Jared Polis proposes $600M in Medicaid cuts to address budget woes

In his final state budget request, Colorado Gov. Jared Polis proposed cutting more than $600 million in projected Medicaid spending, saying that the state simply can’t afford to continue paying so much for healthcare.

Polis released his annual budget proposal on Sunday in a letter to the legislature’s Joint Budget Committee, then presented it to reporters at a Monday news conference, where he pushed back at the idea that he was cutting healthcare spending.

“Let no one say that — in any way, shape or form — this budget cuts healthcare funding,” Polis said. “It actually increases it.”

In reality, Polis is proposing a $250 million increase in the Department of Health Care Policy and Financing’s general fund budget — but that’s not nearly enough to continue funding the program’s existing services, which would have to be cut back significantly to hit Polis’ funding target.

Earlier this year, program officials warned that their latest projections showed that costs would rise by more than $900 million in next year’s budget, which starts July 1, unless lawmakers make major cuts to the services Medicaid provides to low-income households and those with disabilities.

In Colorado, the governor’s budget recommendation is just that: a suggestion that lawmakers can take or reject when the JBC writes the budget over the coming months. And with Polis leaving office in January after two terms, his request for the 2027-2028 fiscal year — which is always due on Nov. 1 — may have even less sway at the state Capitol than usual.

Polis’ budget identifies about $300 million in cuts, including eliminating adult and senior dental care coverage, in-home physical therapy, and Cover All Coloradans, the program that extends healthcare to immigrant children and pregnant women living in the U.S. without legal permission.

It would also reduce payments to teaching hospitals with medical residency programs, eliminate some funding for pediatric hospitals and reinstate prior authorization requirements for behavioral healthcare services.

Polis’ Medicaid budget also relies on another $300 million-plus in unspecified cuts that his letter says will be identified later, but he insisted that he had no intention of kicking people off the federal program, which provides health insurance to around 1 in 5 Coloradans.

“That’s not what this is about,” he said. “It needs to be there for people who need it.”

Polis said he expected the next governor would share his values and agree that Medicaid spending had to be curtailed to avoid deeper cuts to other services.

“If the governor doesn’t bring Medicaid spending in line with growth, then there would be cuts to K-12 or higher education, so that would certainly be good questions to pose to the next governor-elect,” Polis said. “But I believe that they would share the values of funding our schools and not throwing people off of Medicaid and making sure we have a sustainable route.”

Polis’ replacement, who will be elected Tuesday, will be sworn in on Jan. 12. The JBC begins its work on the budget later this month, and Polis said he would present an updated budget request in early January. The January update will account for the results of several November ballot measures that could dramatically change the state’s budget outlook if they pass.

Polis proposes limiting the growth in healthcare spending to 4.3%, a target that would match how much the state is allowed to increase its spending under the Taxpayer’s Bill of Rights. The constitutional amendment known as TABOR limits state revenue to the combined rate of consumer inflation and population growth.

Medicaid has long been incompatible with that limit. Since 1994, the first year TABOR’s spending cap was in effect, the state healthcare budget has grown 828%. The cap has only risen 271% in that same period, requiring cuts to education and other services.

The proposal got an icy reception from healthcare advocates, who chastised Polis for supporting Medicaid cuts, while opposing the preferred solution of progressive Democrats — Amendment 87’s proposed tax hikes on the wealthy.

“Gov. Polis’ suggested budget cuts put the health of vulnerable Coloradans at risk and exacerbate an already worsening affordability crisis,” Adam Fox, deputy director at the Colorado Consumer Health Initiative, said in a statement. “Cuts aren’t a solution for Coloradans struggling to afford healthcare or other basic necessities.”

Here are some other highlights from the governor’s budget proposal:

• Polis said he wants to continue to put money toward the state’s new school finance formula, increasing per pupil funding by $488. The formula is in year two of its seven-year phase-in period.
• The budget calls for reopening a shuttered private prison, the Huerfano County Correctional Center.
• Polis also proposed ballot measures to raise more than $200 million from tobacco and gambling taxes in order to fund preschool and childcare programs.