Colorado Capitol Report

In this Capitol Report:

• Godzilla of All Colorado Ballot Initiatives: $25 Billion Universal Health Care Measure Qualifies for 2016 Ballot
• CACI Hosts Top Environmental Regulators to Discuss Clean Power Plan and 2016 Priorities
• Sign Up Now to Sponsor a CACI Council Meeting

Godzilla of All Colorado Ballot Initiatives: $25 Billion Universal Health Care Measure Qualifies for 2016 Ballot

Coloradans now have one year to thoroughly debate a proposed constitutional amendment, Amendment 69, which would create a state governmental universal health-care system.

On Monday, Secretary of State Wayne Williams said that the ColoradoCare Yes campaign had submitted enough valid signatures to qualify the single-payer measure for the 2016 ballot.

If voters approve the ColoradoCare proposal on November 8, 2016, Colorado will be the first state in the country to adopt such a revolutionary, wide-ranging health-insurance scheme.

Before the initiative qualified for the ballot, it was called Initiative 20, a 12-page amendment (Article XXX) to the Colorado Constitution.

The CACI Board of Directors will carefully examine Amendment 69 before considering what position to take.  Normally, the Board does not consider a position on a proposed ballot initiative that affects the business community until it has qualified for the ballot.  The next Board regularly scheduled meeting will be December 10^th.

The “devil is in the details” of this 12-page document, which should be read carefully by every Colorado voter.

If it is injected into the State Constitution, the political odds of it ever being changed by voters are slim to none, and the state will be left to deal with the enormous consequences—both intended and unintended—for years to come.

Amendment 69 would undoubtedly be the most massive, expensive change in Colorado State Government in recent decades, and the effects on the Colorado economy would be huge.  It would eliminate the entire health-insurance industry, for example, while creating a giant ColoradoCare bureaucracy.

The Legislative Council, the research arm of the Colorado General Assembly, estimates that ColoradoCare will cost Colorado taxpayers $25 billion in its first year of operation.  By contrast, Governor Hickenlooper proposed a $27 billion budget for the state’s 2016-2017 fiscal year!

Moreover, ColoradoCare would swallow up all State and Federal health-care programs, including four well-known, major programs:

1. Colorado’s workers’ compensation system;
2. Medicaid, the state-federal program that provides medical insurance for low-income citizens;
3. Children’s Basic Health program; and
4. Colorado Health Benefit Exchange.

CACI supported bipartisan legislation that created the Exchange, which is called Connect for Health Colorado.

Below are some salient aspects of Amendment 69, and more details will be examined in coming weeks in CACI’s Colorado Capitol Report.

What is the purpose of Amendment 69 and why is it being put forth?

Amendment 69 states that “Colorado needs a health care delivery system that prioritizes value over volume and that encourages quality, efficient, and accessible health care.”  Coloradans need affordable health-care “security.”  Business need “relief” from the “unstainable financial and administrative burdens of providing health insurance for their employees.”  Annual premium changes “disrupt coordinated lifetime health care.”

What does Amendment 69 propose?

In brief, Amendment 69 would create a “health care payment system” called ColoradoCare that would collect “premium taxes” from workers, employers and taxpayers who have non-payroll income and then pay health-care providers for services rendered to the “members” and beneficiaries of Colorado Care.

It would abolish all private-sector health-insurance plans sold in Colorado, causing hundreds to thousands of job losses.

What kind of an animal will ColoradoCare be?

It would be a political subdivision of the State, but it would not be an agency of the State.  It would be governed by an elected, 21-member board of trustees.  It would not be subject to oversight by the legislature, however, nor would it be subject to “administrative direction or control” by any State Government entity.

How does ColoradoCare get off the ground?

ColoradoCare would have an initial, start-up “transitional” phase with a temporary taxing scheme that would begin July 1, 2016.  It’s called the “transitional operating fund tax.”

It would be governed by a 15-member interim board appointed by the Governor and the four majority and minority legislative leaders.

To fund this transitional phase, workers would be taxed at 0.6 percent of total payroll and employers would be taxed at 0.3 percent.

Fifty percent of non-payroll income would be taxed at 0.9 percent from July 1, 2016 to December 31, 2016.

Among other duties, the interim board would oversee the statewide election of trustees from seven districts to govern ColoradoCare once it becomes operational.

How would ColoradoCare, once it is established after the start-up phase, be financed?

Once fully implemented, ColoradoCare would impose a “premium tax” on employers (6.67 percent of total payroll income) and workers (3.33 percent of total payroll income).  Wages, salaries and tips would be subject to the tax.

Anyone who has non-payroll income would be taxed at 10 percent.  Such income includes, according to the Legislative Council:

• business proprietors’ income, including farm proprietors’ income;
• capital gains; and
• pensions, annuities, and social security benefits, to the extent taxed by the state under current law.

Taxes would not be collected on total personal income greater than $350,000 for a single-income filer or $450,000 for joint-income filers.  These two limits would be indexed to calendar year 2017 but then adjusted annually according to the Denver-Boulder-Greeley Consumer Price Index (CPI) in later years.

The proponents of Amendment 69 are very generous in their concern for the financial impact of their measure on workers: “An employer may pay all or part of an employee’s share of the taxes levied . . . “

The Trustees could increase the premium tax to “maintain the fiscal stability of ColoradoCare” once each fiscal year upon approval of the “members of ColoradoCare.”  In other words, a statewide vote by the “members” would be required to increase the premium tax.  In an ironic way, Amendment 69 genuflects in the direction of TABOR by requiring a statewide vote to increase the premium.

Amendment 69 exempts ColoradoCare from TABOR.

Amendment 69 stipulates that the legislature “shall appropriate sufficient funds to ensure a smooth and efficient transfer of the programs” such as workers’ compensation, Medicaid, the Children’s Basic Health program and the Colorado Health Benefit Exchange.

Given the fiscal challenges and the $373 million in cuts outlined in the Governor’s recent budget proposal for fiscal year 2016-2017, the source of “sufficient funds”—unknown now but probably in the hundreds of millions of dollars–to pay for the State Government’s expensive transition to the ColoradoCare system is a total mystery.

Who would participate in ColoradoCare?

The amendment defines a “member” to be a “beneficiary who is at least eighteen years of age and whose primary residence has been in Colorado for at least one continuous year.”  A “beneficiary” also would be any individual who is less than 18 years of age, but such an individual would not be a “member.”

A “member” or “beneficiary” could presumably include, however, those who reside in Colorado illegally because the proposal does not use such explicit terms used by the Federal Government in its “Form I-9, Employment Eligibility Verification” as “citizen,” “noncitizen national,” “alien authorized to work” or “lawful permanent resident.”

How would ColoradoCare operate?

ColoradoCare would apply for a waiver from the Federal Affordable Care Act to establish a state health-care payment system.

ColoradoCare would contract with health care providers to pay for specific health care benefits.

Administration of Medicaid and Children’s Basic Health Plan programs and all other state and federal health care funds would be transferred to Colorado ColoradoCare.

Responsibility for medical care that would otherwise be paid for by workers’ compensation insurance would be transferred to ColoradoCare.

Finally, the Colorado Health Benefit Exchange would shut its doors and transfer its resources to ColoradoCare.

ColoradoCare would establish a “central purchasing authority” to negotiate and buy prescription drugs, medical supplies and other “products and services.”

ColoradoCare could ensure “financial stability by adjusting payments and benefits.”  In other words, providers and beneficiaries would be subject to unilateral actions by ColoradoCare.

ColoradoCare would fund the establishment of two ombudsman offices—one for providers and one for beneficiaries—in the Office of the Insurance Commissioner.  The two offices could, however, only make “recommendations” to the board.

ColoradoCare would establish a fraud investigation and prevention office, which could bring civil actions against providers and beneficiaries and refer criminal matters to district attorneys.

ColoradoCare would create an enormous database of medical records and billing systems that would be accessed by providers and beneficiaries.

ColoradoCare would pay for “designated supplemental health care services for Medicare beneficiaries” but it would not pay for services covered by Medicare Parts A, B and D or covered by a Medicare Advantage Plan that a beneficiary has with an entity other than ColoradoCare.

ColoradoCare would not pay for services “that would have been paid by Medicare Parts B or D had the beneficiary purchased those optional Medicare coverages” unless ColoradoCare “has an agreement with the Center for Medicare and Medicaid Services that requires it to pay for services that would have been paid under Parts B and D.”  ColoradoCare could offer a Medicare Advantage Plan, however, in which beneficiaries could enroll.

What if the Federal Government does not issue the necessary OK needed by ColoradoCare?

If the board decides that ColoradoCare has not received the Federal “waivers, exemptions, and agreements” needed for “its fiscally sound operation,” the board will “shut down operations and returned unused funds.”

For news-media coverage of the universal health-care measure, read:

“Universal health care amendment qualifies for 2016 Colorado ballot,” by Ed Sealover, The Denver Business Journal, November 9^th.

“Supporters, opponents line up as universal health care proposal qualifies for state ballot,” by Vic Vela, The Colorado Statesman, November 9^th.

“Supporters of Single-Payer Health System Turn in Signatures for ‘ColoradoCare’ Ballot Measure,” CACI Colorado Capitol Report, October 30^th.

CACI Hosts Top Environmental Regulators to Discuss Clean Power Plan and 2016 Priorities

This week, the CACI Energy & Environment Council hosted leadership staff from the Colorado Department of Public Health & Environment (CDPHE).  CDPHE Deputy Director, Karin McGowan, and CDPHE Director of Environmental Programs, Martha Rudolf, attended the council meeting to present the agency’s priorities for the coming 2016 legislative session and to address the agency’s efforts on several key regulatory reforms that Colorado will be required to undertake in the near future.

Martha Rudolf presented an overview of CDPHE’s efforts to develop a “state plan” for implementing the EPA’s Clean Power Plan.  The EPA finalized this sweeping, first-ever effort to regulate greenhouse gas emissions from the electricity generation utility sector in August, 2015.  The plan seeks to reduce national carbon emissions by at least 32% compared to 2012 emissions levels, and will require every state to develop and implement unique compliance plans with emissions reductions targets specific to each state and regions within each state.  Accordingly, Colorado regulators must develop and submit a draft of the state plan to EPA by September 2016 in order to be eligible for an extension of up to two years of the deadline for approving a final state plan for Colorado’s compliance with the Clean Power Plan.

Ultimately, the CDPHE’s Air Pollution Control Division will need to propose the state plan to the Colorado Air Quality Control Commission, in order that the Commission is able to approve the state plan by August 2017.  While CDPHE plans to inform the Colorado General Assembly regarding the Colorado’s Clean Power Plan state plan, once the plan is developed, it remains unclear what role the legislature plays in this process and whether legislative approval is required to finalize the plan before the state submits the plan to the EPA for approval.  After their presentation, Ms. Rudolf and Ms. McGown addressed a number of questions from CACI’s Energy & Environment Chair, John Jacus of Davis Graham and Stubbs, LLP, and CACI members regarding the agency’s plan development process and substantive elements of the plan.

As the Clean Power Plan is comprised of literally thousands of pages of new regulatory requirements, guidelines, and options for pursuing compliance strategies, both regulators and stakeholders in the regulated electricity generating utility sector are working to understand the potential impacts of the plan for Colorado’s utilities, rate-paying residents, businesses and industries, and ultimately for Colorado’s economic climate.  CDPHE will be holding several rounds of public engagement hearings around the state through next fall.  For more information regarding the Clean Power Plan, and CDPHE’s state outreach and plan development processes, see the below links:

https://www.colorado.gov/pacific/cdphe/CleanPowerPlan

http://www2.epa.gov/cleanpowerplan/clean-power-plan-existing-power-plants

While CDPHE is still awaiting final approval of its legislative priorities for the coming year from Governor Hickenlooper’s office, the department will be pursuing a legislative measure to address the remediation of radon contaminated mine tailings that were once used in residential and commercial construction and landscaping activities, predominantly in different regions along Colorado’s Western Slope.

CDPHE is also looking into efforts to investigate issues regarding legacy mines that pose environmental threats to water quality.  Legacy mine issues have received renewed focus and attention in the wake of the spill at the Gold King Mine that resulted from failed EPA remediation activities.  The discharge from the mine spilled a plume of heavily contaminated water into the Las Animas River in Southwest Colorado.  The plume turned entire sections of the river bright orange for a period of days, drawing national attention to the disaster and environmental issues stemming from unmediated nonoperational legacy mines.  It remains to be seen if this investigation will lead to legislative activity on legacy mine issues.

CACI will work to inform the Energy & Environment membership as CDPHE finalizes the remainder of its legislative agenda and issue priorities for the 2016 legislative session.

Please contact Dan O’Connell with any questions regarding this matter at [email protected] or at 303-866-4622.

Sign Up Now to Sponsor a CACI Council Meeting

As the 2016 legislative session approaches, we want to invite you to once again participate in CACI’s Issue Councils.  CACI councils offer a unique opportunity for CACI members to add their expertise and judgment to our policy-making and influence legislation and regulations that impact business. Council meetings provide an open and frank dialogue between our members, key legislators and state agency leaders.  This is also your chance to attend council meetings that you have not attended in the past.  The following Councils are available to all CACI members:

Each Council will meet at Noon at the CACI offices throughout the session.  Lunch is served at each meeting.  Sponsorship of council meetings by our members is crucial to maintaining the practice of providing lunch to each member during these important council meetings.  We need sponsors for every meeting in the coming year, so we would like to encourage members to sign up now to sponsor a lunch!  Sponsors receive recognition in both email reminders for the meeting and our online Events Calendar, as well as during the meeting itself.  CACI does all of the ordering and setup of the lunch and the sponsorship is always a flat rate of $600.  Please contact Laura Moss for more details or to sign up as a sponsor.  Again, sponsorship by our members is essential to providing our members with lunch during these meetings; we appreciate your ongoing support!

Please see the grid below for specific dates for each council.  Councils always meet from Noon to 1:15 p.m. in the CACI Conference Room: 1600 Broadway, Suite 1000, Colorado State Bank Building.

CACI 2015-2016 Council Meeting Dates