Colorado Lawmakers Reject Healthcare Price-Fixing Scheme

TPA Applauds Legislators for Rejecting HB 25-1174

Lawmakers in Denver, Colorado averted disaster by refusing to advance misguided legislation (HB 25-1174) being pushed by Governor Jared Polis and Democrats in the state legislature. If passed, this ill-conceived bill would have imposed a top-down healthcare price-fixing system that would have distorted the healthcare marketplace, threatening critical services across the state while failing to address the root causes of Colorado’s problems, including a growing uninsured patient population.

This proposal—based on an Oregon law that has harmed that state’s hospitals and healthcare system—would have imposed artificially low price caps on the payments hospitals receive for treating patients on the state healthcare plan (i.e., state employees) and those who get their coverage through the small group market. Since these caps would use Medicare rates as the benchmark, this approach would have compounded the fiscal challenges many Colorado hospitals are already facing.

Medicare is notorious for significantly underpaying hospitals for the cost of providing care to its beneficiaries. Data from the American Hospital Association shows that Medicare payment levels hit an all-time low in 2022, when hospitals received payments of only 82 cents for every dollar they spent on caring for Medicare patients. That disparity led to two-thirds of hospitals having negative Medicare margins that year, with underpayments totaling $99.2 billion.

In Oregon, where lawmakers passed a similar law in 2017, the outcome of government-imposed price-fixing in healthcare speaks for itself. Today, more than 60 percent of Oregon hospitals are operating with negative margins, and many have been pushed to the brink of insolvency. Hospitals have left major cities without access to care, with the last hospital in Eugene, Oregon, closing its doors for good in 2023. Considering Oregon’s caps were set significantly higher than what was being proposed in Denver, it is easy to imagine how devastating the impact could have been in Colorado.

This proposal also would have failed to address the larger, systemic threats to access and affordable care in Colorado, and instead would have followed a pattern of bureaucratic mismanagement that has left hundreds of thousands of Coloradans uninsured. On top of administrative issues and outdated technology that has contributed to this growing problem, Colorado also disenrolled one of the largest shares of Medicaid enrollees in the country since the beginning of the COVID-19 redetermination process.

However, despite having the tools necessary to keep their citizens insured, Colorado has failed to do so, leaving vulnerable Colorado patients without the resources and support to re-enroll in Medicaid or else find other coverage they may qualify for. This puts even more of a financial strain on hospitals and taxpayers alike. According to the Colorado Hospital Association, uninsured visits to the emergency room have comprised 10 percent of total patient visits since 2023—the year Colorado began disenrolling Medicaid enrollees.

Now that lawmakers have side-stepped this disastrous rate-setting proposal in the short term, policymakers can address the issues that have led to 70 percent of Colorado hospitals operating with unsustainable margins.

Colorado patients deserve stability and quality care—not another risky experiment in government-run healthcare. The Taxpayers Protection Alliance applauds the Colorado General Assembly for rejecting this devastating legislation and protecting Colorado patients, hospitals, and access to high-quality, affordable care in communities throughout the state.