The state conducted direct negotiations with hospitals and other providers, and is trying to nudge employees to use the ones that are cheaper and deliver better outcomes.
Colorado’s health insurance plan is taking steps toward changing how it pays for state employees’ health care, in a test of whether market-based solutions can deliver results.
In theory, insurers should negotiate prices down for their clients. In practice, they don’t necessarily have the incentive to do that, since, as costs rise, so does the amount they can claim as overhead and profit. Hospitals and providers don’t have much incentive to keep prices down either, because patients’ ability to shop around is limited.
Hilary Glasgow, executive director of state employee union Colorado WINS, said that, in general, they support efforts to bring down the cost of health care.
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