When state legislators went home last Wednesday, one of the tasks they had left undone was the restructuring of a hospital provider fee that would have freed up money to bolster the state budget.
Colorado Gov. Bill Hickenlooper had proposed changing the fee to a state enterprise fund — essentially, a government owned business with revenues exempt from Taxpayer Bill of Rights limits. That would have lowered state revenue below TABOR spending cap and eliminated TABOR refunds.
The money would have been used for hospital support, transportation, K-12 schools, higher education, severance tax distributions and transportation projects — all of which the state is struggling to afford.
State Rep. J. Paul Brown, R-Ignacio, was one of five Republicans who supported the bill, saying it made no sense to use a federal subsidy to create a TABOR refund.
The money comes from the state’s 99 hospitals, which pay fees to the state based on patient revenue. Those fees are then matched by the federal government. The money — estimated to be nearly $750 million this year — covers Medicaid coverage for approximately 400,000 Colorado residents and helps reduce uncompensated care. The lion’s share of the fees are paid by large hospitals, and rural hospitals, which provide both health care and stable employment in their communities, benefit.
The enterprise fund plan fell afoul of politics for two reasons: Republicans want to curb “entitlement spending,” including Medicaid, and their constituents tend to support TABOR limits. Republicans controlled the Senate 18-17, with Democrats as a 34-31 majority in the House, which has created considerable gridlock this year.
That’s too bad, because this is a change that should have passed.
The problem with spending curbs on health care is that they tend to curtail reimbursements, not actual costs. With this funding reduced, some smaller hospitals will have to cut services and potentially will lose physicians or even close. Some patients will go without care; many simply will seek it elsewhere, incurring additional costs outside their own communities. Their TABOR refunds will not even pay for an office visit certainly will not replace the money that now will not flow to rural health care.
In other words, a reduction in health care reimbursements does not correspond directly to a reduction in health care costs; it just leaves a larger unfunded gap. This is not an effective way to reduce the state’s health care expenses; instead, it will cause cuts in other budget areas.
The amount at stake is not small. The hospital provider fee will amount to approximately $750 million this year — real money that can make a huge difference in a fast-growing state — and federal matching funds bolster that considerably. It should have been budgeted sensibly for the benefit of all.
Colorado is in an enviable position compared to states like Kansas, where severe tax cuts and corresponding spending cuts have taken effect. Hampering the state’s economy so that taxpayers can get small TABOR refunds does not benefit anyone in the long run.
This is a time when ideology should have been set aside in favor of a common-sense measure to do what many voters say they want: run government like a business.