Low-key Smallwood presents flash-point Obamacare state exchange repeal bill
Author: John Tomasic - January 26, 2017 - Updated: March 22, 2018
State Sen. Jim Smallwood, R-Parker, said on Thursday that he was inspired to run a bill to shutter the state’s Obamacare health insurance market, Connect for Health Colorado, because he feared the market would soon collapse in rural counties and because he believed the state could save at least $5 million annually by giving up its exchange in favor of the Obamacare federal health insurance marketplaces.“I’m nervous for the citizens of our state who live in some 19 counties that are now down to only one health insurance company providing products at Connect for Health,” he said. “I don’t know that we’ve ever created any plan that really addresses what will happen if that last insurance company decides that they also will not provide products.”
Smallwood ticked off what he characterized as alarm bells signaling potential collapse. Fewer insurance companies are working the state markets, he said. Those companies are offering fewer insurance products. And the coverage plans on offer come at frustrating, “skyrocketing” prices.
He also lamented rarely discussed state fees paid by Coloradans to maintain the exchange.
He said it “appears redundant” for Coloradans to be paying taxes for the federal exchanges the majority of states are using and “a handful of other fees that have proven over the last few years to be necessary to sustain Connect for Health.”
Smallwood mainly was talking about the annual $5 million “special fee” or “donation” paid to Connect for Health through tax breaks for insurers.
The nonprofit state exchange has been working in the red the last five years. It is presently teetering on the verge of solvency, according to its own recent numbers. But those numbers include the $5 million insurance industry donation. For fiscal year 2018, Connect for Health will reportedly pull in $35.3 million and pay $35.2 million in expenses.
But Sen. Irene Aguilar, a medical doctor and a close watcher of the exchange, said the annual $5 million donation should be viewed in context. She said that, in the era before the Affordable Care Act and Connect for Health, insurers paid much more than $5 million per year to create Cover Colorado, the state’s defunct high-risk insurance pool for residents with pre-existing medical conditions.
“This is like one of those Jenga things,” she said. “You pull one piece out, and you just don’t know what’s going to happen.”
Aguilar appreciated Smallwood’s concerns about the cost of the exchange and agreed that the state soon may well have to switch over to the federal marketplace. But she added that the state exchange has worked through a lot of startup kinks over the years and offers consumers increasingly improved shopping experiences.
She thought it best to move cautiously, especially given the mounting uncertainty around the U.S. health care system tied to the work President Trump and the Republican Congress are doing to unravel Obamacare.
“There may not even be a federal marketplace in a year,” Aguilar said. “Why would we put our consumers through that uncertainty until we know what’s really going to happen. This just feels premature.”
Efforts in Washington already point to the end of Affordable Care Act penalties on people who refuse to buy insurance. Those penalties were designed to bring more money from healthy people into the market to cover sick people and to end so-called free riding, in which the uninsured are covered by higher premiums imposed on policyholders.
Smallwood, the founder of a successful insurance firm who has been working with clients to navigate Affordable Care Act coverage since it passed, fielded a stream of questions from reporters in crowded small conference room at the Capitol, often working ground between ideological furrows carved deep during the Obama years.
Smallwood dismissed the idea championed by most Republicans that expanding health insurance markets across state lines would significantly reduce policy prices or improve coverage options. He also praised the Affordable Care Act for making advances in the health coverage industry long stalled.
Smallwood seemed the perfect messenger for his politically charged bill. A freshman lawmaker and easy talker, he seemed only to generally understand the heat his bill has already generated and the great amounts of political capital already invested that render dealmaking around it almost inconceivable.
“I do not have a Democratic co-sponsor,” he said flatly at one point.
But the Colorado House is controlled by Democrats. There’s no way the bill can pass without Democratic support. How will it pass?
“I don’t know,” Smallwood said. “I do need Democratic support. There are a lot of very, very smart Democrats who I’ve had great conversations with… I’m not a statement bill person. I never intend to run a statement bill… Given the time and energy this [bill] has taken me, I would hope that it passes.”