Opinion: Get covered or run for cover

Opinion: Get covered or run for cover

By Francis M. Miller

The script for the Colorado Health Benefits Exchange is beginning to read like the storyline of Gilligans Island. It all started as a three-hour tour.

From the outset the debate has centered on whether Colorado should set up its own exchange or have the feds do it for us. So far, 13 states, including Colorado, have opted to set up state-run exchanges. More than half the states, 26 of them, are refusing to participate and the feds will have to run it out of Washington, D.C. This has pretty much divided along party lines with Republican-led states resisting Obamacare whenever and wherever they can.

Colorado in the past two decades has become a metropolitian oasis and its politics have been bleached from purple to blue. Once the Republicans lost control of the state, Gov. Bill Ritters 208 Commission became a blueprint for a socialist field of dreams. That includes mandates, exchanges and a cooperative.

The focus of attention has been on the exchanges budget and its logo. That seems par for the course these days, whether it is higher education or health care branding. It is the means to demonstrate a customer orientation. Starting out as a modestly funded organization, the exchange is now chasing $125 million dollars in grants. When they get awarded, they can relax and not feel forced to seek a premium tax on insurance premiums to fund their organization. Their funding, when combined with several hundred million dollars to expand Medicaid and nearly $70 million dollars to launch the health cooperative, represent the lions share of economic development that has taken place in Colorado since the 2008 recession. Legislators can now declare victory and go home.

I would have been more comfortable if the Obamacare debate had centered on two other issues. One is how do we bend the cost curve? No one has been able to show how this will get done. I suspect we will crash through the 20 percent of GDP ceiling soon. Keep it up and eventually half the population will be caring for the other half. The only question is which half will be paying taxes.

The other question that has been ignored is tell me again how does the exchange create a competitive marketplace? The current hyper-inflation in health care is not symptomatic of a competitive marketplace. Its more a team of health provider rivals governed by insurance company oligarchs. Increasingly we treat the health market as an extractives industry.

Let me confront this issue by way of analogy. Lets say you are unhappy with the level of competition in the auto industry. If you believe prices are too high and quality too low, to whom do you turn? Do you switch from an American manufacturer to a Japanese or Korean car? Or do you set up an exchange and have Ford Credit compete with GMAC Acceptance? None of us would pay $50,000 for a car without cheap financing, just as none of us would pay the outrageous bills for the average hospital stay without tax-favored subsidies from government or our employer. But, is the crucible of the marketplace formed by the financial intermediaries or by the competition between providers? I would argue that insurance is the source of the dead-weight loss in the health care industry.

Is competition furthered by standardizing benefits designs, regulating medical loss ratios and forcing fee schedules down the throats of providers? Or is it created by empowering the consumer?

To many of you, I am arguing distinctions without differences. Most people believe that insurance companies are high profit organizations and that we can squeeze their lemon to lower costs. Forget that it is the intensity of care, excessive administrative overhead and myriad other reasons that explain high health care costs. Why do you think the 12 leading socialized democracies in Europe expend half the money we spend and get superior outcomes? Wouldnt you think a competitive market-based system would spend even less, not more? In an ideal world we would spend half what they spend, not twice as much.

In the end, the exchange can justify its existence by serving other purposes. The CBMS has been so broken and dysfunctional that the exchange can play a major role in getting people enrolled in Medicaid. It will also shepherd the 800,000 uninsured in Colorado. Even if they manage to enroll 150,000 of them, the subsidies will be a steroidal injection into Colorados economy.

So, all in all, the exchange promises to contribute more to economic development than any other agency the state could conceive. The combined effects of Medicaid dollars and subsidies when doubled by the economic multiplier effect will have more of an effect than highway dollars or promoting snowboarding. Whether it was conscious forethought or accidental isnt worth debating. The cascading, trickle-down effects are sure to ripple through the economy affecting us all. Well, maybe not us all.

What still must be answered is whether Coloradoans want to base their economic future on federal transfer payments. Or do we seek to encourage wealth creating export industries? Clearly the natural resource extractions economy is the past and the window of opportunity is closing. The in-migration of the past 20 years has changed Colorado politics permanently. The eastern Front Range is now more of a city-state. You have to drive 100 miles in any direction (Cheyenne, Limon, Pueblo, Grand Junction) to reach the great outback that stretches for 1,000 miles before you encounter another urban area of consequence. Without wealth-creating exports, Colorado will be an island economy exchanging dollars internally.

I would argue that the in-flow of federal transfer payments is unsustainable in the very long run given deficits and unfunded liabilities. Eventually the rhetoric of our debate will have to change.

Until then, party on Wayne.
Francis M. Miller is the past president of the Colorado Business Coalition for Health and the vice chairman of the Colorado Health Data Commission. He founded the first consumer cooperative for health care called the Alliance and is the current president of Health Smart Co-op.

Opinions communicated in Solutions represent the view of individual authors, and may not reflect the position of the University of Colorado Denver or the University of Colorado system.