Amendment 69 (Initiative 20), placed on the November 8, 2016 ballot, would create a single-payer universal healthcare program. Once fully implemented, ColoradoCare would be funded by a $25 billion per year tax increase, collected primarily through employer contributions and employee payroll withholding.

Funding

To fund the program, the initiative proposes a premium tax on most sources of income, including:

— wages, salaries, and tips;
— dividends, interest, and rents;
— business proprietors' income, including farm proprietors' income;
— capital gains; and
— pensions, annuities, and Social Security benefits, to the extent taxed by the state under current law.

Initially, the Colorado Department of Revenue would collect transitional operating fund taxes from Colorado residents beginning July 1, 2017 at the following rates: 0.6% of payroll from employers, 0.3% of payroll from employees, and 0.9% from non-payroll income.

The transitional tax would change over to premium tax the month prior to ColoradoCare's assumption of responsibility for health care payments. At that time, the tax rate would increase to 10%, collected as follows: 6.667% of employer payroll; 3.333% of employee payroll; and 10% non-payroll income.

For calendar year 2017, the premium tax on individuals would be limited to incomes of $350,000 for individual income tax filers and $450,000 for joint income tax filers, and indexed for inflation in subsequent years.

Employers could choose to pay part or all of the employee's share of the transitional and premium tax. Premium taxes could be increased once per year if the majority of voting Colorado residents approves the increase.

See the Initiative 20 summary for more on the proposed program. See also the ColoradoCare website.

Ballot title

On the ballot, voters will be asked the following:

"Shall state taxes be increased $25 Billion annually in the first full fiscal year, and by such amounts that are raised thereafter, by an amendment to the Colorado Constitution establishing a health care payment system to fund health care for all individuals whose primary residence is in Colorado, and, in connection therewith, creating a governmental entity called ColoradoCare to administer the health care payment system; providing for the governance of ColoradoCare by an interim appointed board of trustees until an elected board of trustees takes responsibility; exempting ColoradoCare from the Taxpayer's Bill of Rights; assessing an initial tax on the total payroll from employers, payroll income from employees, and nonpayroll income at varying rates; increasing these tax rates when ColoradoCare begins making health care payments for beneficiaries; capping the total amount of income subject to taxation; authorizing the board to increase the taxes in specified circumstances upon approval of the members of ColoradoCare; requiring ColoradoCare to contract with health care providers to pay for specific health care benefits; transferring administration of the Medicaid and Children's Basic Health Programs and all other state and federal health care funds for Colorado to ColoradoCare; transferring responsibility to ColoradoCare for medical care that would otherwise be paid for by workers' compensation insurance; requiring ColoradoCare to apply for a waiver from the Affordable Care Act to establish a Colorado health care payment system; and suspending the operations of the Colorado Health Benefit Exchange and transferring its resources to ColoradoCare?"

Proposal faces challenges

News sources and anit-Amendment 69 groups have indicated that Democratic Colorado Governor Hickenlooper, former Democratic Governor Bill Ritter and Republican State Treasurer Walker Stapleton oppose Amendment 69. The Denver Chamber of Commerce also opposes the measure.

Vermont senator and presidential candidate Bernie Sanders has expressed support of Amendment 69.

Ernst & Young LLP insights

As we reported previously, Vermont attempted to establish a similar single-payer universal health care program funded by payroll taxes, but state leaders eventually concluded the program was too costly. In a January 2015 blog entry, Governor Peter Shumlin said:

"Earlier this week, I made one of the most difficult decisions of my public life when I announced that I cannot support a move to a publicly-financed health care system in Vermont at this time. I have advocated for such a system for much of my public life, but over the past two weeks it has become clear to me that the risks and economic shocks of moving forward at this time are too great."

———————————————

———————————————