What the Public Option bill means for Haxtun Health, NE Colorado

A public option bill currently in review by the Colorado Legislature seeks to lower the cost of healthcare by allowing the state government to set service costs. The bill, Colorado Option HB20-1349, mandates that health insurance premiums set by insurance companies be reduced in price by 20 percent. If insurance companies do not meet this requirement, then hospitals — including Haxtun Health — will get paid 20 percent less. While paying less for insurance seems positive at face value, Dewane Pace, Chief Executive Officer for Haxtun Health, warns about what may happen to patients in rural Northeast Colorado communities should the bill pass later this month.

“Healthcare is a heavily regulated and financially difficult business, but we have a great team and are committed to being here no matter what,” Pace said. “Unfortunately, the hospitals have no control over what insurance companies decide to charge. To penalize hospitals for insurance companies’ behavior does not make sense to us.”

Effects of the bill

Some may suggest this bill will push hospitals and insurance companies to work together; however, small-town hospitals such as Haxtun Health do not have the leverage for bargaining power with insurance companies like larger city hospitals in the Front Range do.

According to the Colorado Rural Health Center, the bill draft incorrectly assumes there is a direct relationship between healthcare charges and insurance premium rates. Areas like Haxtun in rural Colorado have some of the lowest hospital charges in the State  — yet patients in the region pay some of the highest premiums and insurance rates due to ineffective affordability benchmarks. Front Range insurance rates are typically up to 40 percent lower than rates in rural communities.

“Over time, we have worked very hard to reduce our costs to the point that hospitals on the Eastern Plains have the lowest costs in the State,” Pace said. “We charge 150 percent of Medicare rates compared to hospitals on the Front Range that charge up to 450 percent of Medicare rates.”

Haxtun Health is a taxpayer-funded hospital; however, community taxes contribute to three percent of total hospital operating costs. The other 97 percent is funded through daily operations, Medicare and compensation from insurance companies, Pace said. While Pace agrees the cost of healthcare is problematic, he said the bill has a “one-size-fits-all” approach that specifically benefits Front Range patients, putting rural communities at risk for collateral damage.

“Our hospital, like most hospitals on the Eastern Plains, operates on a very slim margin of one percent to three percent and some years have even had a negative margin,” he said. “What we would like to see is a tailored approach to the situation that takes into consideration the situations rural hospitals face.”

Where Haxtun Health stands

Pace is on the Board of the Colorado Hospital Association and is the chair-elect for the Eastern Plains Healthcare Consortium — groups that have lobbied to amend the Public Option bill to protect the rural hospitals. He met with Representative Dylan Roberts to discuss the impact the bill could have on rural hospitals like Haxtun Health, leading to Roberts’ introduction of a “Strike Below” version of the bill that makes an exception for rural hospitals.

“We are not in this business to make a big profit,” Pace said. “We are in the business of taking care of people, first and foremost. The doctors, nurses and every member of this team are here because they care and want to be here for you when you need us.”

What’s next?

It is anticipated the bill will pass by the end of the month, according to Pace. The EPHC has initiated discussions with insurance companies and is exploring the possibility of an insurance co-op for rural communities. Pace said the goal to offer affordable healthcare in rural communities will continue to be prioritized moving forward, despite the outcome of the public option bill.

“The goal is to reduce what everyone has to pay for healthcare, and we are not done,” Pace concluded. “We are thankful to our community for their continued support and know that we would not be here without it.”