Lessons from Single-Payer Healthcare’s Failure in Colorado Last Year

-Lida Ehteshami

On the day the state of Colorado voted for Hillary Clinton over Donald Trump by about 5 points, voters there also rejected a ballot measure to enact a state-based single-payer system by an astounding margin of 79 percent to 21 percent.

Amendment 69, the Colorado Creation of ColoradoCare System Initiative, would have created a system in which all Coloradans would gain insurance through a tax-funded government insurance program. Private health insurers would have been rendered obsolete.

The Colorado initiative bears a resemblance to the Medicare-for-all legislation released by Senator Bernie Sanders on September 13 and endorsed by leading Democrats like Senators Kamala Harris, Elizabeth Warren, Cory Booker, and Kirsten Gillibrand, and to HR 676, Rep. John Conyers’ single-payer proposal which has the support of a large majority of House Democrats.

Colorado’s initiative, in other words, matched the 2017 health care platform of the Democratic Party. And it failed — terribly.

“The proposal came too soon and too fast for where voters were,” Joel Dyar, who worked as state field director for the ColoradoCare Yes campaign, says.

Some of that failure is attributable to the unique challenges of adopting single-payer through a ballot initiative, and at the state level. Because Colorado’s constitution bans public funding for abortions, ColoradoCare would’ve taken away access to abortion from the hundreds of thousands of women currently in private health plans that cover the procedure.

That earned the amendment the opposition of NARAL Pro-Choice Colorado and Planned Parenthood of the Rocky Mountains, two leading progressive groups in the state. “They didn’t check in advance to see if this was a problem,” Karen Middleton, the executive director of NARAL Pro-Choice Colorado, recalls. “By the time anyone had seen the language, it was already locked in.”

And because the proposal had to be set in stone in order to appear on the ballot, advocates did not have time to negotiate with key stakeholders on details of the plan, meaning few stakeholders bought in.

Many progressive think tanks like the Colorado Fiscal Institute and the Bell Policy Center, unions like the United Food and Commercial Workers, and advocacy groups like ProgressNow Colorado wound up opposing the plan. “A poorly thought-through initiative like Amendment 69 does violence to the future of single-payer in Colorado,” Ian Silverii, ProgressNow Colorado’s executive director, says.

But other obstacles will be just as present in a federal fight. Entrenched interest groups, particularly insurers, spent millions opposing the measure. Moderate Democrats like Gov. John Hickenlooper, Sen. Michael Bennet, and former Gov. Bill Ritter came out against it. And ultimately, Colorado voters were just not persuaded.

The ColoradoCare Plan

ColoradoCare, the single-payer system to be created by Amendment 69, was vague in specifying what benefits it would cover, listing 11 categories like “ambulatory patients services, including primary and specialty care,” “prescription drugs and medical equipment,” and “preventive and wellness services.” The plan would include no deductible and no copayments for preventive and primary care services; copayments for all other services were to be waived for financial hardship.

This isn’t quite as sweeping as many single-payer plans. For example, HR 676, the Conyers bill supported by most House Democrats, covers “the full scope of dental services,” “basic vision care,” “long-term care,” and even “chiropractic services.” Bernie Sanders’s bill is similarly comprehensive, as is California’s proposal. ColoradoCare, by contrast, didn’t guarantee long-term care or vision care or dental care, at least to adults.

But the abolition of deductibles and copayments and traditional premiums, and inclusion of prescription drugs as part of the core benefit, makes ColoradoCare quite a bit more generous than Medicare or most foreign universal health care systems.

The plan was to be funded by a 6.67 percent employer-side payroll tax plus a 3.33 percent employee-side payroll tax, and a 10 percent tax on all nonwage income, like capital gains, self-employment, Social Security benefits, etc.

That’s on the low side of estimates of what a single-payer system would cost. California’s State Senate Appropriations Committee estimates that a (more generous) single-payer system there would require a 15 percent employer payroll tax, while Vermont abandoned its single-payer effort after it concluded an 11.5 percent payroll tax hike and an income tax hike of up to 9.5 percent was necessary.

Advocates note that these taxes would be replacing current employer and employee spending on health care. Health insurance currently makes up about 7.5 percent of private employers’ compensation to employees, according to the Bureau of Labor Statistics, and the average household spends 6.2 percent of pretax income on health care.

With major exceptions, like adult dental and vision and purely elective procedures like cosmetic surgery, ColoradoCare would’ve replaced all those expenses for Coloradans and their employers. Though payroll and income taxes would rise, advocates argued, households and businesses would be held harmless or even made better off once you take that removed burden into account.

Independent analysis cast doubt on some of the details here. The respected, nonpartisan Colorado Health Institute prepared an analysis of the proposal that concluded that while it would roughly break even in its first year, it would have a quite large deficit by year 10: $7.8 billion, or 13.9 percent of revenue.

Understandably, the proposition’s supporters disputed this, with Colorado State economist Anders Fremstad arguing that the analysis underestimated how much the system could restrain health spending and how much it’d continue to bring in in federal funds. And CHI’s Joe Hanel says the group also estimated the tax rate needed to break even over 10 years, and found that a modest bump to a 12 percent rate would work.

ColoradoCare would have run into trouble if it came up short on cash. It would have been governed by an elected board of 21 trustees — three each from seven different geographic regions of Colorado — who’d have the power to raise copayments, eliminate coverage of some services, and even shut down the entire program if the finances weren’t working out.

ColoradoCare’s board could also vote to put a tax increase on the ballot to fund the program, but voters would have to assent to it. “Colorado voters tend not to approve tax increases, so approval for higher premium taxes for ColoradoCare would have proven difficult,” Natalie O’Donnell Wood, a senior policy analyst at the progressive Bell Policy Center in Denver, says.

The voting process was also weirdly designed. “ColoradoCare,” CHI notes, “would create a separate voting system for itself. [It] would create two distinct classes of voters: the current registered voters of the state and members of ColoradoCare. Most adults would be in both groups, but some would be included in one group but not the other.”

For instance, ColoradoCare’s elections — for board of trustees, and on tax increases the board proposes — would be open to noncitizens, including undocumented immigrants, but it would require voters to live in Colorado for at least a year before the election, while normal Colorado elections only have a 22-day residency requirement.

The elected board existing on its own off to the side of Colorado’s regular political structure generated concern among progressive activists. Wood notes that it could have invited legal challenges. One analysis noted that the rest of the Colorado Constitution requires US citizenship to vote, and because “Amendment 69 does not explicitly repeal the Constitution’s voter criteria,” that requirement could still be binding, meaning the different rules for voting on ColoradoCare could be struck down.

The new board could also be vulnerable to co-option, especially if elections to it were low-turnout. “If I’m the Koch brothers,” Silverii, the head of ProgressNow Colorado, says, “the only thing I do in Colorado is attempt to rig that system to gerrymander the districts, get the most anti-universal health care, anti-progressive people on the planet elected to those positions to intentionally run the thing into the ground and then say, ‘See, it doesn’t work!’”

Why progressives reject ColoradoCare

A lot of the opposition to ColoradoCare was predictable. The opposition raised more than $4 million in total — largely from health insurance companies — compared to about $900,000 for supporters.

According to the Colorado Secretary of State’s office, the health insurer Anthem donated $1 million to the anti-ColoradoCare campaign, Kaiser Permanente gave $500,000, UnitedHealth gave $450,000, and the hospital chains Centura and HealthOne each gave $250,000.

“The citizens supporting single-payer in Colorado were vastly outspent by status quo health care powers,” Dyar, the ballot measure’s field director, says. “There were millions of dollars put into television to run ads against it and millions of dollars put into misinformation and fear tactics.”

Worse still, Dyar says, “the national progressive interests didn’t come to the rescue.”

So why is that? For one thing, at the time, backing single-payer represented a political risk. Colorado was a purple state in the presidential race, and Democratic Sen. Michael Bennet was up for reelection. While he didn’t attract a top-tier opponent, the state’s tilt makes him inherently vulnerable. “The party felt like it was very risky and that candidates were vulnerable to being tied to the initiative,” Dyar recalls.

But a number of progressive activists in Colorado also thought the measure could actively make things worse. A major issue was the governance challenge posed by putting the program in the state constitution, where tweaking it could be more difficult.

A report by the left-leaning Colorado Fiscal Institute focusing on Hispanic families noted that while many and likely most low-income Hispanic families would pay less under ColoradoCare, low-income Medicaid enrollees would be faced with new taxes without new health benefits to offset them. This is the kind of thing that could be fixed ahead of time if the proposal had gone through a legislative process — but it did not.

Many, like Silverii, were also skeptical of trusting its supervision to a new board that could be elected in low-turnout elections and that could thus be subject to manipulation and capture.

Perhaps the biggest issue of contention, however, was abortion.

In 1984, Colorado narrowly passed Initiative 3, the Colorado Abortion Funding Prohibition Amendment, which barred all public funding for abortion except if needed to save the life of the mother. And ColoradoCare wouldn’t have changed that. It couldn’t have: The state constitution has a “single subject” rule requiring ballot measures to stick to one topic, meaning the ColoradoCare initiative couldn’t simultaneously repeal the abortion funding ban.

ColoradoCare thus would have taken away abortion access from women whose private insurance covers the procedure — a group totaling more than 550,000, per NARAL’s Middleton. It didn’t just fail to expand access to abortion to poorer women; it actively made access worse.

And while some advocates for the policy argued that it was still worth supporting for the “greater good” of expanded health care coverage for other procedures, reproductive rights advocates were understandably not having it.

“I’m sure there are still hurt feelings, and I’m sure there are still people who are upset about it,” Middleton says. “It was also a proxy around the Bernie-Hillary break. You had people supporting Bernie in the primary who supported Amendment 69 who saw that alignment, and it heightened that tension that you saw around the country in the primary.”

Advocates for the act disputed this interpretation, arguing that ColoradoCare actually overrode the abortion ban, and that the board of trustees could choose to cover abortion if it wanted to do so.

NARAL wasn’t persuaded, noting that the ColoradoCare ballot measure didn’t mention abortion at all, and so courts could easily conclude that it did not conflict with or supersede the abortion ban.

What federal single-payer advocates can learn from Colorado

In some ways, the federal situation is more promising than that in Colorado. While major Democrats in the state resisted the single-payer push, more and more national Democrats and 2020 presidential contenders are endorsing Medicare-for-all.

“ColoradoCare came too soon and came without an open dialogue with the Democratic Party and candidates up and down ballot,” Dyar, the ColoradoCare field director, says. “Had this initiative had the Democratic Party’s support, it could have gone much further.”

The federal effort also doesn’t involve a ballot initiative changing the Constitution. If a real push happens for single-payer the next time a Democrat is in the White House and the party controls Congress, there will be time to negotiate particulars and work out the kinds of problems that emerged with the ColoradoCare language.

“It’s important that many progressive and centrist groups have a role from the start in writing single-payer legislation,” Dyar says. “Without that buy-in and without that compromise that comes with that process, there’s always something to make someone unhappy.”

“Colorado may not be the best case study in looking to successes and failures on single-payer,” Wood concludes, given ColoradoCare’s unique set of challenges. But at the same time, the ColoradoCare debate offered some warnings as to issues a federal single-payer push will have to address.

Abortion is a big one. While the US Constitution doesn’t ban federal funding for abortion, the Hyde Amendment does statutorily ban funds from going to abortions (with exceptions for rape, incest, and life of the mother). That’s just a legislative provision regularly included in federal appropriations bills, and it could be repealed as part of a single-payer push.

But as the 2009 to 2010 fight for Obamacare showed, there are some Democrats who might be on board to raise taxes and expand health coverage, but not if that coverage includes abortion. Former Rep. Bart Stupak nearly scuttled the effort by offering an amendment barring federal funds from being used to subsidize insurance plans covering abortions.

He and other anti-abortion Congress members threatened to oppose the bill without the amendment, and abortion rights groups threatened to oppose any bill that included it. Eventually, President Barack Obama was forced to issue an executive order limiting funding for abortions through the insurance marketplaces to satisfy Stupak.

It’ll be hard enough to get 218 House votes and 51 (or even 60) Senate votes for single-payer. If even one or two members of either House take Stupak’s position, Democrats could be forced to choose between single-payer with no abortion coverage and a system in which every abortion is paid for by the federal government, enraging anti-abortion groups and likely greatly increasing the number of abortions performed.

Another obstacle is the tax shock. Bernie Sanders has been fairly vague about how he’d fund his single-payer proposal, and past funding plans he’s put out have raised far too little money to cover the benefits. But when Congress actually debates a single-payer bill, that bill will have to specify pay-fors, or else its advocates will need to persuade colleagues to access a massive increase in deficits and debt.

That will be tough. Running against big tax increases and a “government takeover of our healthcare” is, as ColoradoCare’s opponents demonstrated, very easy.

“It took the opposition three seconds to call it a tax and supporters three minutes to explain how it was simply a different way of payment that would save them a whole lot of money,” Dyar recalls.

Public opinion on specific issues like single-payer is quite malleable, and support for single-payer falls in polls after respondents are informed of common criticisms of it.

Before any counterarguments, 55 percent of respondents to a Kaiser Family Foundation poll supported single-payer, but after being asked, “What if you hear that opponents say guaranteed universal coverage through such a plan would give the government too much control over health care,” only 40 percent still support it, and 62 percent oppose it.

Hearing supportive arguments (like that it would make health insurance a basic right) turns public opinion in the opposite direction. Which is exactly the point: The public is very suggestible on the topic. And when insurers and spending millions to oppose the proposals, it’s likely people will hear more arguments against the idea and respond by turning away from it.

Bernie Sanders is, of course, hardly a naif about the immense power of corporate interest groups. But even if there were no corporate opposition, winning over the public would be tough.

While the current system clearly doesn’t work for people without coverage, most people with employer-based insurance like it. They like it a lot, in fact. And they tend to be “very skeptical of big disruptive efforts to change it,” as Princeton sociologist Paul Starr argues.

There’s a reason Obama spent months assuring people that if they liked their health plan, they could keep it. When you tell people you’re going to take away what they have now, they usually find it unacceptable.

This is why many health reform advocates, starting with UC Berkeley economist Helen Halpin and Yale political scientist Jacob Hacker, have argued for transitioning to single-payer by offering a public option available to employers and individuals alike.

If such a plan paid the same rates to doctors and providers as Medicare (rates lower than private insurance), that would translate into lower premiums, which would lead employers to gradually shift into the public plan of their own accord, without a huge, super-visible tax increase.

This is the approach that former Rep. Peter Stark offered in his AmeriCare Health Care Act in 2006, and Sen. Chris Murphy is offering similar legislation this year. The Colorado experience suggests that such an approach could avoid the problems that dog more ambitious single-payer plans — particularly if employers could choose between a public plan that covers abortion and a public plan that doesn’t.