Bell testifies against repeal of Health Care Affordability Act

Bob Semro, a policy analyst at the Bell, was scheduled to present an Opportunity Note on the hospital provider fee and the Health Care Affordability Act of 2009 (House Bill 1025) to the House Health and Environment Committee on Tuesday. The Bell opposes the bill, which would overturn the act.

Here are excerpts of the Opportunity Note. For pdf version, click here.

This bill represents a significant opportunity loss for Colorado. The repeal of the Colorado Health Care Affordability Act of 2009 would roll back the effort to expand Medicaid eligibility to as many as 100,000 Coloradans, create greater financial hardships for hospitals that treat large numbers of low-income patients, increase the cost-shifting of uncompensated care costs to the insured, reduce federal funding currently being received by Colorado and leave the state ill-prepared to accommodate the future Medicaid expansions required by the federal Affordable Care Act. ...

... The Colorado Health Care Affordability Act of 2009 had bipartisan support, having passed the House by a vote of 40 to 23 and the Senate by 22 to 11. The law authorized the state Department of Health Care Policy and Financing to collect hospital provider fees (not to exceed 5.5 percent of net patient revenues) in order to obtain additional federal financing for Colorado's medical assistance programs.

... In 2010, hospitals provided more than $1.8 billion in uncompensated or under-compensated care. Prior to the Health Care Affordability Act, hospitals were paid approximately 56 cents per dollar of care provided through Medicaid. After the implementation those payments were increased to almost 70 cents. In addition, the act increased the number of formerly uninsured people covered by public health programs, which reduced the amount of uncompensated care provided by hospitals.

In 2010, nearly one-third of hospitals that had losses in 2009 were able to generate operating income. That income can be used to expand staff, enhance electronic record-keeping and make other improvements. According to the Colorado Hospital Association, operating losses for thirteen hospitals in 2010 would have been nearly 40 percent greater if not for the revenue from the hospital provider fee.

As of December 2010, an additional 31,625 individuals have been enrolled in Medicaid (27,596 adults in Medicaid, 3,759 CHP+ children and 270 CHP+ prenatal).7 When fully implemented in 2012, Medicaid expansions created by the act are projected to reduce Colorado's uninsured population by 100,000 individuals. The provider fee covers 100 percent of the costs of these Medicaid expansions created in the law.

... The passage of HB 1025 would reduce Colorado's cash fund revenue by $1.59 billion over the next three fiscal years. It would increase Colorado's General Fund expenditures by $176.9 million in the same time frame. The bill would reduce state expenditures by a significant amount. However, those expenditures do not currently impact the state's cash or General Fund.

The elimination of the hospital provider fee would end the current federal funding that has been and would be used to expand eligibility for Medicaid to as many as 100,000 Coloradans. It would leave those individuals with few practical alternatives in terms of insurance coverage.

... In summary, this legislation would create greater health risks for uninsured Coloradans, place greater financial stress on hospitals that treat patients who are uninsured or covered by public programs and negatively affect General Fund and cash revenues.