DENVER – Colorado Gov. Bill Ritter has signed into law the Colorado Healthcare Affordability Act, which will provide health coverage to more than 100,000 uninsured Coloradans and reduce uncompensated care and cost shifting.

The bill is the most significant health reform legislation in Colorado in four decades, and Ritter says it will come at no increased cost to taxpayers.

"This legislation would be groundbreaking in a good economy, but it means even more in a down economy as Colorado families struggle to make ends meet," he said.

By partnering with hospitals, the Colorado Healthcare Affordability Act will allow the state to generate an additional $600 million a year through a provider fee and draw down $600 million in federal Medicaid matching funds.

The combined $1.2 billion will support Medicaid and the Child Health Plan Plus expansions and be used to improve hospital reimbursement rates for services provided through Medicaid and the Colorado Indigent Care Program.

Uninsured patients and Medicaid underpayment to hospitals are two of the primary causes of cost-shifting and rising healthcare costs for consumers, businesses and providers. Ritter said that by improving access to coverage and increasing hospital reimbursement rates, the Colorado Healthcare Affordability Act will address both of those drivers and help stem rising costs across the system.

He argued that the legislation would benefit businesses and families by reducing the cost shift and the rate at which healthcare costs are increasing.

The Colorado Hospital Association, the Department of Health Care Policy and Financing and the Governor's Office worked for nearly a year to develop the legislation, which passed both the House and the Senate with more than 40 co-sponsors and bipartisan support.

"Colorado hospitals are pleased to have been a part of this important policy effort to improve access to affordable healthcare services for those most at risk," said Steven Summer, president and CEO of the Colorado Hospital Association. "This new law is not a silver bullet solution to all of our state's healthcare problems, but it is certainly a giant step forward."

More than 40 states have implemented a similar financing strategy for health programs, including more than 20 states that have hospital provider fees. Colorado passed a similar proposal last year for nursing homes.

"This proposal came from a group of stakeholders - the hospitals - agreeing to take on the burden of the fee so that a meaningful solution could be reached," said Russ Johnson, CEO of the San Luis Valley Regional Medical Center. "In many rural communities, the hospital is the only healthcare provider. At the same time, there is often a large proportion of residents that are uninsured, or on Medicaid or CICP, so the provider fee will be very beneficial to rural hospitals in those communities."

The plan will be submitted to the federal Centers for Medicare and Medicaid Services for final approval. Implementation is expected to begin in the spring of 2010.