Colorado lawmakers back $90 million loan to stabilize safety-net health providers

Lawmakers on the House Health & Human Services Committee advanced Senate Bill 290 on a 12-1 vote after hearing testimony that Colorado’s safety-net health providers are struggling following the COVID-19 public health emergency and the Medicaid unwinding.

The bill creates a Provider Stabilization Fund seeded by an interest-free interfund loan from the Unclaimed Property Trust Fund totaling $90 million over five years, with repayment required by July 1, 2045. The bill allows private contributions and seeks federal Medicaid matching funds through mechanisms such as Section 1115 demonstration authority. Lawmakers and proponents said the aim is to get money quickly to federally qualified health centers (FQHCs), community behavioral health providers, rural health clinics and other clinics serving low‑income, uninsured and publicly insured Coloradans.

Supporters said immediate funding will help providers avoid layoffs, site closures and service reductions that have already been reported across the state. “Providers told us they were weeks, if not months, from closing,” Representative Byrd said while outlining the bill’s mechanics, adding that the first payments would begin in fiscal year 2025–26. Representative Burt and Representative Brown, the bill sponsors, described a public–private partnership in which the Colorado Hospital Association committed to raise $40 million from its members over two years to supplement state funds.

Treasury and some committee members voiced concerns about using the Unclaimed Property Trust Fund. Leah Marvin Riley of the Colorado Department of Treasury said the fund holds private property that can be claimed by owners and that diverting large sums creates “fiduciary, legal and sustainability concerns.” Treasury asked for stronger repayment guardrails and monthly or annual repayment schedules rather than a single statutory deadline two decades away. Committee members questioned how often loan interest alone versus corpus would be used, and sponsors said the bill is structured to use interest first and the loan must be repaid.

Committee members also pressed sponsors about the federal matching picture. Supporters noted Section 1115 demonstration authority and other federal options could allow states to draw down federal match on some of the spending but said federal approval is uncertain and cannot be relied on for the initial state-backed transfers.

The bill sets an initial payment of $25 million on Aug. 1, 2025, with distribution to qualifying providers determined by an administrative board and by formulas based on the volume of low‑income, Medicaid and uninsured patients each provider serves. The legislation also creates a Provider Stabilization Fund Support Board to advise on distributions and oversight and requires reporting to the Joint Budget Committee and relevant legislative committees.

Amendments adopted in committee clarified technical accounting for the interfund loan and specified that recipients be Colorado residents and that at least two of five advisory-board members be from rural providers. The bill was advanced to the Appropriations Committee with a favorable recommendation, 12-1.

Why it matters: Coalition witnesses — including the Colorado Hospital Association, Colorado Community Health Network, the Colorado Behavioral Healthcare Council, the Colorado Rural Health Center and representatives of independent clinics — described immediate operational shortfalls: staff layoffs, frozen hiring, consolidation of sites and use of reserves. Proponents said short-term stabilization could prevent irreversible losses of safety‑net infrastructure while the state works on longer-term payment and coverage reforms.

What’s next: The bill goes to the Appropriations Committee for funding review and any further fiscal changes. Sponsors said they will continue outreach to Treasury and stakeholders to refine repayment guardrails and to monitor whether federal match can be secured.