Introduction
This year, Denver voters will be presented with a proposal to increase the city’s sales tax rate. This would raise revenue for Denver Health at the cost of a .34 percentage-point hike. Should it pass, Denver’s total sales tax rate will rise from 8.81% to 9.15%, the highest in the Front Range’s ten largest cities.
Key Findings
- Denver Health’s uncompensated care costs doubled since 2017 while its allotment of $30.8 million from the city has remained unchanged since 1996.[i]
- Denver Health’s operating expenses have risen $300 million since 2017.
- Denver Health expects to raise $70 million a year from the new tax.
- Denver’s new combined sales and use tax of 9.15% would surpass Boulder’s to become the highest among the ten largest Front Range cities.
Denver Health
In an effort to help alleviate rising costs for Denver Health due to increases in uncompensated care, Denver’s November ballot will feature a 0.34% sales tax increase. If approved, the estimated $70 million revenue generated annually by the tax increase would be given to Denver Health to support key areas of trauma and emergency care, primary care, mental health, drug and alcohol use recovery, and pediatric care.
Denver Health is the city’s designated provider of charity care. To this end, it receives an annual allocation from the City of Denver that does not cover expenses. However, several factors have accelerated the rate at which Denver Health accrues uncompensated care, while the budget from the city has remained unchanged.
The Denver Health budget has historically been set around $30 million a year to help cover the costs of uncompensated care. Although with rising health insurance rates, increased immigration, and the phasing out of Medicaid eligibility, these expenses well exceed this budget and are projected to increase.
From 2017 to 2023 Denver Health accumulated over $600 million in uncompensated care costs, spending $102 million on Denver residents in 2023 alone, over triple the yearly allocation for the medically indigent from the City and County of Denver.
Ongoing events in Denver have exacerbated the situation. In the Denver metro area, hospitals spent about $2,931 in uncompensated care per migrant, according to CSI estimates, totaling at least $10 million in costs to Denver Health alone.
[ii] The area’s homelessness issue impacts costs as well, Denver Health’s expenses for unhoused individuals grew 34% between 2019 and 2022.
[iii]
Figure 1
| Denver Health Budget 2017-2023 |
| Year |
Amount of Uncompensated Care for just Denver Residents |
Amount of Uncompensated Care for Out of County |
Total Uncompensated Care |
Total Operating Expenses |
Allocation from City of Denver |
| 2017 |
$53M |
$17M |
$70M |
$1.1B |
$30.8M |
| 2018 |
$47M |
$20M |
$67M |
$1.1B |
$30.8M |
| 2019 |
$42M |
$20M |
$62M |
$1.1B |
$30.8M |
| 2020 |
$44M |
$15M |
$59M |
$1.1B |
$30.8M |
| 2021 |
$61M |
$25M |
$86M |
$1.2B |
$30.8M |
| 2022 |
$82M |
$38M |
$120M |
$1.3B |
$30.8M |
| 2023 |
$102M |
$37M |
$139M |
$1.4B |
$30.8M |
These same costs trickle down into healthcare bills.
Previous CSI reporting had identified that rising healthcare costs are passed to consumers in the form of higher insurance premiums. In Colorado, private payers historically pay a higher rate per capita than public payers. Effectively, private insurance holders subsidize the costs of public and uncompensated care.
Figure 2
What Would the Impact Be?
A .34 percentage-point increase in sales tax would mean that for every $100 Denver residents spend on taxable goods, they would pay 34 cents more. This level of increase would generate approximately $65-$70 million in revenue for Denver Health. The city’s current tax rate is 8.81%, and the proposed Denver Health measure would bring the combined sales and use tax to 9.15%.
Figure 3
At 9.15%, Denver would have the highest overall tax rate among the 10 largest cities in the Front Range. Denver’s sales tax would exceed Boulder’s rate of 9.05%.
Bottom Line
The measure seeks to address problems that some in Denver feel keenly: the rapidly growing demand for the services of Denver Health, the city’s flagship hospital system. The city’s sales tax would become the highest among the Front Range’s ten largest cities and generate $65-$70 million for uncompensated care costs that are projected to rise.
[i] Annual Reports | Denver Health
[ii] https://commonsenseinstituteco.org/the-ongoing-costs-of-denver-migrants/
[iii] https://commonsenseinstituteco.org/metro-denver-homelessness-2023/