1. Amendment 69: What it Means to You and What You Need to Know
Andrea Baldrica, MBA
Vice President, HUB International

2. The State of the state. . . 2 Min
ASK: “ CAN ANYONE TELL ME WHAT THIS IS?
How have the last 6 years evolved with your practice? As practice managers you are hit from all sides…
I was asked to speak about Amendment 69 today, but I think that it is important to have some perspective on the State of the State to better understand how Amendment 69 gained traction.
POSSIBLE ANSWERS:
- MAP OF THE US
- HEALTHCARE LANDSCAPE TODAY
- PUZZLE WITH PIECE MISSING
ACCEPT ALL ANSWERS.
REMIND THEM:
“THERE IS A LOT GOING ON IN OUR BUSINESS TODAY.”
“IT MIGHT BE MORE COMPLEX THAN I HAVE SEEN IT IN OVER 20 YEARS IN THIS BUSINESS.”
CLICK ONCE TO ANIMATE THE IMAGE TO BECOME CLEAR(ER).
“OUR JOB IS TO MAKE THIS BLURRY IMAGE CLEAR FOR OUR PROSPECTS and CLIENTS.”
“OUR JOB IS TO FILL IN THE MISSING PIECES.”

3. Current Perspective
Does not account for ACA rating changes (member level rating, 3:1 ratio, large to small group transition).
Does not address large group
Insurance rates continue to rise. The cost of health care continues to rise, and for those here today from rural parts of Colorado or the Western slope, the increases are pushing people to the breaking point.

4. ACA Exchanges Impact on the Market
Major Carrier Impact (in millions $$)
Carrier Reinsurance Risk Adj. Net Accrual Accrual Variance
AET $350 ($321) $29 $100 ($71)
ANTM $706 ($174) $532 $635 ($103)
CI $201 $109 $311
HUM $549 ($123) $426 $577 ($151)
HNT $215 ($77) $138 $ ($24)
UHC Recent Announcement:
2015 policy year margins in the -15%-16% range / expect 2016 to generate negative low double digit margins. This translates into losses of $475M for the 2015 policy year and more than $500M for the 2016 policy year – exceeding $1B in two years.
Ended 2015 with 650K ACA compliant customers (500K on / 150K off exchange)
Expects on exchange enrollment to grow to approximately 800K during the open enrollment period and then decline over the balance of the year
Impact on Cooperatives, Created under ACA
The Affordable Care Act had set up cooperatives to compete with traditional ins. companies
All cooperatives took 15 years loans, in varying amounts
$6 billion in federal money was originally available for co-ops to use for startup costs and as a solvency fund that would, in theory, buffer them against bad times
But Congress cut off the funding after the first $2.4 billion went to 23 co-ops, which meant some co-ops never had enough in their rainy-day fund to stay solvent
12 of 23 Co-Ops have closed
Payers are pulling out of the Exchanges, consolidation is

5. Unsustainable inflation
Specialty Rx explosive growth
Unsustainable inflation
Specialty medications comprise more than
50% of pharmaceutical pipeline1
Specialty medication pipeline bulging with over specialty products currently in development2
Out of the top 50 selling products, specialty medications will account for 2/3 of sales by 20203
explosive
growth
Specialty medications estimated to make up 40% of an employer’s total pharmacy spend by 20204
WHY IT MATTERS
James D. Affordable care act projected to drive up prescription drug spending in coming years. Accessed August 2014.
Published Online: Tuesday, April 21, 2015.
EvaluatePharma May 22, 2015.
July 16, 2015.

6. big challenges 17 18.5 55% 53% 8% Disease Access Quality Cost
Note to Presenter:
If appropriate, could also include any specific challenges the client is facing.
Key Message:
Getting people and organizations to their definition of healthy is challenging (refer to stats on slide).
We see high rates of disease. It’s harder to access doctors when you need them. There are continued issues with the quality and cost of care. And engagement remains a challenge.
Segue to Next Slide:
But we have a solution.
Access
Quality
Cost
Engagement 17
new diabetes case diagnosed1
seconds
18.5
average wait in cities to see specialist2
days
receive right care3
55%
sacrifice care for financial reasons4
53% 8%
doctors/hospitals with patient engagement strategies5
American Diabetes Association, Stop Diabetes: Diabetes by the Numbers, 2014.
Washington Post, January 29, 2014, Merritt Hawkins, 2014 Survey.
EPI Briefing Paper #358, May 2013.
Health and Financial Well-being: How Strong Is the Link? Cigna 2014 Benchmark Research Study.
National eHealth Collaborative, Health Information Exchange Learning Network, 2012 Member Survey.

7. Less competition???
RMHP

8. Increased rates again
16%
25%
41%

9. What’s Next?

10. Amendment # 69 ColoradoCare

11. Proposed initiative #20 aka Amendment 69
“Shall state taxes be increased $25 billion annually in the first full fiscal year, and by such amounts that are raised thereafter, by an amendment to the Colorado Constitution establishing a health care payment system to fund health care for all individuals whose primary residence is in Colorado…”
Constitutional Amendment that would eliminate private insurance and replace coverage for all Colorado residents except those on Medicare, VA and Tricare.
All Colorado residents would be covered, with a few exceptions
Our current budget is $27 billion
Number was not calculated by actuarial science

12. Amendment 69: ColoradoCare Perspective
The ACA has not worked
Current system is inefficient and confusing
Administrative costs exceed 30% of total spending
Many are still uninsured today
International models are more effective/efficient
Sponsor’s Perspective
Constitutional amendment (includes unlimited taxing authority, functions outside of TABOR)
Cover every resident in the state
Replaces employer-provided coverage, Medicaid, medical component of workers’ compensation, individual plans
Offer a “Platinum” plan with no deductibles (specific benefits TBD)
Approach
Single payer system (for lines of coverage mentioned above)
Governed by 21 independently elected board members (outside of State oversight)
$25 billion in initial funding through taxes … $38 billion all-in
10% payroll tax: employers pay 6.67% of payroll; employees pay 3.33% of payroll
Self-employed and retirees pay 10% of income
Structure

13. Amendment69: The forgotten Component
Would eliminate medical payments under workers’ compensation law and roll the claims under ColoradoCare.
Cost estimates have yet to incorporate our $500M workers’ compensation program in CO.
Same 21 person board to manage this system.
Does not address which, if any, insurance carrier would be willing to only insure the other, highly unprofitable components to workers’ comp.

14. $38 Billion $25B Tax Increase
Full cost of bill
$25B Tax Increase
Another $13B in (hopefully) federal money from ACA waivers and Medicaid
Total Bill Cost in Year 1…
$38 Billion

15. Current Colorado state budget is $27 billion
How Big is $38 Billion
Current Colorado state budget is $27 billion
If it were a private company, ColoradoCare would rank 80th in the Fortune 500
Just behind New York Life and ahead of American Express, 3M, Nike, and McDonalds

16. How is amendment 69 Funded?
Funded by:
6.6% employer 3.3% employee payroll tax
10% tax on all “non-payroll income”, including pass through income from partnerships, unearned income, retirement income and capital gains
Taxes will be applied to:
wages, salaries, and tips (collected from employer & employee);
Dividends, interest, and rents (collected from taxpayer);
Business proprietors’ income, including farm proprietor’s income; capital gains; and pensions, annuities, and social security benefits, to the extent taxed by the state under current law (collected from taxpayer);
Taxes to begin 7/1/17

17. Many Medical practices create pass-through income due to the legal organization= 10% new tax
Most practices are set up as a pass through entity , so the payroll tax will apply to employees, but all partners will pay the full 10% on any pass through income

18. Proponents perspective

19. Reduce waste

20. benefits

21. Providers’ experience

22. The Unanswered questions
What we don’t know:
The Unanswered questions

23. Unanswered questions
How do employers with employees living out of state manage benefits?
Pay 10% tax on all payroll, but would need to have traditional insurance in addition for those employees working out of state.
If traveling or going to school out of state, how do we pay for urgent/emergency coverage?
How (can you) do you access care at Centers of Excellence or America’s top Hospitals?
How do we continue to stimulate the Colorado economy when employers of choice don’t feel they can offer competitive benefit packages to recruit employees?
How do ERISA plans fall under this or are they exempt?

24. Unanswered questions
How do we control costs when sick people outside of Colorado move here for “free” health care?
a. What definition are we using to determine residency?
What will be the provider compensation model?
Percentage of Medicare or Medicaid?
We do know it will be determined by the 21 person elected board.
What happens to all the work that has been done with ACOs, and incentive/ value-based payment programs to improve the health of patients?
How do we keep unnecessary services from happening to make up for the lower reimbursement model?

25. Crunching the numbers…
1965 Medicare Law Passed with first Enrollees coming on in July
CBO Estimated the cost of Medicare in 1990 to be $18 Billion
Medicare Budget in 1990 $98 Billion
444% Off
IS $25 Billion Enough?

26. Colorado Health Institute Study
$253 Million shortfall in first year
$7.8Billion deficit with 10 year projection
Does not seem to account for workers’ compensation component.
Options with the shortfall:
Cut Benefits
Raise Taxes
Reduce Provider Rates
Maintain Hospital Provider Fee Funding
Shut Down ColoradoCare

27. Polling Based on polling from Magellan Strategies on August 30-31st

28. Colorado medical society
Voted to oppose Amendment 69 But…

29. For More Information… www.coloradansforcoloradans.com

30. Questions