HealthCare Affordability Act



COLORADO HEALTHCARE AFFORDABILITY ACT OF 2009 | HOUSE BILL 09-1293

On February 26, 2009, Gov. Bill Ritter announced new legislation that enables more than 100,000 uninsured Coloradans to obtain health insurance while protecting individual policyholders, employers, and Colorado taxpayers to ensure their expenses do not increase. On April 21, 2009, House Bill 1293 was signed into legislation in order to offer people more coverage by balancing state and federal funds.

The law authorizes the Department of Health Care Policy and Financing (HCPF) to gather fees from hospital providers to help fund the effort, as well as fund matching from the federal government. Through this law, hospital provider fees will not exceed 5.5 percent of net patient revenues, and be matched by federal funds. From October 2010 to September 2011, an estimated $473 million was to be collected in hospital fees, which were to be matched by the federal government at about $473 million.

By moving costs from taxpayers to hospitals in providing insurance to low-income Coloradans, taxpayers don’t have to feel the burden of the needy. In announcing the legislation, Gov. Ritter said, “roughly 800,000 Coloradans, including 180,000 children, currently lack health insurance… Over the past two years, we’ve launched a Building Blocks to Healthcare Reform strategy. The Colorado Healthcare Affordability Act gives us an opportunity to continue that progress, and to make major strides at a time when more and more families are struggling just to keep food on the table.”

 

How the Law is Helping Coloradans

Since 2010, the Colorado Healthcare Affordability Act has made Medicaid available to parents with up to 100 percent of FPL, and increased CHP+ eligibility for pregnant women and children with less than 250 percent of FPL in income. Additionally, the law received approval from the Centers for Medicare and Medicaid Services (CMS) to collect funds from providers in order to fund Medicaid and the Colorado Indigent Care Program.

In the first year of implementation, approximately $590 million was paid to Colorado hospitals, resulting in a net gain of nearly $86.5 million. In 2011, the Medicaid Buy-In program was implemented for Coloradans with disabilities who earn less than or equal to 450 percent of FPL. Medicaid in Colorado was expanded prior to health reform in 2012 by offering coverage to childless adults earning up to 100 percent of poverty, and 12-month continuous eligibility for children’s Medicaid was also added.

Prior to Colorado, over 40 states have put in place a plan such as this for medical assistance programs, more than 20 of which utilize the same hospital provider fees concept. In 2008, Colorado passed comparable legislation with nursing home providers through House Bill 08-1114. Many have benefited from the law since it was put in place

 

Support Throughout the State

The state’s hospital system is compliant with the law, and has been glad to take on a new structure. Colorado Hospital Association (CHA) President and CEO Steven Summer said in response to the legislation, “Annually, Colorado hospitals incur more than $375 million in uncompensated costs by serving Medicaid patients because they receive less than 55 percent of total costs for treating Coloradans in need. We are committed to expanding access to affordable healthcare services for those most at risk.” CHA administers 90 hospitals and medical systems across the state.

One of the bill’s main sponsors and Chairman of the House Health and Human Services Committee, Rep. Jim Riesberg (D-Greeley), said, “With the help of hospitals statewide, Colorado can draw down federal funds at a dollar-for-dollar match to provide coverage to more than 100,000 Coloradans. This is the most vital healthcare expansion we’ve made in years. Especially in this time of economic crisis, to be able to expand coverage for the most vulnerable among us is a crucial and ingenious step to keeping healthcare affordable for everyone.”

Another sponsor of the bill, Rep. Don Marostica (R-Loveland), noted that “uninsured patients and Medicaid underpayment to hospitals are two of the primary drivers of cost-shifting in healthcare.” Before the law was in place, Marostica said the Act would “allow us to cover a significant portion of the uninsured and reduce the rate of rising healthcare costs all across the state.”

 

Letters of support since the inception of the law have been provided by:

American Academy of Pediatrics

Anthem

Chronic Care Collaborative

CIGNA

Colorado Academy of Family Physicians

Colorado Association of Health Plans

Colorado Center on Law and Policy

Colorado Children’s Health Advocates

Colorado Concern

Colorado Consumer Health Initiative

Colorado Community Health Network

Colorado Health Foundation

Colorado Medical Society

Colorado Nurses Association

Colorado Voices for Coverage Coalition

Downtown Denver Inc.

Grand Junction Chamber

Rocky Mountain Health Plans

San Luis Valley HMO

United Healthcare

 

COLORADO HEALTHCARE AFFORDABILITY ACT FACTS

Although about 800,000 people living in Colorado are uninsured, including 180,000 children, this law attempts to cover at least a fraction of those individuals. Established in the midst of a national recession and unemployment crisis, the state took action to prevent the number of uninsured residents increasing. If more people continued losing coverage, the economic stability of taxpayers, employers, and the medical system would have been compromised.

In order to avoid this issue, the state of Colorado sought to leverage state funds to add federal funds at an exact dollar match to insure to expand public programs.

How It Works: Use funds generated from a new hospital provider fee, in addition to the increased federal matching funds, to:

  • Offer coverage through Medicaid and CHP+ to over 100,000 Coloradans without insurance
  • Raise hospital reimbursement rates under Medicaid and the Colorado Indigent Care Program (CICP)
  • Cover the HCPF’s administrative expenses to implement the program

 

Making insurance more available and increasing reimbursement will lower uncompensated care and avoid shifting costs to private insurers and policyholders. Thus far, the law has helped alleviate the potential of more expensive healthcare and coverage, and also provided a new, modernized payment system for hospitals.

Costs: The fee assessed on Colorado hospitals will generate approximately $600 million a year for the state. That new revenue will be used to drawn down an equal amount in federal funds, for total new revenue of approximately $1.2 billion annually.

 

Benefits of the Healthcare Affordability Act

Funds generated under the Colorado Healthcare Affordability Act will be applied towards insuring more low-income residents by expanding Medicaid and CHP+; increasing hospital reimbursement rates under Medicaid and CICP; and paying HCPF administrative expenses to implement the program.

Coverage for the Low-Income Population

  • Medicaid available to all Colorado adults with income at or below 100 percent FPL
  • CHP+ available to children and pregnant women with income at or below 250 percent FPL
  • Buy-in program for disabled adults and children up to 400 percent FPL
  • Continuous eligibility for children’s Medicaid

 

Hospital Payment Increases

  • Reimbursement for Medicaid inpatient and outpatient care will be increased to the upper payment limit (UPL), which is the maximum allowable reimbursement under Medicaid. This rate is still below what it costs a hospital to treat a Medicaid patient.
  • CICP reimbursement will be increased up to 100% of cost.

 

Addressing the cost-shifting issues of the state will significantly affect the availability of insurance and health care for Colorado residents, and also benefit hospitals, providers, and the state in making these changes. An additional 100,000 Coloradans have gained eligibility for Medicaid and CHP+, without the costs being placed on higher-income residents. Businesses and those who are insured through an individual plan or self-pay are able to keep their income secure and health insurance costs down due to a lesser amount of uncompensated care.

Colorado hospitals also benefit from a larger number of Medicaid and CICP members, which allows them to continue providing care to Medicaid and CHP+ clients. From 2008-09, almost 80,000 Medicaid and CICP enrollees received care at Colorado hospitals. Medical providers gain more patients through this law, as thousands more individuals can obtain Medicaid coverage and therefore receive services through Medicaid providers. The state benefits from receiving about $600 million in new federal revenue gained without spending any general funds, making this law functional for everyone involved.

 

Resources

Benefits for Childless Adults

Medicaid Buy-In For Disabled Persons

CHP+ Expansion 

Medicaid Expansion For Parents

Medicaid Continuous Eligibility 

 

 

References

 

1. Colorado Department of Health Care Policy and Financing. Colorado Health Care Affordability Act.

2. Colorado.gov. Press Release – Colorado Health Care Affordability Act.