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Fact Check: ColoradoCareYES advertisement needs context

Crystal L. Eilerman, CU News Corps

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A new ColoradoCareYES advertisement in support of Amendment 69 gets some facts right, but sends a misleading message.

The ad, called “Do the Math,” claims:

“Colorado’s health insurance rates are set to increase by up to 40%. But Bob & Susan could save $1400 with ColoradoCare! In fact, over 80% of Coloradans will save money by voting YES on Amendment 69. How is this possible? ColoradoCare trims the fat by using bulk purchasing power, and reducing fraud and administrative expenses.”

If approved by voters on Nov. 8, Amendment 69 would create ColoradoCare, a taxpayer-financed nonprofit organization to provide universal health coverage to 83 percent of Colorado residents. The other 17 percent would retain their current Medicare, TRICARE or Veterans Administration coverage.

The amendment would do away with deductibles and complicated premium calculations, replacing them with a 3.33 percent payroll tax for employees and a 6.67 percent payroll tax for employers. Self-employed people would pay the full 10 percent of their net income.

Colorado’s health insurance rates are set to increase by up to 40 percent.

It’s true that in 2017 premiums for individual health plan coverage (i.e., coverage purchased through Colorado’s state-based exchange, Connect for Health Colorado, or directly from insurance companies) will increase by 40 percent for one or more for at least one of the four coverage tiers in over half of Colorado’s counties, according to the Colorado Division of Insurance.

However, these increases will affect less than 10 percent of Colorado residents. According to the nonpartisan Colorado Health Institute, only 7.7 percent of Coloradans purchased individual health plans in 2015, the most recent reporting year.

In addition, applicants who did not receive a tax credit or subsidy in 2016 can lower their increase to around 13 percent by switching to the lowest plan in the same metal tier, according to the Colorado Division of Insurance. In 2015, 44.5 percent of marketplace applicants did not receive financial assistance, according to the Connect for Health Colorado annual report.

Comparatively, premiums for the 50.9 percent of Coloradans who get health insurance through their employers will increase by an average of only 2.1 percent statewide, according to the Colorado Division of Insurance.

But Bob & Susan could save $1400 with ColoradoCare!

If Bob and Susan are on a family health insurance plan through a private-sector employer, this is actually a conservative estimate.

As explained by ColoradoCareYES spokesman Owen Perkins, the estimate is based on two pieces of data:

  • The average family income is $87,242, according to a draft document by the Colorado Health Institute.
  • The average employee paid $4,325 for health insurance in 2013, according to the Colorado Division of Insurance.

Let’s start with the premium, which was calculated based on the Colorado Division of Insurance’s 2014 Health Insurance Cost Report. In 2013, 26.0 percent of total premium contributions were made by employees (as opposed to the employer) for private-sector employer-sponsored family health plans. If we take 26 percent of the average total premium for family coverage ($16,636 in 2013), the $4,325 average premium checks out, assuming either Bob or Susan has purchased a family plan through their private-sector employer.

Next, although ColoradoCareYES used an income estimate from a draft document, we can find a more targeted estimate of the average family income from the U.S. Census Bureau’s 2013 American Community Survey 1-Year Estimates. The bureau puts the median household income for families in Denver County, Colorado, at $65,155  in 2013.

By taking 3.33 percent of Bob and Susan’s household income, we get an estimated ColoradoCare annual premium of $2,170. Comparing that to the average family health plan premium through a private-sector employer, we get a savings of $2,155, which is more than ColoradoCareYES’s advertised $1,400.

Of course, this example doesn’t consider public-sector employer-sponsored health plans. If Bob and Susan purchased a similar plan through a public employer, like the University of Colorado, the scales even out.

If our hypothetical Denver couple were 40 years old, in fantastic health and worked for the University of Colorado with an annual household income of $100,000, their health plan options would be:

  • Connect for Health Colorado. If Bob and Susan selected the bronze-level plan with the lowest premium (Kaiser Permanente CO Bronze 5000/30%/HAS), their premiums would add up to $441.06 per month, or $5,292.72 per year, according to the Connect for Health Colorado Plan Finder. The deductible would be $5,000 per person.
  • ColoradoCare. If Bob and Susan paid 3.3 percent of their annual household income, their premiums would add up to $277.50 per month, or $3,330 per year. There would be no deductible.

As public sector employees, Bob and Susan would actually pay the smallest monthly premium by purchasing an employer-sponsored family plan, though that savings disappears if they have enough health expenses to require paying the full in-network deductible.

In fact, over 80% of Coloradans will save money by voting YES on Amendment 69.

In this case, context shows this statement to be false. According to ColoradoCareYES spokesman Owen Perkins, the 80 percent figure was quoted from “Three Possibilities for Colorado’s Future Health Care Financing and Delivery,” a 2013 report by University of Massachusetts at Amherst economics professor Gerald Friedman.

Commissioned by the nonprofit Colorado Foundation for Universal Health Care, Friedman’s objective was to compare Colorado’s health care system pre- and post-Affordable Care Act (2010) with a potential future system proposed in a draft version of a 2013 bill by state Senator Irene Aguilar (D-23).

Here’s is the relevant line in Friedman’s report:

Compared with the Baseline program, the Cooperative would lower costs for 80% of Colorado households, those with a household income of under $100,000.

Friedman defines the Baseline program as “a return to the system prior to the enactment of the Affordable Care Act,” which is a distinctly different system from what Friedman’s 2013 report defined as “the current system with the Affordable Care Act.”

Therefore, the 80 percent figure wasn’t in reference to the current healthcare market, but to Colorado’s market before the Affordable Care Act went into effect in 2010.

Here’s the context of Friedman’s comparison:

Who would bear the burden?

With different funding sources, the three alternative plans place substantially different burdens on households at different income levels. The subsidies and high income levies in the ACA lower the burden of health-care costs on low-income households while raising costs for the highest income. Funded through payroll-based premiums and premiums based on non-payroll income, the Cooperative would shift the burden of health onto those Coloradans better able to pay. […] Compared with the Baseline program, the Cooperative would lower costs for 80% of Colorado households, those with a household income of under $100,000.

Friedman avoided comparing the current system under the Affordable Care Act with the proposed cooperative system, instead suggesting that both systems would ease the burden on low-income families compared to the original system.

The only other mention of a cost reduction for 80 percent of Colorado households in the report appeared in the executive summary, which was written not by Friedman, but by Ivan J. Miller, the president of the nonprofit Colorado Foundation for Universal Health Care, which was one of the three organizations that collaborated to conceptualize ColoradoCare.

Senator Aguilar ultimately killed her bill to establish the cooperative, citing an inability to get bipartisan support for the proposal.

Conclusion

Ultimately, ColoradoCareYES is undoubtedly correct that passing Amendment 69 would save some Colorodans money on their health insurance. However, the size of that savings and the number of Coloradans who would see it is much less certain than the amendment’s proponents would have you believe.

Crystal L. Eilerman is a second-year master’s student in the journalism department of the College of Media, Communication and Information at the University of Colorado Boulder. She has served as an editor and communicator for the nonpartisan Wisconsin Legislative Reference Bureau, the basic-research journal Biology of Reproduction, the nonprofit Society for the Study of Reproduction and the CU-Boulder Office of the Registrar. She graduated with a degree in English from Edgewood College.

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Explanatory Multimedia Reporting from CU Boulder Journalism Students
Fact Check: ColoradoCareYES advertisement needs context