By Katie Kerwin McCrimmon

Health exchange managers plan to increase user fees and assessments on Coloradans who buy health insurance in order to fund exchange costs that could soar to $44 million a year.

Previous managers of Connect for Health Colorado had for years said that Colorado’s exchange would be financially self-sustaining this year and would cost $26 million a year to run.

A health coverage guide in Leadville provides insurance sign-up information.

But new financial projections that Connect for Health Colorado managers unveiled Monday morning show far higher expenditures. The board has not voted yet on a new budget, but costs for the exchange’s call center in Colorado Springs alone are expected to balloon to $21.3 million this year, far more than the $13.6 million that had been budgeted.

Exchange managers also may have to spend as much as $5.3 million in additional cash to fix a hobbled IT system that the exchange shares with Colorado’s Medicaid system. Sign-up problems caused major headaches to thousands of customers this year in part because customers must first get rejected for Medicaid coverage before they can qualify for tax subsidies through the exchange. Exchange managers and state officials want to avoid similar problems when the next open enrollment period starts this fall.

In order to stay afloat financially, exchange managers will have to increase fees and assessments on people who buy health insurance, according to planning documents presented to the exchange’s Finance Committee on Monday. (Click here to see the new financial projections.)

Source: Connect for Health Colorado budget planning document. (Click on image to enlarge.)

For this year, people who buy plans through the exchange are paying a user fee of 1.4 percent on their health insurance plans. In the past, exchange board members balked at increasing those user fees. Now the interim CEO, Gary Drews, is telling board members that past projections were wrong and user fees will have to rise to as much as 3.5 percent. Colorado officials had always said that the state exchange cost far less to run than the federal system, but the federal user fee is also 3.5 percent.

At the same time, Connect for Health Colorado this year and next is authorized to scoop up additional cash from people who buy health insurance outside of the health exchange. The exchange gets to collect $1.25 per member per month from companies that sell health insurance. The fee is known as a “broad market assessment,” and health insurance executives have said they pass the cost along to customers. The broad market assessment affects at least 875,000 Coloradans, while anyone who buys a plan through Connect for Health pays the user fees.

The broad market assessment is slated to net about $14 million for the exchange for all of 2015. The separate user fees are expected to bring in about $5.2 million for the fiscal year, which ends this summer.

Drews told exchange board members Monday that Colorado’s exchange has spent the least of the state-based exchanges and that the entity needs more “investment” and more employees to provide customers with better service.

“We will have to adjust both the revenue and expenditure sides of the budget,” Drews said.

He said Colorado is not alone in its struggles. He said he recently met with leaders of other state-based health exchanges.

“Most of them are also going through very similar turbulence. There are a lot of winds buffeting the organizations. That’s having an effect on our financials every day,” Drews said.

Other state exchanges, however, are part of the state agencies that run Medicaid and are getting some funding from Medicaid to help pay for the exchange. In Colorado, the exchange is a separate entity outside of the state government. Managers here say they are not getting reimbursed for millions of dollars in spending to help people who end up qualifying for Medicaid.

Drews wants to find a way for Colorado’s exchange to qualify for some reimbursements related to Medicaid clients.

“As I look at several other states’ financials, up to one-third of the budget is subsidized by Medicaid reimbursements,” Drews said.

He cited Washington as an example and said for 2017, the state had a total projected budget of $78 million with Medicaid providing $28 million.

Colorado has received nearly $200 million in federal start-up funds. After those run out, former managers had claimed they could manage with $26 million a year, a goal that the updated projections show is far off base.

“It’s important context to recognize the amount of money that it takes to run one of these organizations,” he said.

Among the many complications is how to properly staff the call center. One of the biggest challenges, Drews said, is that most customers wait to sign up until the last day, then all call at once.

That means many people have to wait far too long or can’t get through at all to get help.

“How do we right-size the service center? How do we best manage the Medicaid population that’s coming to us?” Drews said. “We have very significant and expensive budgeting challenges ahead of us in the next few weeks,” he said.

“Even if we were to raise our rates to the level of the federal exchanges (3.5 percent) that would provide between $34 (million) and $37 million that we have to meet. We know that’s going to be a very challenging number to get to,” Drews said.

While some planning scenarios showed total annual budgets holding to $37 million for the next fiscal year, another one predicted spending of $44 million for the following year.

“I think it’s going to be a heck of a feat to balance the three or four variables that make this work,” Drews said.

Managers will have to increase fees and spend wisely on improving systems and service that can entice more customers to sign up.

“Yes, I think we can get there. At the same time, we have to manage cash incredibly well. We are going to be using reserves to fund the organization…. It will take a lot of work,” Drews said.

“We do need to ensure that open enrollment No. 3 goes better than No. 2.”

By Bob Semro

The Supreme Court, once again, holds the fate of the Affordable Care Act in its hands. The first challenge to the law involved significant constitutional questions. This time, not so much.

The latest challenge, King v. Burwell, does not raise important constitutional issues – the ACA was already ruled constitutional. However, the potential impact could do real damage. Millions of Americans could lose insurance coverage, premiums would increase dramatically – making insurance unaffordable for many in the individual market – and hospitals would lose funding for uncompensated care. Historic changes that have made affordable health care accessible to more Americans would be erased.

Bob Semro

From the beginning, the ACA has been the focus of a hard-fought battle between opposing ideologies and political parties.

A quick recap: The act passed in the Senate and House on party-line votes. To avoid a filibuster after the Massachusetts special Senate election in 2010, Democrats resorted to a little-used process known as “reconciliation” to push the legislation into law. Since then, the House of Representatives has voted 54 times to repeal all or part of the law and in 2013 actually shut down the federal government for 16 days to block its funding. Every House budget proposal since 2011 has contained a provision to repeal the law.

In 2015, the ACA is still on the front line of that political fight. According to March’s Kaiser Health Policy Tracking Poll, 74 percent of Republicans have an unfavorable opinion of the ACA. Alternatively, 65 percent of Democrats have a favorable opinion.

Given this political divide, amending or revising the law in Congress is all but impossible, and the near-term fate of the law is once again up to the Supreme Court. The first time the court ruled on the health care law was in March 2012.

Whether you love or hate the ACA, at least the first Supreme Court case involved significant constitutional issues.

In NFIB v. Sebelius, the issue before the court was whether the federal government could force American citizens to purchase a private product, in this case health insurance. The law’s drafters argued that Congress had the power to do so under the Constitution’s Commerce Clause – as a matter of interstate commerce. In its ruling, the Supreme Court held that the ACA’s individual mandate was not justified under the Commerce Clause but that it could be implemented under Congress’ power to tax.

The second issue, in Florida v. HHS, was whether the government could force individual states to expand Medicaid by threatening to cut off all of a state’s Medicaid funding if they refused. The core of the debate was whether the threatened budget cut was “unconstitutionally coercive” to individual states. By a vote of 7-2, the Supreme Court decided that this provision of the ACA was, in fact, a bridge too far.

Both issues raised constitutional questions that involved potential precedents and lawmaking.

Unlike the cases in 2012, there are no great constitutional issues at stake in King v. Burwell. The challenge is strictly about the ACA and will probably have no real importance for future laws, federalism or constitutional precedent. It is about one phrase – “established by the state” – repeated 10 times in the 2,000-page law.

The petitioners in King v. Burwell claim that because of that phrase, the ACA’s drafters intended to provide insurance subsidies only to those states that set up their own insurance exchanges. They claim that the language was an obvious attempt by Congress to coerce states into setting up marketplaces.

However, there is no evidence that states felt they were being coerced. No states raised public objections based on the idea that subsidies would be restricted to state-based exchanges. No state filed a regulatory or legal challenge. Nor was there any attempt by Congress or the administration to force the IRS, which manages the subsidies, to stick to a coercive game plan.

On top of everything else, if the petitioner’s interpretation of the law is correct, then more than 50 other provisions in the law would be unworkable. If the key phrase was sprinkled into the law to coerce states into setting up their own marketplaces, it failed on all counts.

In comparison, the provision on Medicaid expansion left nothing to chance. If a state did not expand Medicaid, Congress had the option to slash federal funding. Congress indicated its willingness to do so, and the states clearly recognized the threat. Twenty-six states took the legal challenge all the way to the Supreme Court. Not one state joined King v. Burwell.

In the King case, the petitioner’s claim of harm is about as tenuous as the claim of congressional coercion. They claim that the federal subsidies are so generous that they can no longer qualify for a hardship exemption from the mandate to buy insurance. In other words, the subsidies would make health insurance too affordable to exempt them from buying insurance.

It makes one wonder whether this case truly has merit or is just the latest manifestation of the long effort to kill or wound the law. In an opinion piece in the New Yorker, writer Jeffrey Toobin cited a 2010 statement from Michael Greve, a board member of the Competitive Enterprise Institute, which brought the King case to court. “This bastard (referring to the Affordable Care Act) has to be killed as a matter of political hygiene. I do not care how this is done, whether it’s dismembered, whether we drive a stake through its heart, whether we tar and feather it and drive it out of town, whether we strangle it.”

Even though the King case appears to be motivated by political ideology and its claims frivolous, a ruling in favor of the petitioners would have very real and harmful consequences for millions of Americans. More than 7 million Americans in states with federal exchanges currently receive subsidies to purchase coverage. If those individuals lost access to subsidies, the cost of coverage would be unaffordable for the vast majority of them. According to the Commonwealth Fund, a subsidy shutdown could result in 9.6 million fewer people with coverage by 2016, a 70 percent decline. The resulting adverse selection caused by healthy people leaving the risk pool could increase insurance premiums in the individual market by 47 percent.

Health care providers and health insurers would be hit especially hard if newly insured patients suddenly or even gradually lost coverage. Hospital Corporation of America, the largest for-profit hospital chain in the U.S., reports that it collects zero payment from nearly 90 percent of its uninsured patients. Health insurers could see a 70 percent decline in enrollment. The loss of a healthier risk pool would create unprecedented premium price growth, and insurers leaving the marketplace would create an even more uncompetitive insurance market.

Five years after the ACA was signed into law, it is delivering good results. There are problems with the law, to be sure. Among other changes, Congress could fix the “established by the state” wording with a single amendment. But with our current political dysfunction, that is virtually impossible.

Social Security, Medicare and Medicaid – each a sprawling, landmark piece of legislation -– went through similar legislative and legal challenges for both political and ideological reasons. Those laws were ultimately modified and made better through legislative amendment and regulation. One day, that same basic function of legislating will be what’s required to make changes to the Affordable Care Act. Unless the Supreme Court deals it a crippling blow in June.

Bob Semro is a health care policy analyst with the Bell Policy Center, a non-partisan policy research center that advocates public policies that reflect progressive values.

By Joe Hanel and Allie Morgan

The 2014 election left the Colorado legislature balanced on a knife’s edge, with Republicans winning a one-vote majority in the Senate and Democrats clinging to a three-vote margin in the House.

Many observers wondered what, if anything, could get done in 2015 with such small majorities. The question was especially relevant for health policy, which has endured a partisan fight since before the Affordable Care Act was passed five years ago.

Allie Morgan and Joe Hanel

With two-thirds of the legislative session behind us, we have insight on what’s getting done and what’s getting axed.

The Colorado Health Institute has been tracking all the health bills through the legislature this session, and we have found a pattern: bills that are passing don’t offend anyone’s political sensibilities, and most of all, they’re not too expensive.

Legislators are looking for ways to deliver more care for the same price. A number of successful bills aim to knock down regulatory barriers and stretch the supply of doctors, nurses and medications. This list includes bills that:

• Expand telehealth to urban counties (House Bill 1029).
• Increase the types of mental health professionals who can treat minors (House Bill 1032).
• Make it easier to donate unused, unexpired medications (House Bill 1039).
• Allow pharmacists to substitute biologically interchangeable drugs (Senate Bill 73).

Add to this list a bill to reduce the training time for advanced practice nurses to write prescriptions (Senate Bill 197) and a forthcoming bill to allow dental hygienists to put in temporary fillings.

Bills that are failing are deemed either too ideological or too expensive.

With each party in charge of one chamber, it’s easy for bill sponsors to step over an ideological line in the sand, which can spell trouble before bills can even make it to the House or Senate floor.

House Republicans proposed bills they had tried in previous years to restrict abortion (House Bills 1128 and 1041) and to shut down Connect for Health Colorado (House Bill 1066). Despite their gains in the 2014 election, the result was the same. All three bills died in their first hearings.

But even less overtly partisan bills are running into the buzzsaw. A bill to reauthorize a teen pregnancy and dropout prevention program (House Bill 1079) died in the Senate Finance Committee. It was sponsored by two Western Slope Republicans, but it might have suffered from being associated with the governor’s push for funding a more controversial birth control program for low-income women (House Bill 1194). And a plan by Sen. Pat Steadman, D-Denver, to create a statewide registry of advance medical directives (Senate Bill 125) failed about the same time that the media was fixed on House Bill 1135, which would have allowed physician-assisted dying in the state.

With this in mind, the future does not look promising for the contraception bill, HB 1194. The evidence shows that this program has worked very well to reduce unplanned pregnancies and abortions among young women who have participated. But no bill that has stoked partisan controversies has been able to pass this year. The contraception bill would be the first.

Bills that cost too much are failing, too.

Rep. Kathleen Conti, R-Littleton, sponsored a bill to give tax credits to seniors over the age of 75 to pay for home upgrades so they could age at home, instead of moving into expensive nursing facilities (House Bill 1143). Legislators on the House Health, Insurance and Environment Committee were supportive of the idea. Those on the House Finance Committee hated the price tag – an estimated $29.1 million next year – and killed the bill.

One exception to the thrifty ethic seems to be the Joint Budget Committee. The three Republicans and three Democrats granted much of the wish list submitted by state health agencies, including:

• Addressing delays at the Medicaid call center by adding 25 new employees.
• Reducing churn on Medicaid by using annual income, instead of monthly, to determine eligibility.
• Allocating money for a state immunization registry.
• Eliminating the waitlist for services for children with autism by spending $9 million over the next two years.

The Joint Budget Committee also voted to set aside $5 million for the contraception bill that has stirred up so much controversy. (The funding won’t take effect unless the legislature passes HB 1194.)

The lesson seems to be that if you want this divided legislature to do something big, your first stop should be the Joint Budget Committee. But with such thin margins of control in both chambers and competing ideological views, many health bills face an uphill battle.

Joe Hanel is a senior communications expert and Allie Morgan is a policy analyst at the Colorado Health Institute.

By Diane Carman

Leaders at Connect for Health Colorado said Wednesday that they welcome new, more intense scrutiny by the Colorado Legislature, and Sen. Ellen Roberts, R-Durango, promised to deliver at a meeting of the Legislative Health Benefit Exchange Implementation Review Committee.

The first step was to vote unanimously to create a subcommittee to review candidates selected by the health exchange board to be the next CEO of the organization and to develop guidelines for an appropriate executive compensation package.

Roberts, who chairs the committee, said the legislators need “more dialogue” about what they seek in a CEO, especially given the bipartisan membership of the committee. The exchange board “needs to know what we’re looking for and why,” she said, so they don’t face the prospect of bringing candidates to the committee for approval only to have them repeatedly rejected.

Interim CEO Gary Drews testifies to legislative oversight committee.

Equally important, she said, is for the committee to provide advice on a compensation package for the new CEO to avoid potshots from legislators later if bonuses or other forms of compensation are awarded by the board.

“The exchange board would like to have some guidance,” said Rep. Beth McCann, D-Denver, who is vice chair of the committee. “They need to know what kind of parameters are acceptable.”

Patty Fontneau, the first CEO of Connect for Health who resigned last summer to take a job at Cigna, was earning more than $195,000 in annual salary and bonuses when she left. Her compensation drew criticism from some legislators who questioned the awarding of bonuses at a time when customers were faced with serious problems trying to enroll in insurance plans.

Roberts commented that since the exchange is a public/private sector organization and as a result is “a bit of a strange animal,” a compensation package for the CEO needs to feature “a pay-for-performance type of approach” and not the typical private sector package that awards bonuses and raises to CEOs regardless of how the organization is performing.

Gary Drews has been serving as interim CEO. The chief financial officer and chief operating officer for the exchange resigned soon after Fontneau left, leaving the exchange short-handed through the critical open enrollment period between November and January.

Board Chair Sharon O’Hara said that the search for a new CEO “has taken much longer than anticipated,” but “we expect to have a candidate very shortly.”

Board member Steve ErkenBrack explained why the search has taken so long.

“This is not an easy job to fill,” he said. Not only is there the tricky aspect of managing a public/private organization, but “the skill sets are fairly significant and fairly broad.” Candidates need experience managing consumer services and dealing with insurance companies, Medicaid, finance, information technology, operations and public policy on the state and federal levels. “It’s going to be a rare person who hits all those things.”

Responding to audit findings

Drews responded to the findings from several audits that criticized the exchange for poor financial record-keeping, inadequate oversight of contracts and other problems. The state audit cited $32.6 million in spending that was not properly documented or, in some cases, violated rules for managing federal funds.

“Remember as we review the audits, which are valuable under any circumstances and are always helpful,” that they covered the time from Day 1 until a very short time ago, and that “this organization was being built in a very short time frame,” Drews said.

“It had to be up and running by October 2013,” so he said it was not surprising to see some of the audit findings.

In an attempt to put the findings in context, Drews said, “We were building processes along the way as we added staff under time pressure and with numerous changes in regulations.”

He said the exchange staff did not know it would have “27 audits in two years,” but that it will “implement all recommendations in all cases.

“We welcome the continuing oversight provided through these, and it will help to make our organization stronger.”

He said given the challenges, “it’s remarkable that it came out as well as it did. We’ve been running very leanly since Day 1.”

As for the future, Drews said the exchange has to make its systems work effectively, provide value like any other business, reach the uninsured, stabilize the marketplace and, starting this year, pay its own way since federal grants are no longer available.

Some transitional funding will be available through the end of this year from money from the CoverColorado program and the exchange plans to continue to seek grants from foundations, but the goal is to support the exchange through funds generated from fees on health insurance policies.

The exchange also continues to struggle with costs it has incurred through determining Medicaid eligibility and assisting customers in signing up for that program, which traditionally has been handled by the state Department of Health Care Policy and Finance.

Drews estimated that 40 to 60 percent of the time spent across the assistance network was devoted to counseling Medicaid applicants, which is part of the reason that customer service center costs exceeded projections by 50 percent.

While the exchange wants to ensure that it provides a “no-wrong-door” system for enrolling in health care, Drews said it’s important that it doesn’t become overwhelmed with servicing Medicaid clients. “We need to create a system that quickly gets them to the right place.”

The pressure is on the exchange to streamline its systems so it can attract sufficient customers, set its fees correctly, achieve appropriate staffing levels and meet its goals by the end of this year.

“I  can’t overstate how challenging this is,” Drews said.

Meanwhile, Senate Bill 256, co-sponsored by Roberts and McCann, is working its way through the legislative process. It would change the name of the committee to the Colorado Health Insurance Exchange Oversight Committee and allow the group to meet up to 10 times per year outside of the legislative session and an unlimited number of times during the session.

The next meeting of the committee is April 15.

By Eileen Doherty

Despite some heated political rhetoric from around the country, Colorado seniors know that the Medicare Part D prescription drug benefit is affordable and is working – even for older men and women in the lowest income bracket. At the Colorado Gerontological Society, we see firsthand how seniors struggle every day to make ends meet on a fixed income, and how Medicare Part D has provided a life line that seniors’ health literally depends on. We are calling on Coloradans to stand up for this vital program that has achieved so much for our older citizens.

The record of success that we have seen with Medicare Part D is frankly rare for a government program, and something that we all should be proud of. Part D repeatedly comes in under budget. For three years in a row, the Congressional Budget Office (CBO) has reduced its 10-year budget forecast for Part D. Total Part D costs are 45 percent less than the initial CBO 10 year projections. This program is saving seniors money and saving our government money.

Today, over 450,000 Colorado seniors are enrolled in the program which allows them to choose from 34 different private plans, some of which cost as little as $12.60 a month and have no annual deductibles.

That is a recipe not only for success, but for high levels of satisfaction. According to the 2013 Medicare Payment Advisory Commission, 94 percent of seniors who use Medicare Part D are happy with their plan. Part D has surpassed expectations in both improving seniors’ access to affordable medicines and containing healthcare costs for all taxpayers. Part of this is due to its competitive structure.

That’s good news because Colorado has one of the fastest aging populations in the country. Like millennials, baby boomers are flocking to Colorado. According to the Colorado Commission on Aging, between 2011 and 2021, Colorado will experience a 54 percent increase in residents over the age of 60. Colorado’s Medicare spending is already growing at an annual rate of nearly 9 percent. This trend is certain to accelerate as our population grows and ages.

The good news is that Part D is part of the solution.

Affordable drug coverage and proper medication adherence improves health and helps slow Medicare’s overall spending growth. Costly procedures and hospital visits are less common when patients take their medications as prescribed by their physician. Part D has helped save Medicare about $1,200 a year per patient in medical spending unrelated to prescription drugs.

In the past decade, we’ve seen exciting new treatments for cancer, diabetes, Crohn’s disease, Fibromyalgia, Cystic Fibrosis, Lupus, Hepatitis C and many other devastating diseases. These breakthroughs promise to dramatically improve the health of seniors while reducing the economic costs of many debilitating conditions. Many new medicines are being researched and developed right here in Colorado.

Despite Part D’s undeniable popularity and success, some in Congress are looking to change the program in their push to cut the budget. Over the past several years, some lawmakers have proposed changes to Part D that would save little money, while destroying a market-based structure that has kept the program’s costs repeatedly under budget. Of particular concern is a proposal to weaken the Medicare Part D Low Income Subsidy (LIS) program, also known as “Extra Help”. This proposal would require seniors, many below the poverty level, to pay more for brand name medicines. Losing Extra Help would be burdensome for low-income seniors and increase out-of-pocket costs for many people.

Simply put, Medicare Part D is one government program that is popular and saves money. Let’s protect what works. Our leaders in Washington shouldn’t let today’s political battles get in the way of something that benefits the health of Colorado’s seniors today and for decades to come.

Eileen Doherty is the Executive Director of the Colorado Gerontological Society (www.senioranswers.org), which is a statewide not-for- profit organization dedicated to the support, guidance, education and dissemination of information to seniors, their families, and elder care practitioners.