority of companies have interstate workforces, but several legislators have questioned whether allowing the conversion of Pinnacol would weaken its care and services as the insurer of last resort.
Maybe this year’s legislative agenda won’t resemble that of 2019, when Polis in his first year made his biggest push to attack health-care costs by signing laws to boost hospital transparency, establish a reinsurance program and import drugs from Canada. But industry officials say that the weight and volume of legislation aimed at this sector this year is daunting nonetheless and will provoke debate about how Coloradans want their health-care system to work.
“I have not seen any relief at this point in what is headed our way,” McFatridge said. “The biggest issue from our standpoint is rising costs — costs for insurers, costs for employers and costs for reimbursement.”
