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Informing Policy. Advancing Health.

Be a Two-Minute Expert in the Hospital Provider Fee

Here’s the most common knowledge of the Hospital Provider Fee:

1. Everyone at the Capitol is absolutely obsessed about it.

2. Nobody can explain what it is or why it’s important.

 We’re here to change that in just about two minutes.

This new animation from the Colorado Health Institute demonstrates how the Hospital Provider Fee works and the side effects it bring to the state budget.

Here’s why this matters:

Colorado finds itself in a situation that no other state faces. The more money the state brings in from the Hospital Provider Fee, the more it has to cut the general fund budget to pay for tax rebates under the Taxpayer’s Bill of Rights (TABOR).

That’s because TABOR requires refunds when state revenue grows faster than a formula determined by inflation and population growth. Typically, it comes into effect when the economy is growing.

The debate at the Capitol this year is whether to exempt the Hospital Provider Fee from TABOR. Democrats generally are in favor of this approach, while most Republicans in the legislature are opposed.

The legislature in created the Hospital Provider Fee in 2009, when the Democrats controlled both houses and the governor’s office. They could have exempted the provider fee from TABOR at the time. But in 2009, remember, the country was in the depths of the Great Recession. Thousands of people were getting laid off, and state revenue plunged. It seemed like it would be a long time before Colorado had to worry about the TABOR limit.

Well, that time has arrived.

Most Capitol observers say there’s little chance that the legislature will exempt the Hospital Provider Fee from TABOR this year, because the Republican majority in the Senate stands opposed.

However, it’s still important to understand what the debate is about. The Hospital Provider Fee’s effect on the TABOR limit is projected to grow year after year. If it’s important this year, it will be an even bigger deal next year.

So check out our animation right here. I hope you find it a worthwhile way to spend two minutes.