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Colorado Healthcare Enterprise

May 30, 2016

We support conversion of the Hospital Provider Fee (HPF) to an enterprise under the Taxpayers' Bill of Rights (TABOR) amendment. Because the HPF is funded by fees paid by hospitals rather than state tax dollars, converting it to an enterprise is not only appropriate but it also gives Colorado the flexibility to spend $725 million more over the next two years on transportation, K-12 education, and higher education. These public services are necessary to ensure a high quality of life in Colorado and support the ability of nonprofits to conduct business and develop and retain qualified nonprofit professionals. 

History

In 2009, the Governor signed HB 09-1293 to create the HPF. Colorado hospitals that serve Medicaid patients pay a fee to the state.  Revenue from this fee is matched by federal Medicaid funding to reimburse hospitals for uncompensated care and to pay for expansion of services under the Child Health Plan and Medicaid. HPF revenue is subject to TABOR’s limits.

In 2015, the General Assembly considered HB 15-1389 to convert the HPF to a TABOR enterprise. Revenues collected by enterprises are not subject to TABOR’s limits. TABOR defines an enterprise as "a government-owned business authorized to issue its own revenue bonds and receiving less than 10 percent of annual revenue in grants from all Colorado state and local governments combined." Existing enterprises in Colorado include unemployment insurance and public higher education.

In 2016, the General Assembly considered HB 16-1420 and HB 16-1450 to create a Colorado Healthcare Affordability and Sustainability Enterprise responsible for the collection of a new HPF and an allocation schedule for general fund revenue in excess of TABOR. The bill would have created a new board to administer the enterprise consisting of the membership of the existing HPF board. If 1420 passed, state revenue under the TABOR limit would have decreased by $725 million in '16-17 and $762 million in '17-18. 1420 reduces anticipated TABOR refunds by $59 million in '16-17 and $246 million in '17-18. If 1420 passed, HB 16-1450 would have allocated an estimated $155.7 million of general fund revenue in excess of the TABOR limit in FY '16-17 in the following order of priority:

  • $50 million to the Highway Users Tax (HUTF) Fund for allocation to the State Highway Fund;
  • $16.2 million split equally between the state and local government severance tax funds;
  • $40 million to the Department of Education to reduce the negative factor in K-12 funding; and
  • $49.5 million to higher education institutions to increase financial aid and offset tuition increases.

For ’17-’20, the bill would have allocated the full amount of TABOR rebates identified in revenue forecasts as follows:

  • State education fund: 30%
  • College Opportunity Fund and Higher Education: 25%
  • Capital Construction Fund: 15%
  • State and Local Severance Tax Trust Fund: 10%
  • HUTF: 0%
  • General Fund: 20%

For ’20-’21, the bill would have allocated the full amount of TABOR rebates identified in revenue forecasts as follows:

  • State education fund: 20%
  • College Opportunity Fund and Higher Education: 20%
  • Capital Construction Fund: 10%
  • State and Local Severance Tax Trust Fund: 10%
  • HUTF: 20%
  • General Fund: 20%

This law would have been repealed on July 1, 2022.

On May 10, the Senate Finance Committee voted to postpone indefinitely HB 16-1420 and 1450 to convert the HPF to an enterprise.

Background

SB 17-057  is similar to 1420 in creating the Colorado Healthcare Affordability and Sustainability Enterprise and a 13 member governing board appointed by the Governor. This enterprise replaces the existing HPF. 

Fees paid by the hospitals will draw down matching fund to the states. These funds must be used to:

  • reduce the amount of uncompensated care provided by hospitals by increasing coverage of the uninsured by publicly funded health insurance;
  • increasing publicly funded insurance reimbursement rates to hospitals; and
  • providing for advisory and consulting services to hospitals to help them more effectively and efficiently participate in publicly funded insurance programs.

 

We support 057 because it allows more flexibility in state spending for underfunded programs. Also, the provider fee was meant to be established as a TABOR enterprise. 

Region: 
Statewide