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A Tax Disguised as a Fee: The Hospital Provider Fee Fund

A Tax Disguised as a Fee: The Hospital Provider Fee Fund

The Hospital Provider Fee Fund:

A Tax Disguised as a ‘Fee’ to Artificially Inflate Medicaid Costs, Supplement State Revenues, Expand the Medicaid Program, and Disproportionally Redistribute Funds Among Colorado Hospitals

IP-2-2016 (April 2016)
Author: Linda Gorman

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Executive Summary:

In 2009, the Colorado General Assembly passed the Colorado Health Care Affordability Act of 2009, HB 09-1293. The Act imposed an up to 5.5 percent charge on hospital bills. It created the Hospital Provider Fee Cash Fund1 and the Hospital Provider Fee Oversight and Advisory Board within the Department of Health Care Policy and Financing (HCPF). The Colorado Constitution requires a popular vote on any new tax under the Taxpayer Bill of Rights (TABOR). The Great Recession hit its lowest point in June, 2009. At the time, it was clear to observers that Colorado’s economically stressed voters would not approve a new tax for Medicaid or anything else.

By calling the provider charge a fee rather than a tax, the legislature was able to collect and use the revenue from the provider charge without asking permission from the voters.

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