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IN THE STATES: How Health Reform Can Stimulate Colorado Economy, Create Jobs

November 13, 2009 - 9:05am

Talking about health care reform all over the country, I have the opportunity to see many states' health systems up close.  In particular, we spend a lot of time in Colorado -- as evidenced by our study on Grand Junction. In the context of current reform discussions, I began focusing on the state in earnest in 2006 when the Colorado Blue Ribbon Commission for Health Care Reform began trying to identify a sustainable future for the state's health care system. It was a privilege to be consulted by the Commission -- a true bipartisan and multi-stakeholder effort -- about choices they could make to cover more Coloradans, improve the quality of care while reducing health care cost growth, and make the health system economically viable in the long run. At the end of a long and impressive (but surely exhausting) process, the Commission's recommendations look prescient, in that they are structurally and conceptually consistent with the federal health reform proposals under consideration today.

At the time, the Lewin Group evaluated the Commission's recommendations to quantify the number of people who would be covered, how much it would cost, and the potential savings to households.

This week we released a study that picks up where the Lewin Group analysis stopped. We wanted to evaluate whether, using Colorado-specific data about income, jobs and premium growth, health reform could actually help the Colorado economy. To an audience of  local business leaders invited by the Denver Metro Chamber of Commerce, I explained that failing to fix the health system will only lead to higher costs and a more unsustainable system, and make the coverage crisis worse. Reform done right, i.e., along the lines of the Commission's recommendations, in contrast, will on balance create jobs and stimulate spending that will benefit the Colorado economy as a whole.

It is no secret that health care costs place increasing strain on households, employers and governments. So the first thing we did in our report was demonstrate, with original and secondary state-specific data, that the economic consequences of maintaining Colorado's current health system are not good. Without reform in Colorado:

  • Health care and premium costs will grow at more than twice the rate of economy-wide productivity.
  • More Coloradoans will be uninsured, fewer will be covered by employer-sponsored insurance, and more will rely on Medicaid coverage.
  • Employer health care contributions will continue to rise. 

Still, at a time when Colorado faces a two-year budget deficit of more than $2 billion, our task was to answer one fundamental question: will the economic benefits of coverage expansion and improvements to the delivery system outweigh the cost of financing health reform? We found that while significant state investment is required to finance reform, the resulting economic benefits will exceed the costs.

Specifically, our study found that expanding health insurance coverage in Colorado will (in 2019):

  • Lead to $3.8 billion in new economic output, with nearly 60 percent of new economic activity occurring outside of the health care sector.
  • Create 23,319 jobs, with 40 percent of job growth occurring outside of the health sector.

We also found that in addition to the benefits of coverage expansion, delivery system reforms alone could (in 2019):

  • Yield between $11 and $38 billion in additional savings.
  • Lower premiums by 5.5 to 17 percent

Finally, delivery system reform could have significant benefits for employers.  In particular, health care reform will (in 2019):

  • Reduce uncompensated care costs and increase Medicaid payment rates, thereby reducing costs that are shifted to the privately insured
  • Establish a more efficient, high-quality delivery system
  • Lower premiums compared to what they would otherwise be by between 9.7 and 24.8 percent

The good news is that Colorado has already made progress toward health care reform.  In particular, Colorado is leading the way to a more sustainable health system through innovative multi-stakeholder partnerships, integrated systems of care like Denver Health, and innovative communities like Grand Junction.  Health reform is certainly a shared responsibility -- households, governments, and employers have a role to play.  Colorado is poised to lead the way, if its leaders are willing to invest in the most effective ways.

AttachmentSize
Future_of_colorado_health_care.pdf1.93 MB
Colorado_PowerPoint_Presentation.pdf1.5 MB