California, Colorado Set To Vote On Drug Price Caps, Single-Payer Health Care

On Election Day both California and Colorado will vote on ballot questions that could drastically alter the way health care functions in both states. California’s proposal Proposition 61, aims to restrict drug pricing by capping how much state agencies pay for drugs based on the rates negotiated by the US Department of Veterans Affairs (VA); while Colorado’s Amendment 69 would establish a single-payer state insurance system, known as ColoradoCare.

In California, the Los Angeles-based AIDS Healthcare Foundation campaigned to get Proposition 61 onto the ballot for this election year. The proposal, if passed, would set the cost of drugs for state agencies at the same discounted price currently negotiated by the VA. According to recent reports, the VA’s discount is believed to range from 24% to 40% off of list prices. It is estimated that California spent nearly $3.8 billion on prescription drugs during the 2014 to 2015 budget year.

Despite about $100 million spent campaigning against Proposition 61 by the pharmaceutical industry, the measure is expected to pass.

Physicians who have spoken out against the proposal say they fear drug makers will raise prices on non-government purchasers to compensate for the profit loss. They stated that higher costs among commercial plans may lead payers to stop covering them and force physicians to spend extra time seeking prior approval for medications.

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In Colorado, Amendment 69 would create a universal health system in the state called ColoradoCare, in an effort to control the rising cost of premiums.

ColoradoCare would cover medical service, prescription drugs, hospitalization, and other services; however, $25 billion is required to launch and support the program. In order to pay for the program, Colorado would introduce a 10% payroll tax and increase investment income taxes.

In order to determine the benefits that would be offered, Colorado would create a 21-member panel to determine if a drug cost is too high, as well as set reimbursement rates for doctors, hospitals, and patient co-pays.

According to an independent analysis by the Colorado Health Institute, if voters approve the amendment on Election Day, ColoradoCare will still have a long way to go.

 “Colorado voters will not have the last word on ColoradoCare,” the authors wrote. “If voters approve Amendment 69 at the November 8 election, it will set in motion a series of events and decisions that could take years to play out. Many people and institutions would have power over some aspects of building the ColoradoCare system.”

—Julie Gould

Reference:

The Colorado Health Institute. Colorado Care:  An Independent Analysis. https://www.coloradohealthinstitute.org/uploads/postfiles/Colorado_Care_An_Independent_Analysis.pdf. October 2016.