Colorado's Government Option: Assessing the Impact of Reforms on Access to Health Care

Colorado’s health care landscape is as varied as its topography, from major health systems anchored in the state’s urban centers to small rural hospitals scattered across the Eastern Plains. While the introduction of a state government option to Colorado’s health insurance marketplace would impact providers across the state, its effects may be particularly severe for those communities served by hospitals already operating on tight margins.

These hospitals serve as a critical point of entry to the health system – and sometimes the sole source of care – for vulnerable populations across Colorado. To assess the impact of a proposed state government option on access to care in communities throughout the state, FTI Consulting conducted a statewide analysis of reimbursements to Colorado hospitals and estimated the effects of rate setting on access to providers, which could be impacted by the reduction or elimination of hospital services in response to the state government option. The report finds that 83% of Colorado’s hospitals would see a reduction in revenues under the proposed plan, threatening access to care disproportionately in certain areas of the state where hospitals are already operating on tight margins.

FTI Consulting sought to test this theory by modeling a public option and assessing its impact on market stability and consumer choice in the ACA marketplaces. The results suggest that – rather than spurring competition – the introduction of a public option would threaten the long-term viability of existing ACA plans, with half of current enrollees moving to the government plan by 2030. In fact, the large discrepancy in premiums under the public option scenario would eventually cause the elimination of all private plans in the individual market.