Colorado lawmakers brace for special session over potential Medicaid cuts as session ends

There are now only seven days left in Colorado’s legislative session. But lawmakers and other state officials have for weeks been bracing for the possibility of coming back to the Capitol later this year to deal with potential federal cuts to Medicaid likely to be included in Congressional Republicans’ still-being-written budget proposal.

“There certainly are a lot of indicators that would suggest that we might end up having to come back in the event that there’s a dramatic cut to Medicaid,” state Sen. Judy Amabile, a Boulder Democrat and member of the legislature’s Joint Budget Committee, said last month, as first reported in The Colorado Sun’s politics newsletter, The Unaffiliated.

Speaking to a group of health care leaders earlier this month, Gov. Jared Polis’ budget director put it a little more bluntly. The director, Mark Ferrandino, said the state is estimating up to $1 billion in cuts to Colorado’s federal Medicaid funding under proposals being discussed in Washington, D.C..

“Just to be clear to everyone,” Ferrandino said, “if that’s the cut, we are not backfilling, which means we have to make cuts both in Medicaid and other places in the state budget to deal with it.”

Medicaid is the state’s most expensive program. The agency that runs the program has an $18 billion budget for next year. More than $10 billion in that budget comes from federal funds, meaning Colorado could be facing a 10% cut in that funding if Ferrandino’s projections are correct.

Colorado contributes about $5 billion to the Medicaid program out of the state’s general fund, making it the largest source of general fund spending. When Ferrandino says the state will not backfill, he means the state won’t chip in more general fund money to make up for the possible federal cuts. There just isn’t enough cash to do so.

This is especially true because next year will see another tight budget, regardless of what happens at the federal level. Ferrandino described what lawmakers did this year to close a $1.2 billion budget gap as essentially punting the problem into next year.

“It is going to be a more difficult budget,” Ferrandino said in remarks at the Colorado Hospital Association’s Hospitals on the Hill, a lobbying day for health care leaders that also features informational sessions for those leaders. “We are going to have to look at cuts. I will say Medicaid … if not controlled is going to eat up the entire state budget. Which is going to mean we have to make difficult decisions in the health care space.”

The combination of these two funding crises has sent Colorado officials and health care leaders into overdrive in the past few weeks to fight against federal cuts to Medicaid.

Earlier this month, Polis and Lt. Gov. Dianne Primavera sent a letter to Colorado’s Congressional delegation urging them to reject cuts to Medicaid. The envisioned cuts could mean a loss of 12,000 jobs, $1.3 billion in state GDP and $82 million in state and local tax revenue, the pair argued.

“Children, hardworking individuals, people with disabilities, seniors, and safety net providers are not political pawns or talking points,” they wrote in the letter. “These cuts would mean losing access to lifesaving care with devastating consequences.”

The Colorado Health Policy Coalition, a group of more than 80 health care organizations from across the policy spectrum, followed that with its own letter opposing cuts. Just this week, the Colorado Rural Health Center released a statement criticizing proposals to cut programs that specifically support rural health care providers.

“Cutting funding that has been a cornerstone supporting the rural health care delivery system for decades is both short sighted and profoundly damaging,” said Michelle Mills, the CEO of the Colorado Rural Health Center, said in the statement. “Every dollar of federal funding invested in rural healthcare is an investment in thriving communities.”

The debate over health funding cuts has also created fault lines among Republicans in Washington.

Colorado U.S. Rep. Jeff Hurd, a Republican who represents western and southern Colorado signed onto a letter urging House leadership to preserve Medicaid. Nearly one-third of people in Hurd’s district are covered by Medicaid, the highest percentage of any Colorado representative.

Meanwhile, Colorado U.S. Rep. Gabe Evans, a Republican who represents a swing district predominantly in Adams and Weld counties, told Colorado Public Radio that cuts to Medicaid would be made only to eliminate misuse of funds and to make the program work better.

“We’re going back to cutting out the fraud, waste and abuse that actually preserves the program by making sure that we can get more resources to the people who are actually lawful beneficiaries of it,” Evans said.

If the cuts do happen, Ferrandino said state officials do not yet have a plan for what they would slash — in part because it remains uncertain exactly which areas of Medicaid the GOP may target.

“I don’t know what we will do,” he said. “I don’t know what the legislature will do. I know we’ll be in a special session, so we’ll see all of you in July or September or August to deal with it.”