Government Regulation of the Hospital Industry in Colorado

Abstract

a ripple effect on state programs. In Colorado, the prie c) mary effect was a unanimous effort to "keep out the Feds." It was in this spirit, during the 1977 legislative session, that House Bill 1582 passed with bipartisan and hospital support. House Bill 1582 created the Colorado Hospital Commission, with broad powers to control both revenues and rates of increase in hospital costs. It also mandated a system of prospective budgeting, which represented a radical departure from the norm established by the Medicare program in 1966 of retrospective, cost-based reimbursement. In essence, the new system required that budget and revenue levels be set prior to the start of any hospital fiscal year, rather than simply reimbursing the hospitals for whatever they happened to spend. The new law met the demands and expectations of almost all segments of society. It dealt with the political concerns of the legislature that something be done to appease their constituents about skyrocketing hospital costs. It met the sociocultural concerns of the public-at-large in that an industry that had gone unchecked might finally be brought "into line." The bill also treated the ethical concerns of all involved in that they had reached an equitable compromise solution for dealing with a problem, albeit for widely differing reasons. It was in this spirit that regulation of hospital costs began in Colorado. The Commission commenced in October 1977. Within a year, the spirit of cooperation experienced during the passage of H.B. 1582 had disintegrated. By the end of the 1979 legislative session, Senate Bill 38 passed, dissolving the Commission as of March 1, 1980. Realizing that the Com-