Report Shows Hospitals Continue to Increase Prices for Coloradans with Private Insurance

Press Release

Today, the Department of Health Care Policy & Financing and Lt. Governor Dianne Primavera released the Colorado Hospital Cost Shift Analysis Report that reveals, despite significant reductions in uninsured rates and uncompensated care, Colorado hospitals are persistently increasing the price of care while receiving significant increases in Medicaid payment rates.

"Since we took office, this administration has been focused on lowering the cost of health care for all Coloradans," said Lt. Governor and Director of the Office of Saving People Money on Health Care Dianne Primavera. "This report shines a light on the fact that hospitals are not passing along savings to Coloradans, but are instead making record profits on the backs of consumers. We have to ensure these savings will make their way into the pockets of hardworking Coloradans."

Colorado is proud to be one of the healthiest states in the country, but despite this achievement, Coloradans face some of the highest health care costs.

"Hospital costs represent the largest component of overall health care costs," said Kim Bimestefer, the Executive Director for the Department of Health Care Policy and Financing. "This Department report reveals the drivers of rising hospital prices so policymakers and stakeholders can work together to ensure all Coloradans have access to affordable health care."

This report offers five key findings:

1. The cost of health care has gone up much more sharply in Colorado than nationally. In 2009, Colorado hospitals' operating expenses were 3.2% higher than the national average. By 2018, Colorado hospitals' operating expenses were 14.0% higher than the national average.

2. Hospital margins have increased by more than 280% between 2009 and 2018, from $538 to $1,518 per adjusted discharge (reflects both inpatient and outpatient care). Overall, payment-to-cost ratios across all payers increased from 1.05 to 1.09 (105% to 109%) between 2009 and 2018.

3. Colorado hospitals' prices went up far more sharply than the growth in patient volume. Colorado hospitals' prices grew 71.3% between 2009 and 2018 (7.8% per year) while inpatient and outpatient care volume only grew 16.6% (1.8% per year).

4. Uncompensated care levels in Colorado are at historic lows. The Hospital Provider Fee, Medicaid expansion, and the ACA decreased the number of uninsured Coloradans from 15.8% to 6.5%. As a result, the amount of money hospitals lose annually due to bad debt and charity care has decreased by more than $385 million annually.

5. Cost shifts are driven by strategic hospital decisions, not by shortfalls from public insurance. The increased funding generated by public, taxpayer funded programs -- which are intended to reduce private insurance premiums and out-of-pocket costs -- are not being passed along to health care consumers and employers. Health First Colorado (Colorado's Medicaid program) has steadily increased payments year-over-year since 2009. Hospitals could have been passing on significant savings - from the reduction in charity care and the increases in Medicaid payments - to commercial insurance consumers and employers if they had matched national cost benchmarks. Instead, Colorado has far exceeded those cost benchmarks to the disadvantage of consumers and employers.

State lawmakers and advocates also joined the announcement.

The full report can be viewed here or at www.colorado.gov/pacific/hcpf/colorado-cost-shift-analysis. The executive summary can be read here.

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