By Katie Kerwin McCrimmon

Colorado lawmakers plan to propose fixes for the state health exchange starting in September and one possibility is to switch to the federal IT system, but keep some local control like Oregon, Nevada, Hawaii and New Mexico have done.

Lawmakers also are considering a variety of options for 1332 “innovation” waivers, named for the section of the Affordable Care Act that allows states to begin getting variances from the health law starting in 2017.

On the left, Sen. Irene Aguilar, D-Denver, wants a waiver that would allow a single-payer system. Some in the middle want to find a way to stop requiring employers to provide health insurance. And, on the right, some lawmakers are considering Arkansas-style efforts to allow Medicaid clients to get private health insurance.

In some cases, states don’t need 1332 waivers to make fixes. For instance, managers at Connect for Health Colorado have already decided to hire an outside contractor to overhaul the state’s small business exchange, which so far has been cumbersome and has failed to attract many customers.

Exchange managers told lawmakers at a legislative oversight hearing on Wednesday that they are in the final stages of picking a contractor for the small business exchange.

That plan gave pause to Rep. Su Ryden, D-Aurora. She noted that the state exchange is already a spinoff of sorts from state government. So to have a “spinoff of a spinoff” could lead to poor results. Ryden said that while serving on the legislative audit committee, lawmakers often found that contracting out key government functions led to lack of control and mixed results.

Jeff Bontrager, the Colorado Health Institute’s director of research on coverage and access, briefed lawmakers on various options for 1332 waivers during Wednesday’s hearing.

He advised committee members to first consider “what challenges are we trying to fix? We don’t want to put the cart before the horse and pursue a waiver just to pursue it.

“There are many challenges that can be pursued without a waiver along with some intriguing ideas as well as other fixes,” Bontrager said.

For instance, states that tried to build their own exchanges, but failed, may offer an alternative for Colorado. Now called “federally-supported state-based marketplaces,” states like Oregon and Nevada may offer a solution for Colorado, where persistent IT glitches have caused problems for at least 10 percent of customers.

“So far, (these states have) largely retained a lot of autonomy and decision-making that many not be available to other state-based partnerships,” Bontrager said.

If Colorado adopted that model, state officials could use the federal government’s IT systems, but retain some control over outreach and certifying health plans. It’s unclear exactly how much Colorado would have to pay to use the federal IT system. But Bontrager said the model could be promising.

“This has been cited as a win-win situation for these states. There are a lot of details that have to be worked out,” Bontrager said.

Lawmakers on both sides of the aisle are skeptical about how much faith to put in Colorado’s exchange.

“While I think we’ve made some progress with Connect for Health, I still think it’s incredibly complex. The SHOP (small business exchange) has not proven to be very effective,” said Sen. John Kefalas, D-Fort Collins.

“One of the ideas I’m considering is moving us away from an employer-based system to a market-based system with no mandates on employers,” he said. “The insurance would ultimately follow the individual.”

Bontrager said Colorado could de-couple insurance from employers, but it would cause major changes.

“It could be done, but the majority of Coloradans are covered through employer-based health insurance — about 60 to 65 percent, so we’re talking about a sizeable portion of the population,” Bontrager said.

Furthermore, any state that applies for a 1332 waiver must ensure that residents get health coverage that is at least as comprehensive as would have been under basic health reform models. And the coverage can’t cost the federal government any additional money.

Richard Cauchi, health programs director for the National Conference of State Legislatures, also spoke to lawmakers on Wednesday.

He reminded oversight committee members that long before the Affordable Care Act, employers in the U.S. were providing health insurance.

“Until 2014, there was a whole system of voluntarily paying for insurance. An employer could pay an amount that worked for them,” Cauchi said. “If one were to eliminate the employer mandate, we would crank things back to December of 2013 and the country would look very much the same.

“Employers choose to do this for their own business models,” Cauchi said. “Ninety-five percent of large employers have been providing insurance.”

Among conservatives, there was clearly some frustration that the U.S. Supreme Court did not invalidate subsidies for states using the federal exchange. Had the justices ruled differently in June in the King v. Burwell case, conservatives expected the entire framework of the Affordable Care Act to fall apart.

Sen. Kevin Lundberg, R-Berthoud, has a new term for the Affordable Care Act: SCOTUScare (referring to the acronym for the Supreme Court of the United States).

“I’m not that interested in pursing waivers,” Lundberg said. He said making changes to “SCOTUScare is more like rearranging the deck chairs on the Titanic. I want us to seek solutions that really work.”

Rep. Lang Sias, R-Arvada, said he’s trying to figure out why Colorado needs a state-run exchange at all.

“What functions does the exchange perform that are not performed by a broker? When the Travelocity analogy was being used, it seemed somewhat flawed. Is there any reason that there needs to be only one exchange? Is there any requirement that it’s a public entity?” Sias asked.

Connect for Health Interim CEO Kevin Patterson pointed out that the only place customers can qualify for federal subsidies to help lower the cost of health insurance is through the exchange.

But Cauchi of the National Conference of State Legislatures said the Affordable Care Act certainly envisioned “a much more flexible structure that you see.” States could have had multiple exchanges, or multi-state exchanges.”

Bontrager said there has been a rise in private state exchanges, but the shift would be complex. He urged lawmakers to focus on fixes for the biggest challenges.

“Enrollment would be one of those,” Bontrager said. “Are there ways to increase enrollment to ensure a healthy, viable risk pool to make the exchange viable and have long-term impacts on insurance premiums while making sure more people have access to affordable health insurance.”

Getting all of that is a tall order. The legislative review committee is expected to meet again to begin voting on possible fixes on September 11.