by Dr. Ivan Miller
Executive Director, ColoradoCareYES Campaign

Amendment 69, ColoradoCare, was carefully designed over eight years. Because it was proposed as legislation, the attorneys from Colorado Legislative Council office, considered to be among the best experts in Colorado Constitutional law, advised the authors’ Colorado Constitutional law experts on Amendment language. The Amendment language ensures the state funding for health care remains the same and is available for federal matching funds. If the Colorado Health Institute (CHI) had taken full account of the Amendment’s binding language, it would have reported $9.1 billion, not $6.8, would be received from state and federal funds through the Medicaid waiver funding. This is a $2 billion surplus, not a $253 million deficit in the first year.

How does Amendment language ensure greater funding than the CHI analysis reported?

Amendment 69 requires ColoradoCare and the state government to work together to apply for all federal waivers, and requires the state government to transfer all state funds and waiver funds to ColoradoCare (Figure 1). The Amendment also defines the state and federal revenue in a manner that is identical with the Health Care Policy and Finance (HCPF) budget. HCPF budget for FY2016-17[1] is $9,112 million. CHI applied a 2.5% annual growth rate to the state and federal funding for Medicare associated programs[2].  The budget projected to a 2019 January – December fiscal year would be $9,693 million. This is the potential funding from Medicaid waivers calculated according to CHI assumptions.

Figure 1

Section 8. Transition to ColoradoCare.

(2) No later than the date ColoradoCare is to assume responsibility for health care payments, the state shall transfer to ColoradoCare all state and federal funds for the Medicaid, Children’s Basic Health Plan, and any other program to be administered by ColoradoCare. The state may retain any funds necessary to meet payment obligations, which exist as of the date of transfer. Upon receipt of this funding, ColoradoCare shall be responsible for paying for all benefits and services previously paid by the state and federal government with those funds. 

 

ColoradoCareYES believes that ColoradoCare would receive this full funding because we have not been able to find any example of a state having reduced funding in the federal waiver process. However, the calculations here are based on CHI assumptions regardless of whether or not ColoradoCareYES agrees. On page 20 of CHI analysis,[3] CHI speculates that federal matching funding would not be granted from ten[4] programs. The programs, state funding, federal matching funds, and total funding are listed Table 1, which shows that the total loss of federal matching funds would be $621.7 million in FY2016-17[5].

Table 1

Funding for Programs Speculated to Lose their Federal Match, FY2016-17

Program State funding[6]

(in millions)

Federal funding

(in millions)

Total funding (in millions)
Hospital Provider Fee supplemental payments program to help hospitals recoup losses from Medicaid payments described on page 10  

 

$488

 

 

$492

 

 

$979

Upper payment limit financing ($0.125) $3.5 $3.4
Department Recoveries Adjustment $37.4 ($37.4) $0
Denver Health Outstanding $6.0 $8.0 $14.0
Nursing facility provider fee supplemental payments  

$48.7

 

$49.1

 

$97.8

Physician supplemental payments $4.2 $4.6 $8.8
Memorial Hospital high volume supplemental payments  

$0.3

 

$0.3

 

$0.6

Health care expansion fund transfer adjustment $0 $0 $0
Cash funds financing $0 $0 $0
Disproportionate Share Hospital (CSH) $100.8 $101.6 $202.5
Total $681.0 $621.7 1305.5[7]

 

One reason the CHI report underestimated the state and federal revenue was that in addition to the ten programs cited on page 20, in their calculations, they removed $2.16 billion of funding for Medicaid expansion and CHP+ expansion programs in their calculations[8]. A primary purpose of federal waivers is to fund these programs, not cut them. As Section 8 (2) in Figure 1 shows, the Amendment requires the continuation of funding for these programs

The state funds available for ColoradoCare would be unaffected by a federal denial of matching funds according to Section 12(1)(g), Figure 2.

Figure 2

Section 12. Legislation.

(1) In the first regular session of the general assembly that convenes after the effective date of this article, the general assembly shall enact legislation:

(g) To ensure that the state’s expenditures for health care services, including the state’s responsibility for providing matching funds for Medicaid and other federally supported health care programs, do not fall below the expenditure levels for health care services in the year preceding the effective date of this article. The base year expenditure levels shall be adjusted annually for changes in the consumer price index for the Denver-Boulder-Greeley metropolitan statistical area and in the state’s population; and

 

 

Revenue can then be determined by subtracting the speculated loss of federal matching funds from the potential state and federal funds (HCPF budget) shown in Table 2. The revenue in 2019 would be $9,032 million, not $6.8 billion as CHI reported.

Table 2

Revenue in FY 2019 if federal match is lost for programs as CHI speculates

Full potential revenue in 2019 (HCPF Budget projected to 2019) $9,693 million
Subtract CHI FY2016-17 speculated federal match deficit adjusted by CHI’s 2.5% annual growth rate for a January – December fiscal year in 2019  

-$661.3 million

Revenue from state and Medicaid waivers $9, 031.7 million

 

In discussions with CHI, they have noted that existing statutes would no longer make sense under ColoradoCare. They indicated that as the statutes are currently written, if the federal government does not provide matching funds for part of the Hospital Provider Fee (HPF), the whole HPF program might shut down reducing state revenue and making it impossible to maintain the state’s contribution. However, problems with current statutes cannot over rule a Constitutional Amendment. It is the other way around. A Constitutional Amendment over rules a problem with current legislation.

Amendment 69 is designed to address potential conflicts between existing legislation and the Amendment. As Section 12(1)(g) shows in Figure 3, Amendment 69 requires that the General Assembly write whatever legislation is needed to implement ColoradoCare. In the case of a potential conflict between the current language for the HPF and the requirement to maintain the same level of state funding, the needed legislation would contain new the new language needed to enable the continued collection of the HPF at the same level.

Figure 3

Section 12. Legislation.

(1) In the first regular session of the general assembly that convenes after the effective date of this article, the general assembly shall enact legislation:

(h) Necessary to implement this article.

 

 

Writing new legislation accompanies almost all Constitutional Amendments, and 69 is no different. Amendment 64, the regulation of marijuana, required the legislature to write extensive legislation.

Finally, the CHI analysis incorrectly suggested that ColoradoCare would operate without sufficient funding to carry out its mission to provide all Coloradans with accessible health care. As is shown in Section 16 (Figure 4), the amendment guarantees that if there are not sufficient funds ColoradoCare will not open. In addition, as part of the federal waivers, there will be an actuarial analysis that must show sufficient funding in order to obtain the waiver.

Figure 4

Section 16. Termination of ColoradoCare’s operations.

(1) If the board determines that ColoradoCare has not received the waivers, exemptions, and agreements from the federal government sufficient for its fiscally sound operation, the board shall:

(a) Shut down operations and return unused funds;

(b) Notify the governor of the state of Colorado of ColoradoCare’s inability to function; and (c) Notify the revisor of statutes in writing of the date the operations are shut down.

 

As a consequence of overlooking essential components of Amendment 69, CHI did not accurately and completely analyze Amendment 69. If they had analyzed the complete Amendment 69 and its binding language, they would have found $9.1 billion, not $6.8, would be received from state and federal funds through the Medicaid waiver funding. This creates a $2 billion surplus, not a $253 million deficit in the first year.

[1] State of Colorado, Joint Budget Committee, FY 2016-17 Budget Package and Long Bill, http://www.tornado.state.co.us/gov_dir/leg_dir/jbc/16LBNarrative.pdf, page 53

[2] Personal communication with Michele Lueck and Amy Downs, Colorado Health Institute

[3] Colorado Health Institute, 2016. ColoradoCare: An independent analysis — finances

[4] CHI listed 11 programs, but the Hospital Provider Fee supplemental program is the Hospital Provider Fee program described on page 10 as the program CHI speculated would not continue. Therefore, on page 20, this program is cited twice.

[5] Colorado Legislative Council, August 16, 2016, Memo re. Department of Health Care Policy and Financing Appropriations.

[6] General funds, cash funds, and appropriated funds were combined to determine the state funding

[7] Rounding errors create a small difference so numbers do not add to exactly 100%

[8] Personal communication with Amy Downs and Michele Lueck, Colorado Health Institute

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