Bill to repeal Colorado health insurance exchange passes first test

Updated to include comment from Connect for Health Colorado on enrollment practices.

After a nearly four-hour hearing, the state Senate Finance Committee on Tuesday night gave its blessing to repealing Connect for Health Colorado, the state health benefit exchange. That earned the committee’s Republicans cries of “shame! shame!” from a few witnesses who stayed until the votes were finally cast.

The 3-2 vote was along party lines in the Republican-controlled committee. The bill, sponsored by first-year lawmaker Sen. Jim Smallwood of Parker, will next be heard by the Senate Appropriations Committee.

But the proposal faces near-insurmountable challenges and is almost certainly headed for defeat in the Democratic-controlled House. If it makes it that far.

Topping the challenges: its cost. The measure’s fiscal analysis estimates the first year cost of the repeal will be about $2.6 million, and that’s just for state agencies, largely for reprogramming computer systems. That doesn’t include costs for closing down the exchange itself. That could run as much as $23 million, according to Connect for Health Executive Director Kevin Patterson, based on what it has cost other states to close down their exchanges and connect to the federal system.

That’s a big pill to swallow at a time when Gov. John Hickenlooper and legislative budget-writers are looking for ways to close a $500 million gap in the 2017-18 state budget.

There are still 12 states, including Colorado, with their own state-based exchanges. Several states have closed their exchanges and switched to the federal Affordable Care Act website to handle the health insurance plans. Among the most recent states to do so are Kentucky and Nevada.

More than 175,000 Coloradans signed up for new health or dental insurance, or signed up to continue existing insurance, during the most recent enrollment period that ended on Feb. 3, with about 62 percent in line for federal subsidies to help them pay for the insurance. Connect for Health Colorado said the enrollment numbers represent about a 12 percent increase over 2016.

Michael Schneider of Denver was among many witnesses who shared stories about how the exchange has made their lives better. Schneider lost his wife in 2012 to cancer, just a few months before the exchange opened for business. He told The Colorado Independent that because of pre-existing conditions, their health insurance cost about $3,000 per month. Between the premium cost and medical bills, his retirement savings were wiped out.

Then came the exchange. He said he listened to the testimony of those who had trouble navigating the exchange website — some said it took four hours or more and then they got kicked off the website anyway — but that wasn’t his experience. Schneider said the personal service he got from a broker on the 16th Street Mall helped him figure out what he needed, and he’s been covered, for about $240 per month, ever since the exchange opened for business in 2013.

But the exchange has not been without problems. Two audits, one by the federal Centers for Medicaid and Medicare Services, and another by the Colorado state auditor, pointed to cost overruns and mismanagement. The CMS audit in January recommended the exchange pay back $9.7 million due to those problems.

Laura Hays, a software engineer, said she worked for Connect for Health Colorado for four months in the summer of 2015. She left due to a “moral conflict” over what she said she saw at the exchange. She claimed the exchange fudged its enrollment numbers, citing as an example, a family of six that signs up for four different products, which she said would be counted as 24 enrolled lives. “I’m not opposed to the concept of the exchange,” Hays told the committee. “I’m opposed to how it was implemented.” Connect for Health CEO Patterson, who testified after Hays, did not address her allegations. The Independent has sent Patterson an email requesting comment.

Update — Luke Clarke, spokesman for Connect for Health Colorado, told The Colorado Independent Wednesday that the organization had not heard of these allegations until Tuesday’s hearing. “We take these enrollment numbers pretty seriously,” Clarke said. Enrollment is reported to the federal Centers for Medicaid and Medicare Services on a weekly basis during open enrollment, monthly and quarterly throughout the rest of the year. If the former employee wants to come forward with her evidence, Clarke said, they would look into it. —

And the exchange has lost some of those who originally supported it, including the Colorado chapter of the National Federation of Independent Business. NFIB chapter head Tony Gagliardi recalled the heat he took in 2011 from Republican lawmakers for backing the exchange. In 2011, 64 percent of NFIB members in Colorado supported the exchange’s creation. Today, 70 percent want to see it repealed, Gagliardi said.

Then there’s the fear factor. If the exchange goes away, Democrats question what would happen to the 175,000 Coloradans who get insurance through the exchange. Smallwood’s bill would repeal the state exchange and transfer Coloradans to the federal system, but Congressional Republicans and the President have vowed to repeal the federal Affordable Care Act. Given that uncertainty, now is not the time to repeal the exchange, argued state Sen. Lois Court, a Denver Democrat.

Finance Committee Chair Sen. Tim Neville of Littleton pointed out that whatever happens with the federal system, his responsibility is to Colorado taxpayers. He was among the committee’s three Republicans who voted to send the bill on to the Senate Appropriations Committee.

Photo credit for rally against the repeal, January 31, 2017 by Marianne Goodland