VAIL — Chris Romer has watched families in the Vail Valley writhe under mortgage-sized payments for medical insurance. He’s watched state legislators and regulators fail to stem the soaring costs of health insurance in the Colorado high country, where a family policy easily tops $2,000 a month. And with the pending departure of the Affordable Care Act’s individual mandate, requiring everyone to have medical insurance, Romer has seen more families dropping premiums from their over-stressed budgets.
So this month the head of the Vail Valley Partnership introduced an alternative option for residents and business owners paying some of the the highest medical insurance premiums in the state. The cost-sharing One Valley Healthcare Program pools members in the pricey Vail Valley with a national group to shoulder health care costs. It’s not insurance, but it can cut insurance premiums and expenses by 60 percent.
In the last three weeks, Romer’s plan has inspired similar programs across the Colorado mountains, with three other communities offering identical cost-sharing plans and more coming. By early next year, as many as eight mountain communities could be offering cost-sharing plans.
Here’s how it typically works: Chamber members — businesses and individuals — can enroll in a national program where tens of thousands of members share the cost of medical care, ranging from vaccines to major surgery. Members pay a monthly fee and pay out of pocket for a certain amount of care before all other costs are shared across the membership. The program does not use a network of doctors and hospitals, so members — who commit to a healthy lifestyle — can see any doctor anywhere.
In 2017, more than 1 million participants in U.S. cost-sharing programs — many of them faith-based — split the cost of $1 billion in medical care.
“We sparked something. I think in large part that’s due to the continued frustration from business groups and business owners and citizens with the increasing cost of health insurance in the mountains and the lack of any kind of legislative fix,” said Romer, who within a week of debuting the One Valley plan prodded chambers of commerce in Summit County, Steamboat Springs and Leadville to offer cost-sharing programs that can help pay emergency medical costs and some preventative care.
“There is a reason regulation exists”
The explosion of cost-sharing programs across the mountains troubles Michael Conway, Colorado’s interim insurance commissioner. As the top regulator of the insurance industry, Conway is closely watching the grassroots surge and he’s making sure chamber executives don’t peddle these programs as insurance. He’s been in touch with Romer and Summit County Chamber of Commerce chief Judi LaPoint and asked them to remove any mention that the cost-sharing medical programs are compliant with the Affordable Care Act.
He also told them to remove language suggesting the programs would provide the minimum essential coverage under the national health care legislation.
Conway said the initial trumpeting of the One Valley and Summit Choice health care programs was “misleading.” But he has more issues than with the way the programs are marketed.
“I don’t think, over the long term, this is the answer,” said Conway, who worries that claims will be denied or the organizations that administer the cost-sharing programs could fail. “I don’t think these are sustainable programs and I’m very fearful of what we will be talking about in 15 years with these ministries.”
Consumers need to read closely, Conway warned, especially people with pre-existing conditions or mental health or substance abuse issues. (The programs limit coverage for some pre-existing conditions until the fourth year of membership.) The programs often have exclusions for “irresponsible behavior, including accident or sickness related to drugs or alcohol,” reads the details of the One Valley Healthcare Program.
Conway is working with groups in Summit County to address the soaring price of health insurance in the high country. Though he understands the appeal of deeply discounted programs, he compares their popularity to the emergence of subprime mortgages more than a decade ago, which triggered a record-setting wave of foreclosures.
“This feels the same to me. They looked really great and they looked fantastic to people, but I’m really afraid this could blow up on Coloradans,” Conway said. “There is a reason regulation exists and we need to find that sweet spot … where we are not driving more cost into the system because of regulations. But at the end of the day, regulation exists because the product being regulated can be dangerous and can cause damage to individuals and communities.”
Health care key to attracting scarce employees
Jim Farrell used to offer his employees a health care plan at his 20-year-old Vail Valley Gutter company. “I felt it was the right thing to do as an employer,” he said.
When prices exploded several years ago, he stopped offering health insurance and gave each of his workers a $1 an hour raise instead.
He’s hoping to enlist his business and his family in the One Valley plan. By offering a chance to enroll in more affordable healthcare, Farrell hopes he can better lure and retain employees.
“It’s been a huge challenge for employers to find and keep good employees up here. I think Eagle County unemployment is around 1.2 percent right now. This will help me attract employees,” Farrell said.
The One Valley and Summit County’s Summit Choice programs — partnerships with the national Small Association Leadership Alliance Healthcare Program — have two components. Preventative plans mirror the ACA’s minimum essential coverage, with more than 25 measures like vaccines, mammograms, colonoscopies and wellness visits as well as a prescription program, all covered after paying a certain amount, similar to a deductible. A second component offers care following an accident or illness with costs beyond a certain amount shared across a network of nationwide plan members.
In the pitch to members, Romer outlines a scenario where a family’s infant has a persistent ear infection. They have insurance with a $5,000 deductible and after several doctor visits, prescriptions and a surgical procedure, the family’s out-of-pocket costs are $2,525. Under the cost-sharing plan, the family would pay only their deductible, or in program parlance, the Initial Unshareable Amount — say $500, depending on their plan — and plan members would pay all costs beyond that.
Still, boosters of cost-sharing are quick to warn that the programs are not for everybody.
Coverage can be denied for reckless activity and illegal drug use. Illegality, it should be noted, is based on federal definitions. So break a bone while stoned on Colorado’s legal weed, and medical care might not be covered. Drive drunk and crash and you will not be protected.
Farrell is OK with that. The program can give him peace of mind that he won’t be buried in crushing debt in case of catastrophe. He likes that the shared responsibility means each participant has, what he calls, “some skin in the game.”
“I don’t think it’s fair that my insurance premiums help cover someone who makes bad decisions and has bad behavior, like smoking. My insurance premiums shouldn’t support another person’s poor lifestyle choices,” he said. “So I’m fine with that aspect of this program.”
Buyers willing to accept risk for cost relief
In Romer’s office, they broke down the cost savings among a dozen staffers. The program saved the youngest worker 28 percent and the oldest worker saved 60 percent. More than 100 businesses have already joined, including, he said, families who were paying more than $2,400 a month for health insurance and cut their cost to $980 a month with the One Valley program.
When Congress eliminated the penalty for not-having insurance as part of the tax-reform package passed last year, Romer feared more people in the valley would choose to live without health care. That’s what motivated his team to explore the cost-sharing model.
“This is the option for people who might be thinking they would go without any health care protection,” he said.
Judi LaPoint, the executive director of the Summit County Chamber of Commerce, said for the last several years her surveys of county business owners have yielded a resounding plea for affordable health care. She’s heard from families who dropped insurance when the choice was between health care or rent and food.
“We looked and tried but the answer always came back the same. There was no way to help anyone,” she said.
Cost-sharing offers relief to some residents and business owners in her community. She heard from commissioner Conway when she launched the Summit County program and, like Romer, she removed any reference to ACA from her announcements. She too is making sure that everyone knows this is not a one-size-fits-all solution.
“Will claims be denied? Yes. But claims are denied in regular insurance as well. So, yes it is a little bit risky. But what in life isn’t risky?” she said. “What’s more risky, not having any insurance at all or having something that could potentially protect you and your family?”
Romer knew that regulators would look askance at the cost-sharing program. He expected grief from Conway. Every industry disruptor in the U.S. economy, from Airbnb and VRBO to Uber and Lyft, has ruffled regulators and traditional industries, he said.
“They always push back with these doomsday scenarios,” Romer said. “The hotel industry was the first to say that if you stay a night in an unregulated home, you could die from carbon monoxide poisoning. The taxi industry told us if we get in a car with a stranger, they could take us to a field and we’d never been seen again.”
But cost-sharing health care has been around since the 1980s, often offered through church groups or other large faith-based organizations. The faith-based Alliance of Healthcare Sharing Ministries counted more than 960,000 members in 2017.
“You can operate from fear or from a standpoint of ‘How do we solve this very real problem and address a significant community issue?’” Romer said.
Both Romer and LaPoint hope the momentum sweeping across the high country spurs state legislators to create a statewide solution to the soaring cost of healthcare and insurance.
“Everything so far has died in the legislature and the office of the state insurance commissioner. What if now there are so many people not using the insurance system that it collapses?” Romer said. “They say this isn’t sustainable. I would respond that the current system is equally unsustainable. The entire system has failed our mountain communities in such a big that we had to do this. This is not for everybody, but for the people it helps, it will help them in a very big way.”