ColoradoCare

[Beaker]

I just saw that ColoradoCare, a single-payer health care system, made it onto the 2016 ballot. Looks like the full text of the initiative can be downloaded here, and weighs in at a surprisingly light 12 pages.

I haven't read enough of it to form an opinion yet. Does anyone else have an informed opinion?

I did note that this would cause Colorado to opt out of the ACA ("Obamacare"), which might have interesting implications for the FIRE crowd. I don't know nearly enough about the ACA to know what they might be, though.

[JZinCO]

A 10% tax.. for a healthy person like myself, ouch.

[protostache]

Very interesting. I had no idea that ACA contained a provision for letting states try their own single-payer or otherwise non-ACA systems. Sounds downright Canadian!

It looks like it would cost 3.3% of wage income on the employee side and 6.6% on the employer side, plus 10% of all non-wage income capped at $450k for joint filers. BUT it would be deductible on Federal taxes for itemizers, which brings the price down a bit.

The summary document has the sentence "For both TOFT (transitional tax) and PT (permanent payroll tax) much of Social Security and pension income would be exempt as defined by tax law." I'm not sure what that means for FIREd people. Would "pension" income include income recognized as part of a Roth rollover or 72t plan?

Still, it will be very interesting watching this go through the process. Thanks for the link!

[Beaker]

Yeah, it's a hefty tax for sure. Although presumably it would replace your health insurance premiums, so that would soften it somewhat.

I just finished reading initiative itself. It's relatively straightforward for something of this scale. Basically it creates a separate entity (not part of the state goverment) that is charged with paying for health care for any state resident. It is a secondary payer (ie, after any other insurance you might have), for whatever that matters. They also explicitly say that ColoradoCare is not itself insurance - I'm not sure if that's to avoid falling under insurance laws or what.

Another question just occurred to me: I wonder how this interacts with HSAs (health savings accounts). If this passed, presumably nobody in Colorado would have a high deductible plan anymore, so would we be excluded from having an HSA?

[JZinCO]

Yeah, it's a hefty tax for sure. Although presumably it would replace your health insurance premiums, so that would soften it somewhat.

I just finished reading initiative itself. It's relatively straightforward for something of this scale. Basically it creates a separate entity (not part of the state goverment) that is charged with paying for health care for any state resident. It is a secondary payer (ie, after any other insurance you might have), for whatever that matters. They also explicitly say that ColoradoCare is not itself insurance - I'm not sure if that's to avoid falling under insurance laws or what.

Another question just occurred to me: I wonder how this interacts with HSAs (health savings accounts). If this passed, presumably nobody in Colorado would have a high deductible plan anymore, so would we be excluded from having an HSA?

Yeah, the HSA question came to mind.
I'm probably thinking selfishly because I don't pay anything for my premium and have very low medical costs. Then again, I had an accident last year w/o health insurance which ate up 7% of my gross income. ColoradoCare does sound as if it would negate the need for health insurance, considering it pays for primary care visits, has no deductible and only a 4% co pay. I skimmed quickly so maybe I missed something.

If the data show that the tax would be lower on the average Coloradoan is lower than their medical bills, I could support it. Even if it would hurt my bottom line. Greatest good for the greatest number and all that...

[JZinCO]

Also, we just had a health co-op, the largest private insurer on the market, go under. Whether or not that directly relates to this proposition, I know opponents will bring it up.

edit: I also think it's cute how they say "Look coops work really well. Just look at the Green Bay Packers!".

[jorjor]

Also, we just had a health co-op, the largest private insurer on the market, go under. Whether or not that directly relates to this proposition, I know opponents will bring it up.

edit: I also think it's cute how they say "Look coops work really well. Just look at the Green Bay Packers!".

It doesn't at all. It will be brought up, but the two wouldn't be very similar.

[protostache]

Also, we just had a health co-op, the largest private insurer on the market, go under. Whether or not that directly relates to this proposition, I know opponents will bring it up.

edit: I also think it's cute how they say "Look coops work really well. Just look at the Green Bay Packers!".

Michigan just lost one as well. We were actually about to switch to them because they were so much cheaper than our current plan, but then the day I went to go sign up for a plan they had the press release on their homepage.

[jorjor]

Being a health insurance actuary that lives in Colorado, I'm interested in running the numbers to see if the taxes would be enough to run everything. That seems like a lot of work for my free time though.

[protostache]

Oh, another interesting thing is that it replaces huge sections of Colorado's worker's compensation system. I have no idea how much these premiums cost employers but it's probably not zero.

[Beaker]

Oh, another interesting thing is that it replaces huge sections of Colorado's worker's compensation system. I have no idea how much these premiums cost employers but it's probably not zero.

Good point. I believe it depends on your industry, number of employees, claims record, etc. All the usual insurance stuff. I want to say low-single-digit percentages of payroll is typical, but I'm not sure.

I wonder how this would work for expenses incurred outside the state. At a quick glance it doesn't seem to limit itself to medical services provided in Colorado, so it might just work anywhere. If not, residents might need to get a policy for use outside the state - basically traveler's medical.

Also, it's a separate tax that can only be increased by a popular vote. So if 10% turns out not to be enough (ouch) and voters don't feel like increasing it, they would have to cut services. No idea how likely that is, and maybe it's no worse than what insurance companies do, but it's a possibility.

[regulator]

ColoradoCare is exempt from TABOR.

That is all I need to know to vote against it.  Basically opens the door for this to be a runaway crazy tax nightmare.  No thank you.

I can also imagine all the Freeloader Freddies showing up and saying gimme, gimme, gimme.  This is Colorado, not California.

[Scommm]

It's not insurance, it's exempt from Tabor, smh.  Voting no.

[Beaker]

ColoradoCare is exempt from TABOR.

That is all I need to know to vote against it.  Basically opens the door for this to be a runaway crazy tax nightmare.  No thank you.

I read the following section to mean that they can only raise the taxes with a popular vote (ie, not just legislature). I'm not super familiar with TABOR, but I think this is even more strict?

IF THE BOARD DETERMINES THAT A PREMIUM INCREASE IS NECESSARY TO MAINTAIN THE FISCAL
STABILITY OF COLORADOCARE, THE BOARD MAY INCREASE THE PREMIUM TAXES SPECIFIED IN
SUBSECTION (2) OF THIS SECTION NOT MORE OFTEN THAN ONCE PER FISCAL YEAR, BUT ONLY IF A
MAJORITY OF THE MEMBERS OF COLORADOCARE WHO CAST VOTES ON THE PROPOSED INCREASE
APPROVE IT
...
(11) "MEMBER" MEANS A BENEFICIARY WHO IS AT LEAST EIGHTEEN YEARS OF AGE AND WHOSE
PRIMARY RESIDENCE HAS BEEN IN COLORADO FOR AT LEAST ONE CONTINUOUS YEAR

I can also imagine all the Freeloader Freddies showing up and saying gimme, gimme, gimme.  This is Colorado, not California.

Yeah, that is a potential problem. You'd have to have some pretty crazy high medical bills to move just for that, though. Especially with guaranteed issue everywhere else due to the ACA. Granted, people with high medical bills are exactly who you don't want.

[regulator]

ColoradoCare is exempt from TABOR.

That is all I need to know to vote against it.  Basically opens the door for this to be a runaway crazy tax nightmare.  No thank you.

I read the following section to mean that they can only raise the taxes with a popular vote (ie, not just legislature). I'm not super familiar with TABOR, but I think this is even more strict?

IF THE BOARD DETERMINES THAT A PREMIUM INCREASE IS NECESSARY TO MAINTAIN THE FISCAL
STABILITY OF COLORADOCARE, THE BOARD MAY INCREASE THE PREMIUM TAXES SPECIFIED IN
SUBSECTION (2) OF THIS SECTION NOT MORE OFTEN THAN ONCE PER FISCAL YEAR, BUT ONLY IF A
MAJORITY OF THE MEMBERS OF COLORADOCARE WHO CAST VOTES ON THE PROPOSED INCREASE
APPROVE IT
...
(11) "MEMBER" MEANS A BENEFICIARY WHO IS AT LEAST EIGHTEEN YEARS OF AGE AND WHOSE
PRIMARY RESIDENCE HAS BEEN IN COLORADO FOR AT LEAST ONE CONTINUOUS YEAR

I can also imagine all the Freeloader Freddies showing up and saying gimme, gimme, gimme.  This is Colorado, not California.

Yeah, that is a potential problem. You'd have to have some pretty crazy high medical bills to move just for that, though. Especially with guaranteed issue everywhere else due to the ACA. Granted, people with high medical bills are exactly who you don't want.

Frankly, if it is not subject to TABOR someone is trying to get away with murder and I am no longer interested aside from checking how many rounds of ammo I have stockpiled.

I also cannot see how this will work on the state level.  It is too easy for the freeloaders to pick up stakes and show up for bennies (walk down the 16th St. Mall in the summer).  This has to be done on a national level or not at all.

[Beaker]

Frankly, if it is not subject to TABOR someone is trying to get away with murder and I am no longer interested aside from checking how many rounds of ammo I have stockpiled.

Having looked into TABOR a bit, the only difference I can see is that ColoradoCare revenues would not be capped at (inflation X pop growth). Instead they would hang on to any revenues in excess of that and presumably use it to build/replenish the trust fund. Is there another effect I'm missing?

In general having a trust fund seems like a good idea to help smooth out short term fluctuations in revenue (see: 2008) or demographics. I do always get a bit nervous about government trust funds since the Feds have used Social Security as a piggybank. I think CC would be safe from that since it's not properly a part of the government.

[Anura]

Hi all! I've been lurking for a while, but ColoradoCare has finally motivated me to post!

While a 10% tax sounds high, when I actually looked up how much my employer and I are currently paying combined it seems quite reasonable.

Insurance for me individually - 9.8% of ~$70k income (we don't have a high deductible plan offered)
For my partner individually (HD plan) - 7.5% of ~$80k income

I don't have the info for my own company on hand, but for my partner's company the total (employer + employee) cost for spousal and family plans would be:
Employee + spouse OR + children (HD plan) - 14% of $80k income
Employee + family (HD plan) - 20% of $80k income

So as moderately high earning DINKs we (us + employers) would pay a bit more, but not by that much.  And for more average earning families, 10% seems like a really good deal!  (And especially a good deal for small businesses trying to hire people with <$50k salaries)

And even if we when we FIRE our entire income were subject to the tax, $2-3k/year for basically all medical expenses doesn't seem bad to me (I honestly don't know current ACA rates, so I can't compare).

I'm looking forward to hearing more details of the plan over the next year, but, if they can convince me that a 10% tax can actually support the level of coverage they are talking about, I am all in!

[Beaker]

Hi all! I've been lurking for a while, but ColoradoCare has finally motivated me to post!

While a 10% tax sounds high, when I actually looked up how much my employer and I are currently paying combined it seems quite reasonable.

Welcome aboard, and thanks for the info! You reminded me that I wanted to run that calculation as well.

For my company's not-bad PPO plan, employee + spouse would run me about $5700. I don't know the employer side, but the pamphlet says that the company covers "over 75% of total plan costs." If that means they're paying $17100, then the total is $22800. Which seems pretty crazy expensive, but I haven't shopped unsubsidized insurance for comparison. Clearly that's over 10% of salary for all but the highest earners.

My wife's benefits are $3800 for employee + spouse on the PPO, or $1800 on the HDHP. Her company is generally fantastic about this stuff so I'm guessing that represents well under 50% of the cost, with the employer paying the rest. There's a reason we use her benefits :)

Both examples indicate that it's not that expensive compared to current insurance.

I'm looking forward to hearing more details of the plan over the next year, but, if they can convince me that a 10% tax can actually support the level of coverage they are talking about, I am all in!

Yeah, that's probably my single biggest reservation about it. It wouldn't be the first time a government benefit over-promised and under-delivered, and this kind of thing is extremely difficult to repeal.

[JZinCO]

I'd like to run the numbers myself. I don't know the true costs that my employer bears, but let's assume the health plan is revenue neutral. Or put another way, premiums cover costs of claims and overhead. I have an HDHP, so to get closer to apples/apples, I will assume I have the best available plan (no deductible, $15 coinsurance for routine visits, $1250 OOP max ).
The employer covers 11.5% of my salary and I pay 4.4% of salary for premiums (The 'bronze' equivalent is employer 11.5%/employee 0%). And then the employer is relieved of worker's comp.Looks like a win for ColoradoCare. Still, I am in a low risk group so myself and my employer are paying for that 'TruCoat'.

I may have skipped over it so did ColoradoCare do an analysis to see the aggregate impact to residents? I'm sure the state picks up the tab for under/uninsured ER visits and the like, so the true cost of healthcare to me is there but invisible.
Last, it could be argued that the tax should be structured more progressively.

[jorjor]

Numbers for me:

Employer pays about 4.4% of my household income. I pay 0.5%.

It's an HDHP, so there are some HSA seeds to consider. If you add in the portion the employer pays for an HSA seed, employer pays about 5.5% of household income and I pay 3.0%.

[jorjor]

 

I'm looking forward to hearing more details of the plan over the next year, but, if they can convince me that a 10% tax can actually support the level of coverage they are talking about, I am all in!

Yeah, that's probably my single biggest reservation about it. It wouldn't be the first time a government benefit over-promised and under-delivered, and this kind of thing is extremely difficult to repeal.

I may have skipped over it so did ColoradoCare do an analysis to see the aggregate impact to residents? I'm sure the state picks up the tab for under/uninsured ER visits and the like, so the true cost of healthcare to me is there but invisible.
Last, it could be argued that the tax should be structured more progressively.

Here are the most recent detailed projections that I could find: http://www.couniversalhealth.org/wp-content/uploads/2015/09/addendumwith2019projectionsplusappendixv5.0,8.3.15.pdf

I'm wary of a few of the assumptions being far too rosy, to the point that 10% wouldn't cover it (assuming they're right on how much 10% would bring in).

[JZinCO]

Here are the most recent detailed projections that I could find: http://www.couniversalhealth.org/wp-content/uploads/2015/09/addendumwith2019projectionsplusappendixv5.0,8.3.15.pdf

Thanks.
What would MMM do? Take the safety net as a true canadian, or move to avoid 10% taxation on his rent, dividends and capital gains :)