By Cory Gaines | Commentary, Colorado Accountability Project
Our state is Medicaid (and government) poor
Do you have a friend or relative that’s house poor? Truck poor? They live in (or own) something that’s beyond their means, and this financial decision makes their lives more difficult than it has to be?
I read the Sun article linked first below recently and it struck me that our state is Medicaid poor. As a result of our state’s poor financial decisions, we have some fancy stuff, but we’re financially struggling right now. The thrust of the Sun’s piece is that our state’s budget gaps (the unhappy kind where we are short of money) are recurring and likely to continue to recur.
Why? Medicaid’s a big reason, but there’s more to that picture. A couple of non-contiguous quotes from the Sun piece will flesh this out.
“He [JBC Staff Director Craig Harper] said the main driver of the annual shortfall is rising state spending on Medicaid, a problem that’s been compounding since the Great Recession. It got worse during COVID, at which point, Harper said, the growth in Medicaid spending was ‘explosive.’”
and
“[State Rep Rick] Taggart asked why the Polis administration wasn’t doing more to trim Colorado’s bureaucratic costs to help balance the budget. Republicans have continually complained about the size of state government growing under Polis. [Director of the Governor’s Office of State Planning and Budgeting Mark] Ferrandino said doing so would be a drop in the bucket. He pointed to how about 10% of the legislature’s roughly $18 billion general fund goes to the state’s administrative operating budget. If the administration were to cut that by 10%, it would save somewhere in the neighborhood of $200 million. That may sound like a lot, but it would come nowhere near covering the annual increases in Medicaid spending that the state is facing right now.”
Before talking about the size of the government, let’s look in at some state Medicaid numbers. The screenshots attached all come from the second link below. It’s the state’s budget explorer, a site maintained by the non-partisan legislative staff.
Screenshot 1 is a good overview. It shows the state’s overall funding for healthcare, the amount we send to the Division of Healthcare Policy and Financing (HCPF — pronounced “hick-puff”) the state office that administers Medicaid and other healthcare programs.**
It has been, as you can see in the highlighting, been adjusted for population and inflation both. These are real, per-person dollars. Clearly visible is a peak that happened just as Polis took office and then a BIG spike in the last couple years.
Screenshots 2a – 2c give some fast details on healthcare/Medicaid funding and expenditures, showing the portion of the state budget that goes to health care, where the money comes from, and what it goes to respectively.
Clearly the Feds taking away some Medicaid funding hurts. A lot. Our state relies heavily on Federal money to fund our expanded state-run healthcare, money that comes partly from what’s been called “money laundering” (see my earlier newsletter linked third below for more on that). It’s also clear that, by far and away, our biggest cost is reimbursing medical providers.
Why are our expenses so high? Why is Medicaid eating up so much money? A large part of the reason is our state’s embrace of Medicaid expansion offered under Obamacare (something I’ve written about before, see link #4 below for more there).
This expansion is dramatically evident in Screenshot 3 attached. As soon as Obamacare dropped and for years after, our state took every chance it got to expand Medicaid and roll more and more people into it; they especially loved bringing in young singles with no kids who were making more than the Federal poverty wage.
You can clearly see that the expansion is not just in the past either. That spike on the far right side is the last couple years.
Lets round out our look at Medicaid by noting who’s using it. Screenshots 4a and 4b show Medicaid enrollment and expenditures respectively broken down by group into adults, children, elderly, and the disabled.
As I’ve kept reiterating here, a quick review of screenshot 4a shows that spike in adult enrollment in Medicaid in Colorado from Obamacare on. All other groups have also gone up but even the bump in children enrollees pales in comparison to the jump in adults who’ve joined the government healthcare rolls.
They’re also, see 4b, along with the disabled, a big driver of costs.
Our state and the Feds have greatly increased Medicaid enrollment. The expansion, coupled with the way healthcare prices have gone up, is a giant strain on our state’s budget.
In that sense, the first quote above from the Sun article is spot on.
I disagree with the second, however. While Mr. Ferrandino is correct about how little savings there are to be realized by trimming government, he misses the larger point, the point I’m trying to make by calling our state “Medicaid poor”.
Our state chose to clothe itself in an ever-bigger government. We hired more people, took on more things, etc. This cost money. We bought that bigger house.
At the same time, those running the state, and especially since 2014 and the last few years, chose to compound this decision with an expansion of Medicaid creating an entirely new class of dependents that weren’t there before. We made more wards of the state. We bought the bigger house we knew would cost more and then furnished it with lots of expensive furniture and gadgets.
This is not a surprise either. Over and over our state has played tricks to expand Medicaid by things like provider fees to hide the burgeoning expenses by soaking the Feds and nationwide taxpayers so they could brag about saving Coloradoans money.
We’re Medicaid poor. We’ve committed so much money into so many fancy things for them to brag about that we are going to struggle to keep the lights on. From the outside, it’s pretty: people can look at Colorado and see all the nice things we have. Come through the doors and see how we have to use flashlights and you can’t use the toilet because the water’s been turned off.
Imagine how a more sound policy would’ve looked. We could have been judicious in spending and expanding government healthcare. We could have kept our government small. We could have lived more modestly, and been able to meet unexpected financial developments.
This is no structural problem. It’s not TABOR. It was (at least partly–you can’t subtract out runaway healthcare prices) a choice.
**Heads up for this Sunday when I’ll have some info to share on how and where Gov Polis and HCPF intend to trim Medicaid. If you’re thinking it’s taking options from some of the most vulnerable, you’re spot on!
https://coloradosun.com/2025/11/17/colorado-budget-cycles-1-billion-shortfall-medicaid/
https://content.leg.colorado.gov/explorebudget
READ THE FULL COMMENTARY AT THE COLORADO ACCOUNTABILITY PROJECT
Editor’s note: Opinions expressed in commentary pieces are those of the author and do not necessarily reflect the opinions of the management of the Rocky Mountain Voice, but even so we support the constitutional right of the author to express those opinions.
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