denver_capitolFor the past three years, the state legislature has wrangled over the Hospital Provider Fee.

Allowed by the Colorado Health Care Affordability Act and overseen by the Department of Health Care Policy and Financing, the fee (enacted in 2009) impacts hospitals participating in Medicaid. It’s based on patient revenue, and the state uses the money to obtain matching funds from the federal government to subsidize provider costs in caring for uninsured patients. The fee has been credited with expanding Medicaid and health care to low-income Coloradans.

Partisan budgeting problems arose, however, when the fee triggered Taxpayer’s Bill of Rights revenue caps — which means the state must refund money to the taxpayers, cut the fee or lose funding elsewhere in the budget. Those problems persisted, at least until this week.

With an 11-2 vote on May 9, the House Finance Committee approved moving the fee out of the General Fund and into an enterprise fund, thus freeing that money from TABOR caps. It was subsequently approved by the House on its third and final reading in the House of Representatives on a 49-16 vote. All 36 House Democrats supported the measure, joined by 13 Republicans.

In theory, Republican and Democratic legislators are in disciplined, hierarchical and ideologically uniform caucuses. Yet every legislator has to consider district needs and votes accordingly. That’s what happened this week, when House Democrats and Senate Republicans swallowed the bitter pill of compromise and dealt with some of the state’s most pressing needs.

The fee

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The state government passes the Hospital Provider Fee to Health First Colorado, the state’s Medicaid provider, where it is matched by federal dollars. Since the legislature removed the fee from the General Fund and reclassified it as an enterprise, the $700 million paid by hospitals no longer counts against the TABOR revenue cap.

Democrats have supported reclassification, while many Republicans long opposed it as an end-run around the constitutional amendment passed in 1992 that requires refunds once certain revenue requirements are reached.

Earlier in the session, legislative budget writers had decided to cut fee payments to hospitals for providing uncompensated care. The cuts would have devastated a dozen rural hospitals, as well as dealt big hits to Front Range providers. Denver Health would have lost more than $50 million, while UCHealth’s Memorial Hospital in Colorado Springs would have taken an $18 million hit. The $264 million loss would have doubled to $528 million when the federal match was factored in.

Those proposed cuts triggered a late-session bipartisan bill, SB 267, that removes the provider fee from the General Fund, restores hospital funding, provides more funding to rural schools and highways and reconstitutes the senior homestead property tax exemption as the first rebate to taxpayers when TABOR rebates are mandated.

The Senate bill does more than fix the provider fee. It also authorizes the state to issue certificates of participation backed by state-owned properties totaling $2 billion. The funds generated will be used for state transportation projects, perhaps including the I-25 bottleneck between Monument and Castle Rock. The bill also includes a $20 million business personal property tax break, a net increase in state marijuana taxes of 2.1 percent, increases Medicaid co-payments and a $200 million reduction of the enlarged state spending cap.

In addition, the bill encourages state agencies to cut spending by 2 percent in future years.

The Colorado Association of Commerce & Industry calls it “the most complex bill the legislature has considered in many years.”

Senate Republican Communications Director Sean Paige said every element of the package had been discussed for some time.

“There had been other bills that contained elements of SB 267, but it took Jerry Sonnenberg to pull something together,” Paige said.

Senate President Pro Tem Sonnenberg,  R-Sterling, and Minority Leader Lucia Guzman, D-Denver, joined Reps. Jon Becker, R-Fort Morgan, and House Majority Leader KC Becker, D-Boulder, in sponsoring the 76-page bill.

All 17 Senate Democrats voted for the bill, but only eight of 18 Republicans supported it. Colorado Springs senators were evenly split, with Republicans Owen Hill and Kent Lambert opposed while Republican Bob Gardner joined Democrat Mike Merrifield in support.

“We all have a goal of improving education for our kids,” Becker told the House Finance Committee Monday, according to, the website operated by House Democrats. “We all have a goal of supporting small business. We all have a goal of making sure our hospitals are thriving and sustainable. We all have a goal of helping seniors. This bill does all that.”

Life in the legislature

“It gets more partisan every year,” said Tony Gagliardi, Colorado & Wyoming state director for the National Federation of Independent Business. “[Gov. John] Hickenlooper hasn’t had to be governor for a while. When the Dems controlled both the Senate and the House, he had to deal with hyper-partisan bills from the base, but now it’s up to the legislature to create bipartisan compromises. It makes his life a lot easier.”

Political rookies soon realize that the House and the Senate are structured to assure majority dominance. The House Speaker and Senate President appoint a majority of the members for every legislative committee. Before being considered by either body, bills are assigned to committee. Bills that the majority leadership disapproves of are sent to a “kill” committee, traditionally the House or Senate State, Veterans and Military Affairs Committee, where they die a partisan death.

“In a divided statehouse, you have to have real compromise,” said Paige. “You can move the ball forward a little bit, or just pick up the ball and go home.”


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