Financial Analysis of ColoradoCare

August 12, 2016

(Colorado Health Institute; Published August 2016)

ColoradoCare, the proposed universal health care system on November’s ballot, would struggle to bring in enough revenue to cover its costs, according to an independent financial analysis released by the Colorado Health Institute.

The Colorado Health Institute is a nonpartisan source of independent and objective health information, data and analysis. The new study finds that:

  • ColoradoCare would nearly break even in its first year, but would slide into ever-increasing deficits in future years without additional tax increases.
  • On the plus side for ColoradoCare, it would be able to reach its goal of saving money in the health care system by cutting billions of dollars in administrative costs and insurance company profits. That money could be reallocated to provide health insurance to the 6.7 percent of Coloradans who remain uninsured, making Colorado the first state to achieve universal coverage.
  • However, the revenues for ColoradoCare — primarily from a new 10 percent income tax — wouldn’t be able to keep up with increasing health care costs, resulting in red ink each year of its first decade.

The analysis finds that ColoradoCare would face the same financial dilemma as the current health care system — the inability to tame rising health care costs. That would create a structural problem.

Although savings on administrative costs would grow over time, those savings would be overwhelmed by the increasing cost of health care, which is projected to grow faster than tax revenue. This is crucial because taxes would account for roughly two-thirds of ColoradoCare’s projected funding.

This is the second in a series of independent analyses by the Colorado Health Institute of Amendment 69, the proposed constitutional amendment that would create ColoradoCare. The first installment, published in April, focused on how ColoradoCare would work and posed key questions about its structure, financing and governance.

Michele Lueck, president and CEO of the Colorado Health Institute, said that these analyses of ColoradoCare fulfill an important part of the organization’s mission of bringing evidence-based information and rigorous analysis to key health care policy discussions.

“By mission and by charge, we do not take positions on legislative choices, policy options or proposed constitutional amendments,” she said. “Our job is to shed light on the issues, bring in disciplined analysis, often where there isn’t any, and allow educated voters and policymakers to make informed choices on matters of health and health care.”

An infographic detailing how the Colorado Health Institute conducted the analysis is available here.

Have questions about ColoradoCare? Give us a call at (719) 579-9090. We are here for you.

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