Polis proposes $600M Medicaid cut to align spending with TABOR limits

Colorado Governor Jared Polis proposed a reduction of more than $600 million in projected Medicaid spending in his final state budget request, aiming to curb healthcare costs that he argues the state can no longer sustain. The proposal, delivered to the Joint Budget Committee on Sunday and detailed at a Monday news conference, represents a significant shift in the state's approach to managing its largest mandatory expenditure.

Polis maintained that the plan increases funding for the Department of Health Care Policy and Financing's general fund by $250 million. However, this increase is insufficient to cover the program's current service levels. To meet his funding target, the state would need to significantly reduce the scope of services provided to low-income households and individuals with disabilities. The governor rejected the characterization of the plan as a cut to healthcare, stating that no one could claim the budget reduces healthcare funding in any way, shape, or form.

The proposal specifically identifies approximately $300 million in immediate cuts. These measures include the elimination of adult and senior dental care coverage, the removal of in-home physical therapy benefits, and the termination of Cover All Coloradans. The latter program provides healthcare to immigrant children and pregnant women residing in the United States without legal permission. The budget also proposes reduced payments to teaching hospitals with medical residency programs and the elimination of certain funding streams for pediatric hospitals.

Additionally, the plan reinstates prior authorization requirements for behavioral healthcare services. Polis noted that an additional $300 million or more in unspecified cuts will be identified later. He emphasized that the goal is not to remove individuals from the federal program, which serves roughly one in five Coloradans, but rather to ensure the system remains sustainable for those who need it.

The core of Polis's argument centers on the Taxpayer's Bill of Rights, or TABOR. This constitutional amendment limits state revenue growth to the combined rate of consumer inflation and population growth. Polis proposed limiting healthcare spending growth to 4.3% to match this cap. He argued that if the next governor fails to align Medicaid spending with this growth rate, the state will be forced to make deeper cuts to K-12 and higher education.

Since 1994, the first year TABOR's spending cap was in effect, the state healthcare budget has grown by 828%. In the same period, the TABOR cap has risen by only 271%. This disparity has required the state to offset healthcare growth with reductions in other services, a trend Polis believes must be corrected to protect school funding.

Healthcare advocates responded with criticism, arguing that the proposed cuts place vulnerable Coloradans at risk. Adam Fox, deputy director at the Colorado Consumer Health Initiative, stated in a statement that the budget exacerbates an already worsening affordability crisis. He noted that the proposal contrasts with the preferred solution of progressive Democrats, who support Amendment 87's proposed tax hikes on the wealthy.

Polis, who leaves office in January after two terms, suggested that his successor would share his values regarding fiscal sustainability. He indicated that the next governor would prioritize funding schools and maintaining Medicaid access over allowing unchecked spending growth. The Joint Budget Committee begins its work on the budget later this month, with Polis scheduled to present an updated request in early January after accounting for the results of several November ballot measures.