Health care costs in Colorado keep exploding.
Some people, whether they even know it or not, use language that obscures the real drivers of increasing costs in a way that incorrectly targets Taxpayer’s Bill of Rights (TABOR) revenue limits as standing in the way of a sustainable budget.
The problem with this framing is it lets legislators sidestep accountability and avoid addressing the underlying problems.
TABOR only limits an ever-decreasing portion of the state budget from growing faster than a modest formula of population growth plus inflation, but doesn’t determine what it’s spent on. In other words, legislative decisions matter more than fiscal restraints.
Medical inflation
For the average person, the word “inflation” is often shrouded in some mystery.
People generally understand it involves rising prices, but the mechanism behind those increases remains hazy.
In reality, inflation is largely driven by the basic economic principles of supply and demand for the US dollar, which the Federal Reserve controls.
An increased supply of money (“printed” by the Federal Reserve) without an increased supply of goods and services means each dollar buys less than before, thereby raising prices.
So when discussions of Colorado’s budget suggest that “medical inflation” increases faster than general inflation (and therefore faster than the TABOR formula), it then appears the simple fix would be to change TABOR’s formula or eliminate it entirely.
What the legislature decides
This notion of calling Colorado’s increasing health care costs a type of “inflation” is convenient but misguided, and it often helps politicians to sidestep accountability for their spending decisions.
While the state does not control general inflation—again, that is in the hands of the federal government — it certainly makes decisions that affect medical costs in the state.
For example, medical spending is significantly higher in Colorado than it would be if it had not expanded Medicaid.
It also has 194% more health-services-related regulations than the national average (13,719 versus 4,673 rules).
Colorado has spent more than forecast on Cover All Coloradans, Behavioral Health, and Community-Based Long-Term Care.
And it’s no small matter as to how much of the state’s health care spending is going to waste, fraud, and abuse.
So, when “medical inflation” rises faster than the TABOR limit, it sounds like a fixed, unchangeable fact, beyond the control of politicians.
In reality, the solution to unsustainable health care spending is simple, though rarely popular: address unsustainable programs and make cuts where necessary.
Getting rid of TABOR or using obscure language will not change the underlying drivers of health care spending; it will only let more money pour into unsustainable programs with less taxpayer input and less legislative accountability.
Nash Herman is a fiscal policy analyst at Independence Institute, a free market think tank in Denver
