By Katie Kerwin McCrimmon

The future of health insurance in Colorado is as unpredictable as the House majority leader.

If Rep. Amy Stephens, who is the Republican co-sponsor for Colorado’s health exchange bill, continues to frustrate her colleagues with her frequently changing tactics  on health reform legislation, Colorado’s health exchange could be DOA.

If that happens, Colorado would have three options: Gov. John Hickenlooper could create an exchange by executive order; Colorado could do nothing and the federal government will automatically create and run a Colorado exchange; or state lawmakers could punt the issue to next year’s legislature when an election year may make the issue even more partisan.

Establishing a framework for Colorado’s health exchange was not expected to be controversial. The exchange will be an online system where uninsured individuals and small business employees will be able to shop in real time for health insurance by Jan. 1, 2014.

Business leaders have been huddling with consumer advocates for months working out the details. There was hardly any opposition at the first hearing in the Senate. Then, the bill got snagged in Tea Party politics and the national debate over the Affordable Care Act.

For those who haven’t followed the Colorado health exchange drama, here’s a recap of the recent plot twists.

Sen. Betty Boyd, D-Lakewood, and Rep. Stephens of Monument are co-sponsoring SB 11-200.

But weeks before she was slated to co-sponsor the exchange bill, Stephens co-sponsored the HOPE Act, which would dismantle health reform in Colorado. Health exchanges are required under the Affordable Care Act and are seen as the first step toward implementing the act. Therefore, Stephens’ support of two conflicting measures was puzzling.

Analysts suspected that Stephens introduced the HOPE Act to give her cover with the most conservative members of her party, whom she has said have “extreme” views on exchanges. Other Republicans think exchanges, which were first proposed by George W. Bush, are the most free-market element of the Affordable Care Act.

The HOPE Act didn’t protect Stephens. Some Tea Party activists in Colorado Springs became enraged with what they saw as promotion of “Obamacare,” their name for the Affordable Care Act.

So, on the day when the exchange bill was being heard for the first time in the Senate, Stephens seemed to torpedo her own measure when she sent out a letter insisting that she would no longer support the bill unless it stipulated that Colorado would “opt out of Obamacare.”

That’s a deal-breaker for Boyd. The bill appeared to be dead.

The latest development came on Tuesday when Stephens told the Denver Business Journal that she would no longer insist on the “opt-out” amendments. But she said she wanted some kind of language that would “decouple” Colorado’s exchange from the Affordable Care Act. A coalition of five business groups released a letter Tuesday supporting a Colorado-run health exchange. Their pressure may have sparked a renewed commitment from Stephens for her own bill. But, time will tell. The legislative session has weeks left, leaving Stephens time to reconsider yet  again.

A health exchange by executive order?

So, what will happen if the Colorado Legislature fails to create its own exchange?

Hickenlooper may have to follow Indiana’s lead and create Colorado’s health insurance exchange by executive order. Indiana Gov. Mitch Daniels set a precedent for other governors by signing his executive order in January. An opponent of the Affordable Care Act, he nonetheless decided that Indiana needed to move forward with implementation of its own exchange.

“The nation will be best served by the repeal of this expensive and unworkable law, or by its judicial overturn,” Daniels told NWITimes.com in Indiana. “But for now, there seems no alternative but to prepare for the possibility that Indiana will try to operate an exchange of some kind.”

Louisiana officials simply decided to return the cash and have the federal government run their state’s exchange. California is quickly building an exchange, while Utah and Massachusetts already have insurance exchanges. (Both may have to change their exchanges to comply with requirements under the Affordable Care Act).

Altogether, according to the National Conference of State Legislatures, 180 health insurance exchange bills are pending in 44 different states. Click here to see status updates in various states.

Here in Colorado, Hickenlooper and his health policy experts declined to comment for this story.

A  Democrat in a purple state, Hickenlooper is saddled with a divided legislature. Democrats control the Senate while Republicans control the House. All along, advocates for a Colorado health exchange tried to build a bipartisan coalition. Exchanges have been popular among some Republicans who want to boost competition and reduce health insurance costs for small business owners.

Another option aside from an executive order would be waiting until the 2012 legislative session. But, that is an election year and partisan rancor is likely to be even more pronounced. What’s more, analysts say a delay could be costly. Without a framework for a Colorado exchange, the state will lose federal planning grants. And, waiting a year could put the state far behind in building the complex tool, which must give consumers instant, real-time health insurance quotes or determine immediately if they qualify for public health insurance programs like Medicaid.

“It’s conceivable that a state could do it all at the last minute. But there are a lot of complicated moving parts here,” said Lee Goldberg, health policy director at the National Academy of Social Insurance, a nonpartisan think tank in Washington that has created a toolkit for states to provide information on how to build health exchanges.

Trend in other states: establish an exchange while fighting health law in court

Failure to pass a bill this year would create a very tight timetable.

“It puts a lot of pressure on the state in 2012,” Goldberg said. “The Massachusetts exchange is still evolving and being tweaked. It took them a good three or four years to get their exchange.”

Goldberg said even in states where opposition to the Affordable Care Act is fierce, most leaders are moving forward with exchanges.

“In Virginia, where their attorney general has led the charge against the law, they’re figuring out their exchange,’’ he said. “I would say a lot of states are officially opposing the Affordable Care Act, but they’re contingency planning and they’re trying to figure it out. If the (health law) is considered constitutional, they don’t want the feds running it and they won’t pass up the federal aid.”

Gov. Haley Barbour is another vocal opponent of the health law.

“He can’t stand the ACA, but the only thing he hates more is if the feds did it,” Goldberg said.

Defaulting to a federally-run exchange is an unpopular idea here as well. In a written comment from his spokesman, Michael Amodeo, U.S. Sen. Michael Bennet, a Democrat, said he wants Coloradans to work out their own state’s exchange.

“Sen. Bennet is hopeful both parties will come together to craft an exchange from the bottom up that provides Coloradans quality health care choices at an affordable price.”

And Bill Lindsay, a health expert, chairman of the Denver Metro Chamber of Commerce and president of Lockton Benefits Group in Denver, has a message for fellow Republicans.

“They are fighting the wrong battle. (Rep. Amy Stephens) was under tremendous pressure from people who said that anything you do that would appear to be supporting the President’s plan is not a place where Republicans ought to be. But what they’re missing is, what’s the alternative if we don’t act? A federally controlled, federally mandated program. That’s a much worse outcome,” Lindsay said.

“Unfortunately all of this has now devolved into a discussion of political ideology as opposed to saying how do we fix the health care and insurance situation we have in the United States,’’ Lindsay said. “I think that’s unfortunate.”

Colorado needs its own exchange

Lindsay believes Colorado needs to get moving on its own exchange now.

“We want to have a solution that is unique to Colorado,” Lindsay said. “It’s hard to do it quickly and not make mistakes. We need time to be deliberative. No one’s ever done this before.”

Lindsay, who has worked for years as a health insurance broker and served on Colorado’s 208 Commission for Health Care Reform, said Colorado’s needs are different than those elsewhere. For instance, most of Colorado’s uninsured people are individuals. Many work as contractors or freelancers. If Colorado establishes its own exchange, the state can also start by serving small businesses with 50 or fewer employees. A federal exchange would mandate Colorado to open the exchange to many more businesses, including those with 100 or fewer employees.

Lindsay believes Colorado will do better to figure out the system first, then add more potential clients.

As for an executive order, he thinks Gov. Hickenlooper may have to resort to that,  but it’s not ideal.

“He could have done that from the beginning. But, with this concept, you really want to have bipartisan support,” Lindsay said. “If he just signs an executive order, that makes it really difficult for him politically.”