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New medical forecast adds $207.6M in general fund pressure, sparking committee action
Summary
Budget staff told the Joint Budget Committee a February forecast increased Medicaid-related general fund needs by about $207.6 million across two years, driven by higher pharmacy costs and growth in long-term services and supports, prompting votes on staff recommendations to curb spending.
Budget staff reviewed a February medical expenditure forecast that increased projected general fund spending by roughly $69.7 million in FY25-26 and $137.6 million in FY26-27 relative to the governor’s November request, creating about $207.6 million in combined pressure.
Mr. Kurtz explained the primary drivers: higher acute-care per-capita expenditures (largely pharmacy) and substantially increased projections for long-term services and supports (LTSS), particularly home- and community-based services. He also flagged that the Children (Cover All Coloradans) forecast rose substantially — driven by higher assumed per-capita expenditures — and that these costs are 100 percent state-funded for children, while pregnant people draw a CHIP match rate (approximately 65 percent federal).
Committee members asked about the possible enrollment effects of HR1 (work requirements and renewals), and staff said the Department expects enrollment declines of over 100,000 people in later years in their modeling, with a portion tied to proposed work requirements, renewal frequency changes and restrictions on emergency-service-only immigrants. Staff noted shifts in eligibility categories could shift some people into disability eligibility, which is generally state-funded.
Members voted through several staff recommendations that are intended to address the forecast gap, including accepting the staff summaries of medical service premiums and other program forecasts, and asked staff to return with more refined numbers and the fiscal impacts of potential statutory changes. The committee recorded multiple unanimous votes to adopt staff recommendations during the session.
The committee did not finalize statutory changes in the meeting; it directed staff to prepare legislation and detailed implementation options for upcoming sessions, while adopting short-term staff recommendations and some implementation accelerations to capture near-term savings.
