One of the biggest fights of the Colorado legislature this year is about to start, with the introduction of a highly anticipated bill to create a statewide health insurance option coming as soon as next week.

The bill is a key piece of Colorado Democratic lawmakers’ agenda to tackle rising hospital costs, an issue that state governments and presidential candidates alike have been trying to address. Colorado Republicans are pursuing counterproposals they say would reduce health care costs with less emphasis on hospitals’ portion.

Colorado has become a national battleground in the health care fight, particularly since Gov. Jared Polis and lawmakers began pursuing a state insurance option. A “dark money” campaign has aired more than $800,000 worth of ads and sent mailers to voters criticizing Democrats’ efforts.

Sponsors are confident they have the votes to pass a bill in the Democrat-controlled General Assembly, but they have made significant changes to the initial recommendations in an attempt to garner more support across the aisle. They’re not proposing a pure public option but rather a statewide health insurance option that would be run by private insurance. Rep. Dylan Roberts, D-Avon, said the sponsors are also willing to consider amendments as the bill moves through the statehouse.

Americans spend more on health care than people in most developed countries and often for less care, according to a Johns Hopkins Bloomberg School of Public Health study.

The nonpartisan group National Academy for State Health Policy is working with at least 17 states, including Colorado, to address health system and hospital costs through legislation.

“It’s individuals … it’s businesses, it’s every part of the state,” said Colorado Democratic House Speaker KC Becker. “Everyone is feeling the crunch from health care costs that are growing significantly faster than insurance.”

A health access survey published by the Colorado Health Institute in December found that more than 18% of Coloradans struggled to pay medical bills, which the nonprofit said was back up to levels before the Affordable Care Act. More than 30% of Coloradans had received a surprise medical bill in 2019, according to the same survey.

“The number one thing we hear from Coloradans is that we need to do something about health care costs,” said Conor Cahill, Gov. Jared Polis’ spokesman. “People simply cannot afford their care.”

Joshua Ewing, associate vice president of legislative affairs at the Colorado Hospital Association, however, said the lawmakers’ proposals aimed at hospitals “lack vision.” Hospitals, he said, account only for a third of health care spending.

“It ignores a huge portion of the conversation,” Ewing said.

Democrats have also introduced legislation over the past couple of years to address pharmaceutical costs and drug transparency, Becker, D-Boulder, noted.

Colorado became the second state to pursue the creation of a public health insurance option after passing House Bill 1004 in 2019, according to the Colorado Health Institute. Only Washington state has tried a similar model, but proponents say Colorado’s would go beyond what Washington has proposed.

It doesn’t go as far as the proposal by Democratic presidential candidate Sen. Bernie Sanders, who proposed a Medicare for All option — a single-payer health system — though opponents say it will inevitably turn into that.

The upcoming bill follows a 2019 vote by the legislature to direct the state Department of Health Care Policy and Financing to develop a plan for a public option. Roberts and Sen. Kerry Donovan, D-Vail, used the recommendations as a starting point for a plan they now call “The Colorado Option.” It would address hospital costs, pharmaceutical reimbursements and insurance premiums. Sponsors expect about 10% of Coloradans will use it.

One of the largest points of contention in the proposal for hospitals has been the Medicare reimbursement rates set by the plan. Opponents of public option in Colorado feared it would restrict some hospital profits — particularly rural hospitals — to a point where they would have to shut down.

But Roberts and Donovan said they come from rural Colorado and their bill won’t hurt rural hospitals.

“The average Colorado hospital can cover all their costs,” Roberts said.

As more people gained coverage through the Affordable Care Act and Medicaid expansion, costs were expected to go down, Becker said.

“Instead what we’ve seen are hospital prices and hospital profit margins actually soar,” Becker said.

Large for-profit hospitals merged, decreasing competition and increasing capital costs for hospitals, she said. She points to data that show hospital costs are among the largest drivers of increasing health care costs.

A new state report released last month found that Colorado hospitals are making billions of dollars in profits — the second highest in the country. And their prices — the fifth highest in the country — are being passed down to consumers, according to the report.

The Colorado Hospital Association countered the report’s findings, saying hospitals are forced to cover gaps from Medicare payments and uninsured patients. But Lt. Gov. Dianne Primavera said at a news conference that the legislature provided a solution to fund those gaps with a hospital provider fee, and instead, hospitals pocketed the money and continued to shift costs to the consumer.

A Colorado health market report released in 2019 found that hospital spending was the fastest growing category of expenses in 2014, accounting for 40.2% of health spending that year.

“Average hospital profitability in Colorado has steadily increased and is higher than any of the other five states (Florida, Michigan, Minnesota, Ohio and Texas) for which I have comparable current data,” Allan Baumgarten, a Minnesota-based analyst and consultant, said in an email.

The Colorado Hospital Association opposed the recommendations for the public option and is working with Sen. Bob Rankin, R-Carbondale, on a bill that addresses the total cost of care, which the group says will save consumers at least as much as a public option. It would set benchmarks for costs across the health care system, following other states’ models.

“From my perspective, any time you’re looking at solutions, you need to look at the shared responsibility of the health care system,” Ewing said.

Editor’s Note: This story has been updated to correct that hospitals have been concerned about Medicare reimbursement rates setting.