The situation is leading up to the launch of the 2025 legislative session as Colorado's healthcare sector nervously monitors the federal budgeting process to see what levels of change will be brought to local providers.
However, a review of the 120-day session on a wide range of healthcare players found that despite important discussions, the session ended with almost major changes.
The lawmakers proposed a number of large, rather radical ideas. They limited hospital pricing, limited access to and expanding health systems, increased insurance contract fees, and provided bills requiring coverage for expensive obesity medications.
But in the end, none of these ideas became law.
Instead, legislators sought a compromise as both hospitals and health insurance companies warned of potential financial blood.
Rather than keeping the prices of hospitals to generate funds for struggling safety net clinics, we found another way to raise those funds. They rejected insurance fees and obligations to cover Ozempic and Wegovy. Instead of placing strict restrictions on the use of federal drug splitting money, they made the costs more transparent. It also helped Medicaid providers get refunds despite a $1.2 billion budget shortfall.
“Can I pause?”
In conversations since the end of the 2025 legislative conference, leaders in the healthcare sector acknowledge that outcomes are different from many things that are expected, and are very necessary for the majority of industries struggling under cost pressure. For example, nearly 70% of hospitals have an unsustainable operating profit margin of less than 4%, and if Congress passes the budget with a significant Medicaid cut this year, they are worried that revenues will drop sharply.
Still, some said they appreciated their plea to suppress this session, as the majority of moderate bills that Gov. Jared Police signed the law represents a respite for the sector remaining under scrutiny from government at all levels.
“We need to open communication channels and interact,” said Nico Brown, Vail Health's Chief Strategy Officer. “There was a lot of pressure on Colorado Hospitals, and there were a lot of regulations reporting and requirements that increased costs, so we ask:
The cost of medicines and hospital services has become a key target for Gov. Jared Police's management.
The reason for so much scrutiny is that Americans spend on healthcare remains so high, it is about a sixth of their gross domestic product. Cutting healthcare costs was one of the pillars of Gov. Jared Police's platform, which first operated in 2018, and early in his term he limited prescription drug prices, raised hospital reports, and produced laws requiring the provision of low-cost insurance.
However, seven years after his governor, medical costs remain high. However, the ability of the providers to provide the service has been damaged.
Medicaid, Eye Acuity Changes the Roiled Healthcare Industry
The post-pandemic rollback of Medicaid eligibility knocked 575,000 state residents from publicly funded health insurance programs, but many of those individuals continued to flow to hospitals seeking care without paying. Between March 2023 and the beginning of this year, hospitals saw a 50% increase in the number of uninsured patients seeking care. According to the Colorado Hospital Association, the charity care provided by the health system has increased by 140% since 2019.
Meanwhile, vision levels for Medicaid patients have risen, with spending 26% on programs that played a major role in creating state budget shortages, said Kim Bimesteffer, Colorado's Department of Health Care Policy and Funding Director. The rising levels of illness have been heavily in other programs, such as reinsurance programs that seek to keep costs down on private plans in the state's highest regions, and in the Omni Salud program, which funds cost insurance for around 12,000 undocumented immigrants.
In February, leaders of the Police administration worked with Legislative Democrats to introduce a bill that would limit what hospitals can claim to small group insurance plans and 60,000 national government workers insured under the plan. The goal was to use savings in state planning to help the struggles of safety net clinics treating many of their new, uninsured patients, and limit costs to small group planning premium hikes.
Colorado Sen. Kyle Brown, supported by Gov. Diane Primavera, explained the bill to curb hospital rebates at a press conference in February.
Meanwhile, the leaders of Health Insurance Affordable Enterprises, who oversee the reinsurance and omnisardo programs and provide subsidies for individual plans for state health insurance exchanges, need financial support. They proposed a 1% commission increase on each private plan sold in Colorado.
Concerns, costs are large healthcare proposals
They said the federal government is expected to terminate funding to subsidize individual plans sold in exchange, so that fees will be increased. But after years of pushing the healthcare agenda, the Police administration encountered an insurmountable obstacle with these proposals.
The hospital warned that the cap price would lead to significant revenue cuts and would force them to cut services or increase what they would claim from private insurance plans that are not affected by CAP. Officials from both parties responded to an expected increase that would cost consumers $73 million as state residents sought relief for living expenses by increasing the existing 2% rates for plans sold by the for-profit insurers. Even insurance companies opposed to closing what could be paid to hospitals, calling interference in the state of ideas in private contracts.
So, in partnership with opponents of the proposed reimbursement cap, the hospital has passed alternative measures to increase spending on safety net clinics using funds from other sources, including donations from CHA members. And the proposed increase in Hiae fees died at the end of the session.
Health insurance companies have won several other major battles this year. Sponsors have reduced the bill aimed at increasing coverage of obesity-related diseases, eliminating the requirement to cover high-cost drugs such as Wegovy and Ozempic. They worked unanimously to deny public ambulance services bill capping costs, claiming that the cap could encourage the use of non-emergency ambulance vehicles and increase insurance costs and premiums by $5.5 million.
Colorado Rep. Kyle Brown and Karen McCormick will explain the ambulance claim bill to the House.
“We're excited to be able to help you get started,” said Kevin McFartridge, executive director of the Colorado Health Association. “I think we must continue to educate our committee members about the impact of delegation.”
Hospitals, insurance companies other victorious
Police's goal of cost-cutting efforts has also won a massive battle with over 50 bills. The pricing bill has died. A bill that could limit the hospital acquisition of doctors' practices was killed by its sponsor. Lawmakers granted a law that prohibits drug manufacturers from limiting the number of pharmacies that can receive discounts through the Federal 340B drug pricing program.
The hospitals have lobbyed heavily to include an increase in Medicaid provider rates of 1.6% in the budget. This is a move needed to offset the rise in uninsured patients arriving at emergency rooms seeking care, Brown said. And in a quiet but big victory for the health system, lawmakers made no effort to limit facility fees hospitals can charge for non-acute services in off-campus settings.
Perhaps the biggest healthcare change from the 2025 session was the passing of another bill in reform practices for pharmacy benefits managers, except for the 340B bill, where insurance-funded intermediaries negotiated low prices from drug makers. Under House Bill 1094, PBMs must only earn flat rates, not fees, based on their savings. This is a change that we believe will focus on high-cost drugs and will set minimum requirements for independent pharmacies reimbursements.
Colorado Sens. Dylan Roberts and Byron Payton will explain the bill on pharmacy benefits manager reform to the Senate.
The bill opposed each other the factions of the sector. CAHP argued that by limiting how PBMs negotiate discounts, the law would increase by $118 million, plus an additional $74 million, plus an independent pharmacy refund order. However, supporters include rural interests and people who belong to local pharmacies, saying regulations are necessary for survival.
What's coming next
It is quite possible that Congress will not take place in 2025 on healthcare issues.
The “big beautiful bill” that Congress is debating to reduce spending this week and make temporary business tax cuts permanent, permanently suggests a major reduction in Medicaid spending that could further hit hospitals and healthcare providers. Police said if the changes keep the state's budget from balance, they're likely to return to special sessions to address it, in order to bring legislature back to special sessions.
However, these companies are far better than they would expect to emerge from sessions where many companies question many of the business models used in the healthcare industry, at least financially. (In fact, these lawmakers have passed a bill that will conduct a survey on how states can implement Canadian-style government-funded insurance schemes to replace the private insurance sector, but the 2027 session will not be discussed early.)
“It's hard to assess where we are now without seeing where we are in Washington. I think we're in a position to wait. We'll continue our dialogue about how hospitals are in tensile places,” Brown said. “If fees and refunds are reduced, it would put us in a tough position.”
