Pandemic upends state plans to expand health insurance

“When your house is on fire, you’re not focused on building another wing,” said Democratic health strategist Chris Jennings, who’s advising Biden’s campaign.

The stalled progress on coverage expansion proposals could also deprive Democrats of an opportunity to claim momentum on their health agenda if Biden defeats President Donald Trump and the party retakes the Senate this fall. Even in that scenario, Biden would likely enjoy the narrowest of majorities, making it challenging to push through a public option and other health plans fiercely opposed by Republicans.

Colorado was geared up for a fierce battle over the public option this year, offering a preview of how a similar national effort would play out. Democratic Gov. Jared Polis, who campaigned on the idea two years ago, had made an all-out push for the legislation, condemning hospitals opposing it as greedy. Hospitals and insurers had fought back hard, attacking the bill months even before it was formally introduced.

The state’s public option legislation passed out of committee in March, before the coronavirus shut down the Legislature. Other Democratic-run states like Connecticut and New Jersey that planned to explore the idea this year didn’t make much progress.

The Colorado bill’s prospects next year will depend on Democrats holding their narrow two-seat majority in the state Senate — and whether the public sentiment is strongly in hospitals’ favor after the pandemic.

Under the legislation, the state would offer an insurance plan at an estimated 7 to 20 percent cheaper than private options by paying doctors and hospitals less. The state projected about 18,000 people newly able to afford coverage would sign up for the plan.

“It will not be hard next session to say we need to strive for improvements in access to health care,” said state Sen. Kerry Donovan, the bill’s sponsor.

Public option critics say the idea will be a tougher sell in statehouses after the pandemic upended hospitals’ finances, with many providers taking huge revenue cuts following the cancellation of elective surgeries during stay-at-home orders.

“Public option ideas are going to face new hurdles,” said James Capretta, a fellow at the right-leaning American Enterprise Institute. “Legislators are going to feel a lot of political pressure from hospitals that say now is not the time to move more of our patient base into a regulated payment system.”

Washington Gov. Jay Inslee is tempering expectations for the looming debut of his state’s first-in-the-nation public option. Under the program, approved by the Legislature last year, the state plans to offer slightly cheaper coverage that caps payments to hospitals and doctors below the rates paid by private insurers.

Hospitals in the state, which were never big fans of the idea, are balking at lower rates, citing financial devastation from the pandemic. Inslee recently said the state is launching the public option this fall as planned, but he said it could take years to ramp up the program.

Meanwhile, Medicaid expansion plans have already been scrambled in two red states that until this year had long resisted the program.

In Oklahoma, which has the nation’s second-highest uninsured rate, Republican Gov. Kevin Stitt on Thursday called off his plans to expand Medicaid on July 1. The move came a week after Stitt vetoed a plan for financing the expansion, noting that Medicaid is facing greater strain than expected since the coronavirus emerged. Still, there’s a chance Oklahoma voters green-light expansion next month through a ballot referendum, though the coverage likely wouldn’t take effect this year.

In neighboring Kansas, Democratic Gov. Laura Kelly earlier this year struck a deal with a leading state Senate Republican to expand Medicaid. However, expansion legislation got bogged down amid a fight over abortion policy before the coronavirus halted most legislative work for the year.

Kansas has so far avoided making emergency budget cuts, and Kelly said she expects Medicaid expansion to pass next year.

“If this pandemic has done nothing else it has shown how critical access to health care is,” she said in an interview.

Two-thirds of adults in the roughly dozen states that haven’t extended Medicaid to poor adults under Obamacare said their states should expand, according to a new Kaiser Family Foundation poll that found support for the program has risen during the pandemic. About 1 in 4 adults not enrolled in Medicaid now expect they or a family member will likely need the safety net program in the next year.

The prospects that more Medicaid expansion holdout states join the program could come down to the health of their budgets. States hoping to forestall major cuts to health care and other services are anxiously awaiting Congress to agree on a new aid package that would provide them hundreds of billions of dollars to replace lost revenues. An agreement, however, could be weeks away.

In California, Newsom hasn’t said when he might reconsider expanding state-funded health insurance to undocumented immigrant seniors. The coverage would have cost the state an estimated $87 million in the first year.

Anthony Wright, executive director of the consumer advocacy group Health Access California, which supports the coverage expansion, said the economy will dictate whether it ultimately moves forward.

“If the economy rebounds in the ‘V’ shape rather than the ‘L’ shape, that could create opportunities,” he said.

Rachel Roubein contributed to this report.