By Katherine Blair Mulready, Vice President of Legislative Policy & Chief Strategy Officer, at the Colorado Hospital Association
“Over the next few years, as we do more refunds, it’s going to come out of education. It’s going to come out of transportation.” That’s how Gov. John Hickenlooper summed up the fiscal challenges facing the state following an eleventh-hour attempt to turn the Hospital Provider Fee into a government-owned business enterprise was killed after a series of party-line votes in the 2015 Colorado legislative session that ended in May.
At issue is how dollars used in the state’s Hospital Provider Fee (HPF) program are allocated in the state budget. Created in 2009, the HPF uses money collected from hospitals to leverage additional federal matching funds to support access to health care in Colorado.
The HPF allows Medicaid to provide health insurance coverage to over 305,000 parents and children, pregnant women, adults with disabilities, and some childless adults. In addition, the HPF reduces health care costs for all Coloradans by raising Medicaid reimbursement rates to 80 percent of what it costs to provide care, allowing hospitals to pass savings on to businesses, insurers, and consumers.
Fees collected by the state through the HPF program are counted toward the state’s revenue limit established in the Colorado Constitution by the Taxpayers Bill of Rights (TABOR), even though state legislators are restricted from diverting these funds to other priorities in the state budget.
TABOR requires states to issue refunds to voters for revenues that exceed the limit, which is created by a complex formula. Moving HPF funds out from underneath TABOR, or “de-Brucing,” would give state legislators more flexibility to spend other state revenues – perhaps on needed priorities like K-12 and higher education, health care, and transportation.
Although TABOR refunds will be of modest amounts to the individual taxpayer, issuing them will require funding cuts of over $200 million in the next state fiscal year (2016-2017), with increasingly large cuts in the years that follow. Health care advocates and hospitals worry that these cuts could force lawmakers to look at reducing the amount collected by the HPF program, which would mean cutting access to health insurance coverage and increasing health care costs for consumers.
Gov. Hickenlooper, health care advocates and business leaders continue to make their concerns heard in hopes that action can be taken avoid negative impacts on Colorado residents.