Obamacare will widen the budget gap in Colorado thanks to revenue limits

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Greg Campbell Contributor
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Expanding Medicaid in Colorado to comply with the Affordable Care Act will trigger constitutionally mandated taxpayer refunds requiring the state to consider deep cuts to in the areas of public safety, education and human services, according to a new economic forecast by Colorado State University released Tuesday.

To pay for expanded Medicaid under Obamacare, Colorado instituted a hospital provider fee in 2009 that is treated like revenue in the budget. That influx of new funds will cause overall revenues to rise above the threshold dictated by the state’s Taxpayer’s Bill of Rights (TABOR), triggering automatic refunds to taxpayers.

Those refunds are paid from the state’s general fund and will cause shortfalls for other services beginning in 2017, the study finds.

“Legislative efforts to create a mechanism to fund the expansion of the Medicaid system vis-à-vis a hospital provider fee have run afoul of constitutional spending and revenue limits set in the Taxpayer’s Bill of Rights,” said Phyllis Resnick, the lead economist at the Colorado Futures Center at CSU, in a statement.

“It creates a scenario where lawmakers will be forced to look at deep cuts to public safety, higher education, human services, the court system, and more at the same time the state will be required to deliver substantial tax refunds to citizens,” she said.

Colorado has one of the most complex budgets of any state because of constitutional provisions that limit spending and revenue growth while requiring spending in other areas. The study shows that the TABOR refunds, triggered solely by the hospital provider fees to pay for expanded Medicaid, will account for more than 31 percent of the gap between Colorado’s expenditures and revenues by 2030.

“The state could look for ways to remove the hospital provider fee from the state’s revenue and spending caps, a step that would reverse a portion of the potential budget cuts but that would also likely erase refunds for taxpayers,” according to a press release announcing the study’s findings.

The study was released just a day after Connect for Heath Colorado, the state-run health care exchange, released numbers showing more than 64,000 people having enrolled in expanded Medicaid under Obamacare since Oct. 1.

The state reported that 9,980 people have enrolled in private health insurance through Colorado’s state-run health care exchange, Connect for Health Colorado. That’s a healthy bump up from the 6,001 reported just two weeks ago, but still dismally behind the worst-case scenario projection of 11,108.

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