Thanks to activist legislators and citizens, this November Coloradans will be faced with a bewildering array of ballot measures, from cigarette taxes to assisted suicide. Some of the worst proposals failed to make the ballot, but there are still some pretty bad ones to vote on.

Of all the measures, Amendment 69 which would establish a statewide single-payer health care system to be known as “Colorado Care” is the worst, which is why it will lead this series of commentaries on the nine initiatives to be decided.

 

It’s A Terrible Idea

Last year, when Amendment 69 was validated for the ballot, I heard anecdotal stories about how the proponents gathered signatures by asking people if they wanted to opt-out of Obamacare. Because Obamacare is loathed by all except progressive partisans, that seemed like an attractive alternative. Sadly, this was a misdirection because while Amendment 69 would be made possible through an Affordable Care Act waiver, it is opting out of a bad system in favor of a worse system.

If passed, Amendment 69 would be implemented in two phases:

• Within 60 days of becoming effective, an interim 15 member board would be appointed by the Senate President and Minority Leader, the House Speaker and Minority Leader, and the Governor.
• The so-called “transitional phase” would last for up to three years, during which the Interim Board would be required to schedule an election for a permanent board, which would consist of 21 members.
• Once the elected board is in place, Colorado Care would be up and running.

Colorado Care would divide Colorado into seven districts, each having the same approximate number of residents. Any board member could be removed for “cause” by a majority of other board members, meaning that the board will be highly political and groupthink will be incentivized. Dissent will be squelched by removing dissenters from the board.

The Board is supposed to be “non-partisan”, but this is ludicrous. Since only people who believe in government-run healthcare – Democrats – would run, this Board would be composed of big government progressives. Further, the board members would be exempt from recall elections and would only stand for election every four years. Fortunately, they would be term limited to eight years.

The Board would have virtually unlimited power over all healthcare decisions in Colorado including services covered, pricing, availability, purchasing, facilities and others. They would have the power to hire an executive team at high salaries (see the health co-op CEO and other executive salaries).

The Board would have the power to allow ColoradoCare to maintain a central database of YOUR medical records (and given the track record of government entities securing data from hackers, that could be a nightmare), administer all state funds for health care services, authorize “reasonable” compensation and expense reimbursements for themselves, and others.

 

How Would ColoradoCare Be Funded?

ColoradoCare would be funded through a “transitional” tax structure with a permanent tax structure commencing 30 days prior to ColoradoCare assuming responsibility for healthcare payments. This tax structure is merely a starting point, and the rates are subject to increase at the whim of the Board because ColoradoCare would be exempt from TABOR.

The “Transitional” structure looks like this:

Note the 50% tax rate (25% annualized) on ALL forms of non-payroll income in the first year. This really is punitive to small business owners, retirees and anyone who has passive income.

The “Permanent” structure starts like this:

With the increase of 6.67% on the payroll expense of every employer, the cost of hiring employees goes up tremendously, as does the incentive to modernize, move, cut hours, and other ways of holding down costs. Note also that if Amendment 70 to raise the minimum wage passes, it would be a double negative impact on small businesses across the state.

With the increase of 3.33% on payroll (earned) income, Colorado’s income tax rate would go from 4.63% to 7.96%, a 72% tax increase.  For non-payroll income, the tax rate would go from 4.63% to 14.63%, a 216% tax increase and giving Colorado the highest state income tax rate in the nation for this type of income.

While the proponents say that there are exclusions for non-payroll income, there is no language in the Amendment itself to support that statement. Further, they try to make it seem as if the 10% isn’t really 10%, but income taxes are complex, and their explanations don’t hold water for filers who don’t itemize their deductions.

All forms of income on Form 1040 except lines 11 and 19 would be subject to the ColoradoCare tax.

Devastating Impact on Businesses in Colorado

All businesses will see their cost of hiring human beings to work for them increase by almost 7% right out of the gate. While the proponents say that this will “satisfy their obligation” to provide health insurance for their employees, this too is misleading. There currently is no “obligation” under the law to provide health insurance. It is provided as a benefit and as part of an overall compensation package for employee services. Changing this voluntary benefit to a mandate will have overall adverse impacts on the employer/employee relationship. While large employers may benefit, small employers – who make up 97% of all businesses in Colorado – will suffer.

Further, small business owners – those entrepreneurs who take risks and put their livelihoods at risk to provide products and services to the public – will be punished severely. First, their cost of hiring an employee will go up by 7%. Then, their personal income from their business will be taxed at an additional 10% (50% during the transitional period).

This will make it harder to start a business, to stay in business, to recruit, hire, train and motivate qualified employees. Leftists of all stripes view profits and those who earn them as evil, and Amendment 69 will certainly be punitive toward these individuals.

Coupled with a minimum wage increase, Amendment 69 could have a severe adverse impact on businesses in Colorado, with people closing up shop, moving, downsizing, having to offer lower quality customer service, and many others. On the bright side, as businesses and people move away it would solve traffic congestion and housing affordability!

 

There Is No Escaping ColoradoCare

ColoradoCare will be mandatory. There is no provision to opt-out or evade it. There are no waivers, exceptions or escapes. Because it would be enshrined in our state Constitution, it would be very difficult to repeal, amend or nullify.

Another misdirection of the proponents (of the many lies and misdirections) is that ColoradoCare would not be a state agency. That is a lie. ColoradoCare would be an agency of the State and would be empowered through the implicit use of government force to levy and collect the taxes they need to fund it.

ColoradoCare represents almost a 100% increase in Colorado’s state budget in the first year alone. Including the approximately $9 billion already in the state budget for healthcare provision, this represents an astronomical $33 billion and there are estimates it could cost up to $38 billion. Tax increases to cover shortfalls are virtually guaranteed, and the rosy projections of $4.5 billion in savings are highly unlikely to be realized.

Indeed, the nonpartisan Colorado Health Institute published a study in August 2016 forecasting a $253 million shortfall in the first year alone, and in subsequent years these deficits would only increase.

 

Arguments Against ColoradoCare

Leading the arguments against ColoradoCare is the mythical $4.5 billion savings that is promised. The $4.5 billion is a completely fabricated number, derived from a PROJECTION (estimate) of costs under our current system three years from now, over ESTIMATED costs of ColoradoCare in the same year. As someone with many years of financial reporting and budgeting experience, I can say that projections and estimates aren’t worth the pixels they’re displayed upon. Even simple budgets and forecasts change radically over a short period of time. Projecting costs and savings in a multi-billion-dollar system over multiple years is impossible to do with any accuracy.

Despite the claims of the proponents, people would still be required to pay out-of-pocket for dental and vision care.

There is no assurance that Colorado residents would be able to obtain healthcare services out-of-state.

Proponents say that ColoradoCare would reduce administrative expenses by $6.2 billion. There is no credible evidence that this is true. They ignore the bureaucracy that ColoradoCare would create, with costs of its own completely unrestrained by any profit motive, statutory constraints or laws of economics.

ColoradoCareYes talks about using “bulk purchasing power” to bully providers and companies into accepting the Board’s desired price points, regardless of what goods and services actually cost. When the price point is set below cost, companies will lose money, leading to scarcity and rationing.

Another of their imaginary cost savings is eliminating $600 million of alleged fraud involved in the healthcare system. There are two problems with this. First, there is no credible evidence that there is that amount of fraud involved in the healthcare system. Second, government programs are MORE prone to fraud and abuse than private sector programs. One need only look at how “improper” payments are soaring for Medicaid, up almost 10% in 2015 alone.

Additional fanciful promises put forth by the proponents include unspecified gains of $1.1 billion, a program surplus of $1.5 billion, and a net gain of 32,000 jobs in Colorado by the year 2019, paying an average of $140,625 annually. In months of research and study of this ballot initiative, I have found no credible sources to support any of these assertions. In fact, years of experience and knowledge of economics and human nature render these promises extremely hard to believe and impossible to achieve.

 

ColoradoCare Violates the Principles of Liberty

All legislation and constitutional amendments should be evaluated in light of the principles of liberty, which include:

• Individual Liberty
• Personal Responsibility
• Property Rights
• Free Markets
• Limited Government
• State vs. Federal Balance of Power
• Fiscal Responsibility
• Equal Protection/Rule of Law

Amendment 69 violates most of these principles. Individual Liberty and Property Rights are violated by depriving individuals of their property through increased taxation and impaired freedom of healthcare choices, including the choices of providers regarding what they can charge for services.

ColoradoCare violates Personal Responsibility by eliminating co-pays and deductibles, removing self-governing mechanisms normally provided by price and having to pay for goods and services.

It violates Free Markets by its very nature. There would be nothing “free” about ColoradoCare.

Amendment 69 represents a massive increase in government, violating the principle of Limited Government.

It violates the principle of Fiscal Responsibility “because government cannot provide anything it has not first taken from the people. Private markets are subject to competitive pressures on price, services, products, quality and profitability; the government is not.

 

Real World Failures

Often, it seems that concepts such as “socialism” and “nationalized healthcare” are somewhat abstract without real world implications, especially among the young. Let’s take a look at some real world results of implementing or trying to implement these concepts.

In 2010 Vermont elected a governor who ran on a single payer platform. “VermontCare” would have imposed an 11.5% tax on payrolls instead of 6.67% and the individual income tax rate would have been up to 9.5% on top of the existing 8.95%. The architects (including the infamous Jonathan Gruber) promised cost savings of $0.9 to $1.4 billion by 2019, something the Governor’s fiscal staff found “not practical to achieve”. Before it could even be implemented, in December 2014 Vermont Governor Peter Schumlin (Democrat) pulled the plug.

Canada and the UK both have single payer healthcare. In Canada’s healthcare system long wait times for medically necessary treatment is the norm – on average four and a half months and in England the wait after general practitioner referral can be up to four months.

One thing is apparent from the failures and problems of single payer healthcare in other places is there’s never enough money! The UK’s National Health Service is projected to face budget shortfalls of 30 billion pounds ($47 billion) annually by 2020. The government responds by…rationing care! The number of family practice doctors who appeal to the NHS to STOP ACCEPTING new patients doubled in 2013 and nearly 16,000 operations were cancelled for non-medical reasons.

In the UK, as care becomes scarce, British people take matters in their own hands by paying out-of-pocket for treatment –which allows them to jump ahead on the waiting list. Of course this just means that the rich can still get treatment while everyone else suffers, and disproportionately hurts lower-income families.

Some other adverse impacts of single payer healthcare, as described by the Heritage Foundation:

• Result in substantially lower payments to physicians and other health care providers compared to a multiple-payer system;
• Reduce the quality of care by limiting the ability of physicians to invest in advanced medical equipment that takes advantage of new technology;
• Limit access to care in the near term, as current physicians retire earlier or otherwise leave the profession
• Limit access to care even more substantially in the long-term, as the prospect of lower lifetime earnings reduces the incentive for talented people to choose careers in health care; and
• Reduce the rate of medical progress, because fewer talented people receiving medical training decreases the supply of talented medical researchers

Additional impacts in Colorado will include all of the above; AND doctors will close their practices and move out-of-state, reducing access to care. Specialists and high-earning physicians will have their earnings impaired, reducing incentives to practice and impairing access to care. Finally, healthcare providers will essentially become employees of the state, which will impair their earnings and drive out the best and brightest.

Once healthcare providers become employees of the state, there will be a drive to unionize, and then we’d have another public-sector union that would kill competition, merit based compensation, demand lavish retirement benefits, and…be a huge new source of campaign contributions for Democrats!

 

Opposition From Right…and From Left

Since before Initiative 20 was certified for the ballot, several individuals and groups have been in opposition. Leading the vanguard was Jonathan Lockwood, Executive Director of Advancing Colorado. I joined the fray by forming Stop Colorado Care and speaking against it at every opportunity. More well-known (and better funded) opponents formed the bipartisan group Coloradans for Coloradans, which is led by former Democratic governor Bill Ritter and Republican Treasurer Walker Stapleton.

Americans for Prosperity has been vocal against Amendment 69 and has been knocking on doors across Colorado educating our fellow citizens for months now. The Independence Institute has sponsored debates between the proponents and opponents across the state. Another group called Healthcare Options That Work was formed by Dr. Jill Vecchio, a prominent physician and healthcare activist.

In recent months, several prominent Democrats have come out against ColoradoCare including Governor Hickenlooper, Senator Michael Bennet, and State House Majority Leader Crisanta Duran.

Interestingly, the Democrats in the state’s General Assembly have largely remained silent about Amendment 69, perhaps because they know it’s a terrible idea, or perhaps because State Senator Irene Aguilar D-Denver imposed a gag order on her fellow Democrats.

The key opposition to Amendment 69 that has surfaced recent weeks has come from the progressive group ProgressNow Colorado, NARAL Pro-Choice Colorado, and the left-leaning think tank the Bell Policy Center.

Due to a constitutional prohibition of government funds paying for abortions, NARAL and Planned Parenthood stated their opposition to Amendment 69 in the fear that it would make abortions difficult or impossible for Colorado women to obtain. ProgressNow Colorado teamed up with them, apparently due to this concern over abortion rights.

The Bell Policy Center takes a more nuanced (and responsible) approach, saying “This measure exposes the state to potential unintended detrimental consequences because it cements a broad, taxpayer-funded program within the state constitution while leaving crucial implementation complexities to be decided in the future.”

 

Just Vote “NO”

There are many things to lament about our healthcare system in the United States, and this has been the case for years. From perverse incentives brought about by government interference in healthcare markets to the unrealistic expectations of society, the system is largely broken. It is a testament to American resilience that despite all the flaws and challenges, our healthcare system is still the envy of the world.

I believe the Affordable Care Act was designed to fail (which it is), and was intended to be a way of moving our society toward acceptance of a single payer model. Indeed, the Democratic Party adopted a plank in their platform calling for such as system in America, and it clearly has been a progressive goal “for generations”.

The problem is: it won’t work in Colorado, nor will it work in America.

Let’s not take the risk of ruining our economy, driving out businesses and causing irreparable harm to our state and its residents.

Vote NO on Amendment 69.

By Richard D. Turnquist

September 16, 2016