Q&A: Why Republican Sen. Jerry Sonnenberg flipped on the hospital provider fee

Republican state Sen. Jerry Sonnenberg of Sterling set off shock waves at the state Capitol this week when he decided to sponsor a bill, along with Democratic Senate Minority Leader Lucia Guzman of Denver, on reclassifying the hospital provider fee.

Related: Republican Senate leader to back hospital provider fee change

The fee works like this: hospitals pay a per-bed fee on the number of overnight patient stays plus the number of outpatient visits. That fee is pooled among all hospitals in Colorado, about $700 million per year, and matched with federal dollars. The money is then redistributed among hospitals to pay for Medicaid for low-income Coloradans and to cover the costs for people who use emergency rooms for non-emergency treatment.

But the fee, which was passed by the General Assembly in 2009, counts as revenue under the Taxpayer’s Bill of Rights (TABOR). In the past two years, that revenue has pushed the state over revenue limits (known as a cap) allowed under TABOR, and that triggered a TABOR refund. In 2017, that refund is expected to be around $43 per person.

Democrats have advocated for reclassifying the fee as an enterprise, a government-owned business, which would take it out of TABOR revenue calculations That would free up about $350 million per year that lawmakers could direct to transportation projects, K-12 education (which is owed $881 million by the state) and health care.

In the 2017-18 budget, Gov. John Hickenlooper proposed limiting the amount of revenue that comes in from the hospitals by $195 million, to avoid triggering another TABOR refund. That means the hospitals that rely on the fee to pay for indigent care won’t get all of the money they were expecting, as well as the matching federal funds that go with it. And that’s making some rural hospitals nervous.

Sonnenberg has been opposed in the past to reclassifying the fee, backing the position taken by then-Senate President Bill Cadman of Colorado Springs, and this year, by current Senate President Kevin Grantham of Cañon City. Sonnenberg voted against the bill in 2009 that originally set up the fee, and in 2015 was one of three “no” votes in the Senate’s State, Veterans and Military Affairs Committee that doomed a reclassification bill.

The Colorado Independent recently sat down with Sonnenberg to find out what changed his mind.

Note: This interview has been slightly edited for clarity.

Jerry Sonnenberg: The process started because there are a number of issues in rural Colorado that we need to address: hospitals, transportation and education. All seem to be lacking in rural Colorado. So I tried to figure out a plan that incorporated all three. The hospitals have contacted me, as have schools, on a regular basis, on the dire situation they’re in.

The Colorado Independent: What kind of role do rural hospitals play in their local economies?

JS: Some of these hospitals are their community’s largest non-government employer, and in some places, larger [employers] than the city or county they’re located in. Hospitals are economically important to those communities. But more so than the economic, there are so few of them in rural Colorado, those communities that need health care will struggle if those hospitals close.

For example, you drive along I-70 from Denver to Kansas. You can drive for an hour, an hour and 15 minutes, and still not be near a hospital. The first hospital you get to after you leave Denver is about 10 miles south of the interstate near Hugo (southeast of Limon). Wonderful little hospital. If that hospital closes, the next closest is Burlington, or back to Denver. So those communities out there, those people who live in those communities, heaven forbid you have chest pains, or a farming accident. Heaven forbid you’re trying to help a cow birth a calf, and save that calf, and Mother Cow, being motherly and very protective, puts you in a predicament where you need emergency care. Now you’re an hour and 15 minutes after you get to town to Hugo, or an hour and a half to Denver, to the nearest hospital. It’s unacceptable for a rural community.

CI: What have you been hearing from the hospitals, as the hospital provider fee conversation has been going on?

JS: I have more of those critical care facilities in my district than anywhere else – eleven of them. I know of two, and I won’t identify them, but directors have directed staff to have an exit plan. That means if we lose this funding, [they’re looking at ] how to close and have the least impact on those communities. That’s unacceptable.

CI: Which funds? Hospital provider fee? Federal dollars?

JS: The vast majority of that is federally mandated, and that overrides anything we do here in the state. Reducing [the provider fee] becomes a challenge, when the feds tell you this is part of the health care. Part of the reason we’re in the budget crunch we’re in is because of the mandates placed on us. [The funding] is all inclusive: to access that [federal] money, the hospital provider fee was put in place. Now we have these unintended consequences of rural hospitals standing the risk of being closed.

CI: What kind of reaction have you gotten from folks on your proposed bill, especially from your own party?

JS: I’ve shared it (that took place in a meeting with Republican senators Monday). The bill includes a number of different ideas. I had a much better response than I anticipated. The caucus was glad to see that I am putting something out there on the table as a solution.

CI: Have you spoken to other Republicans about cosponsoring the bill? (At least three Republican members of the state Senate might be willing partners: Sen. Don Coram of Montrose, Sen. Kevin Priola of Henderson and Sen. Larry Crowder of Alamosa. Coram and Priola both voted in favor of the reclassification bill last year when they were members of the House; Crowder was the Senate sponsor of that same bill.)

JS: One-on-one, no, I have not had any conversations with my caucus as I still don’t have a final draft of the bill, and everything in it that I want or that I think works. I can’t predict how the caucus will respond but the bill’s intent is to help rural Colorado, and the understanding from my caucus is that rural Colorado actually needs some help. It’s just a matter of how we can help and still not have government as the big elephant in the room.

CI: What role does the TABOR revenue cap play in this conversation?

JS: [He declined to answer until the bill is released.] One of the things I need to do for us Republicans, and me philosophically, is to respect TABOR and my bill actually does that.

CI: Have you gotten reaction from your constituents?

JS: Very few people actually know about it. There has been a newspaper article (written by The Colorado Independent). I’ve had a couple of text messages, which said “how can I help?”

I committed to the hospitals that I want to help. I’ve also committed, philosophically, to have respect TABOR and how it works. But there’s 99 other people who have to cast a vote on this and I have to figure out where that middle ground is, without compromising my values.