Colorado Budget: Polis Caps Medicaid Growth Amid $1.6 Billion Deficit

Governor Jared Polis submitted his final budget proposal for fiscal year 2027-28 on Monday, outlining a plan to manage a projected $1.6 billion deficit. The document represents the eighth iteration of the budget request sent to the state legislature.

The proposal totals $20.9 billion for the Department of Health Care Policy and Financing. Polis described the overall budget as a 1.1% increase in total funds compared to the previous year. He stated that the plan relies on evidence and data to drive priorities that deliver results, maintaining that Colorado balances its budget annually.

The central tension in the proposal concerns Medicaid spending. Polis argued that health care costs must grow at a sustainable rate to protect funding for other state programs. He proposed capping Medicaid growth at 4.3%, a figure he aligned with the Taxpayer's Bill of Rights limit. This target represents a decrease of more than 10% from the projected 15% increase in spending for next year.

According to Polis, the 4.3% cap would result in approximately $820 million in total funding growth, with $250 million coming from the General Fund. He emphasized that this approach increases healthcare funding by over $800 million rather than cutting it. The governor cited over $15 million recovered through law enforcement actions in fiscal year 2025-26, $12 million from post-payment audits, and $93 million recovered from commercial insurers.

Advocates expressed skepticism about the plan. Priya Telang, communications manager for the Colorado Consumer Health Initiative, said the proposal raised immediate red flags. She argued that claiming to preserve care while simultaneously cutting services creates a contradiction. Telang specifically highlighted proposed cuts to Long-Term Services and Supports, reduced dental coverage, and the elimination of home health therapy services for adults.

Chris Stiffler, Senior Economist at the Colorado Fiscal Institute, described the presentation as a vague punt. He noted that the proposal lacked specifics on the service cuts required to realize the savings. Stiffler pointed to potential impacts on rural doctors and hospitals, as well as enrollment changes driven by federal legislation. He expressed frustration that the governor did not articulate the necessary cuts while opposing Amendment 87, a graduated income tax on the November ballot.

Senate Republicans attributed the budget challenges to Democratic leadership. State Sen. Barb Kirkmeyer, R-District 23, called for stringent oversight of Medicaid payments in a written statement. She stated that Colorado has seen spending commitments outstrip the state's ability to sustain them over the past eight years of Democratic control. The Joint Budget Committee will hold final authority over the budget during the upcoming legislative session.