Fed Up With High Health Care Costs, A Community Asks for A Better Deal

This story was originally published by Stateline, an initiative of The Pew Charitable Trusts.

FRISCO, Colo. — St. Anthony Summit Medical Center commands an epic view of the snow-covered mountain valley here. It’s perched above town, flanked by pine forest and facing frozen Lake Dillon.

But the attractive setting comes with not-so-attractive prices.

A hospital visit in this ski town costs about 40 percent more than a visit less than 100 miles away in Denver. In 2015, an overnight hospital stay cost 80 percent more, according to a study commissioned by the Summit Foundation, a local community group with a mission to help working families.

High prices for medical services—here in Summit County and across rural Western Colorado—have left many residents struggling financially.

“For a number of years, it’s felt like a crisis to our commissioners and to our community as a whole,” said Sarah Vaine, assistant county manager for health, safety and human services.

Now local leaders are working on a plan to drive down prices that could be a model for the state and other places facing high health care costs.

They’re forming a nonprofit, the Peak Health Alliance, that will try to negotiate lower hospital, clinic and physician prices on behalf of some of the largest employers in the area, including the county and the towns of Silverthorne and Breckenridge.

Peak Health Alliance would then partner with an insurance company to package those discounts into plans that dues-paying members can offer to their employees, or that Summit County residents can buy on the state exchange, created under the Affordable Care Act. The plans could have different features—deductibles could vary, for instance—but if they’re based on lower prices, they should have lower premiums.  

Lee Boyles, CEO of St. Anthony Summit, said he’s willing to work with the county, and praised the efforts of local leaders. “We know we are a significant entity when it comes to health care in the county,” he said. “And we really do empathize, and we really do have concern with the high cost of care.”

Negotiations have barely begun, but Colorado’s interim insurance commissioner, Michael Conway, is excited about the strategy and is already planning to try it elsewhere, perhaps by nudging the state employee health plan to join a statewide alliance that would bargain with health care providers.

“I’m going to be pushing for this to be something much bigger than the Summit County idea,” Conway said.  

Similar efforts have succeeded in a few places in the country, but some have failed. Summit County’s is unique because it aims to bring together an entire community—including large employers, individuals and small employers — to push for lower prices, Conway said.

‘I’m Furious’

On the state’s health insurance exchange, Summit County is part of a pricing region that includes almost all of Colorado’s scattered mountain towns, as well as farms and ranches near the Utah border.

The region generally has the highest premiums in the state, with 14 counties served by just one insurer.

Economists who study health care markets say people who live in rural places tend to pay more for health care than city dwellers do, typically because rural places have fewer hospitals. When one hospital system dominates an area, it has little incentive to attract customers with lower prices.

Summit County residents don’t face the highest prices in the region. They do have a choice of insurers. And they can drive to Denver’s hospitals in less than two hours, if there’s no traffic. But people here are fed up with health care costs that seem unreasonably high.

Boyles, the hospital CEO, said there are multiple reasons why prices at his hospital may be higher than prices in Denver. The higher local cost of living in a resort community means higher pay for hospital staff. And the hospital operates year-round even though it sees far more patients during peak tourist season, he said.

“It’s a very unique market, not just for health care but for everything around here, and that’s going to require a unique solution,” he said.

Any of Summit County’s 30,000-odd residents who want help picking a plan on the exchange can head to a one-story, dark green building near the Silverthorne outlet mall to sit down with Elise Neyerlin, who manages the health access program at the Family & Intercultural Resource Center, or FIRC, a nonprofit.

Neyerlin said all kinds of people come to her cramped office seeking advice: small business owners, early retirees, contractors such as real estate agents, service workers and seasonal workers. About 16 percent of people who live in the heart of ski country buy insurance on the exchange, according to a survey by the Colorado Health Institute, a Denver-based think tank.

For a single 30-year-old woman in Summit County, the cheapest comprehensive plan on the exchange costs about $400 a month with a $6,500 deductible. The cheapest option for a couple in their early 40s with two young kids costs about $1,500 a month with a $13,000 deductible.

The plans cost a few hundred dollars a month more than the same offerings in Denver, and many people qualify for tax credits that significantly reduce those premiums. But Neyerlin said prices are still too high for some of her clients, who already may be struggling to pay their bills in a county where average home prices are nearly twice the state average.

Some tell her, “OK, well, I can’t do that,” and walk out, she said.  

Savvy locals try to go to Denver, where care is cheaper, for tests and procedures. But when emergencies strike, they must visit St. Anthony’s or Vail Health Hospital, in Eagle County, which is even more expensive.

A surgical procedure after a miscarriage and, less than a year later, the birth of her twins by Cesarean section cost 33-year-old Justine Spence $33,000. She hit the out-of-pocket maximum for a health plan bought on the exchange, then the maximum for a plan her husband joined when he took a job with the town of Frisco, she said.

Spence and her husband, a former professional skier, had to put the charges on their credit cards. “Who has that kind of cash lying around?” she said. The financial stress has been enormous. “It completely crippled my family,” Spence said of the debt. “I’m furious.”

High health care costs also hurt local businesses, said Judi LaPoint, executive director of the Summit County Chamber of Commerce. “Most businesses cannot afford to contribute to their employees’ health care,” she said.

“There’s such a high cost of living here that adding one more high-cost thing to the mix makes it untenable for people to live here and stay here,” LaPoint said. “So what that does, from an employer’s standpoint, is make it really hard to attract and retain employees.”

Searching for Solutions

A recent health care town hall at the Community and Senior Center in Frisco drew a standing-room-only crowd on a Friday night.

Democratic Gov. Jared Polis and four state lawmakers—three Democrats and a Republican—sat on a dais, a piano covered by a black cloth tucked away behind them. Three locals shared their stories from the podium, drawing “mmm-hmms” from the audience, as they described expensive plans and family debates over whether to move elsewhere.

“Health care over the years—it’s just been cost-prohibitive. It’s been insane,” said Laura Eickhoff, a nurse who has lived in the area for over 20 years.

Polis, who previously represented Summit County in the U.S. House, has vowed to save Coloradans money on health care. At the town hall, he promoted a reinsurance bill that would reduce premiums on the state exchange by using public funds to help health insurance companies pay the most expensive medical claims. 

State lawmakers from Western Colorado touted a bill that would increase hospital price transparency and a bill that would instruct state agencies to research and present a plan for a public health insurance option.

With Democrats now in control of the legislature, the lawmakers said, the proposals have a better chance than they did in the past. “This year, it’s a different political story down at the Capitol,” said Democratic state Sen. Kerry Donovan.

Some Republicans oppose the reinsurance proposal, which would be paid for partly by limiting hospital charges above a certain dollar limit. As for the public option, that’s a non-starter for many conservatives.

“Generally speaking, getting the government more and more involved in health care has proved to increase costs over the last 10 years, rather than decrease them,” said state Sen. Jim Smallwood, a Republican.

Summit County’s local efforts may be less controversial. State Sen. Bob Rankin, a Republican who represents the county, says that while he has reservations about the public option, he supports his constituents’ plan.

“My feeling is that it’s great. It’s local people trying to do something about their health care costs,” he said. “I believe it can be, and I hope it’s more effective than what we’re trying to do at the state level.”

Conway, the insurance commissioner, argues the Peak Health Alliance could be the best way to use market forces to drive down health care costs in Summit County.

“The reinsurance program is just a temporary solution to the problem,” Conway said at another community meeting at the Frisco senior center, hosted by the Summit Association of Realtors.

“Peak Health Alliance can be the long-term solution,” he said, “and I truly believe it will be the long-term solution.”

Conway said Summit County leaders have the authority to create their nonprofit purchasing collaborative under a state law governing cooperatives, though a bill in the legislature would clarify some of that language. Plans negotiated through the Peak Health Alliance would comply with the Affordable Care Act.

While many cooperatives across the country formed by small employers to push for lower health care prices have failed, larger employer groups and mega-employers acting alone, such as Walt Disney Co., have in some cases been able to get a discount from doctors and hospitals.

The Alliance, a Wisconsin-based nonprofit, has been negotiating health care prices on behalf of self-insured employers since the 1990s. The group now serves more than 240 businesses that employ more than 100,000 people in Wisconsin, Illinois and Iowa.

The Wisconsin group is not affiliated with the Peak Health Alliance in Colorado, although it has offered advice.

“I do think this can work everywhere,” said Cheryl DeMars, the Wisconsin-based Alliance’s president and CEO. It helps if employers and employees are willing to walk away and seek care elsewhere, she said. “That creates a powerful incentive for providers to negotiate more reasonable rates.”

The Summit Foundation study suggests there’s room for a deal. The study compared Summit prices with Denver prices and to prices paid by Medicare, the federal health care plan for the elderly. It found that patients in Summit County were charged more than double, sometimes even eight times the Medicare rates.

“That was far more than we had imagined,” said Mark Spiers, president of the Summit Foundation Board of Trustees. He serves on the executive committee of the Peak Health Alliance, with assistant county manager Vaine, FIRC Executive Director Tamara Drangstveit and Democratic state Rep. Julie McCluskie.

The study also found that a third of health insurance claims filed by Summit County residents in 2015 and 2016 were for medical services in the Denver area. Some of those claims likely stemmed from complicated, life-threatening conditions that local providers couldn’t treat. But others were for services local doctors and hospitals could have provided.

Peak Health Alliance’s leaders hope to spend less money negotiating than an insurance company would and to convince health care providers that Summit County workers and residents would seek more health care in the area if it wasn’t so expensive.  

The nonprofit’s leaders want to start offering health care plans next year. To get there, they’ll need to keep participating employers on board, and find common ground with health care providers, including Boyles and his bosses at Centura, the hospital’s parent company.

So far, four employers have signed letters of intent to participate in the nonprofit, but nothing formal, Vaine said. “We don’t have a product to offer yet,” she said.

The Summit County government, which employs about 500 people, is among the potential members. County Manager Scott Vargo says his team is “excited and intrigued” by the Peak Health Alliance idea. But he’s also waiting to see whether the nonprofit really can deliver a lower-cost health plan.

“There needs to be a substantially similar level of benefits being offered, and there needs to be significant savings in overall premium costs,” he said. “Those are the two factors that the alliance, right now, is trying to pull together.”

Boyles, for one, is optimistic about the potential for a deal.

“The challenge for us is always what rates are going to look like,” Boyles said. “But those are definitely things we’re going to overcome.”