Colorado’s battle to save Medicaid 

Plus: ????A whole lotta fightin’ going on at the Capitol

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Apr 23, 2025 - 11:41
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Colorado’s battle to save Medicaid 
A woman wearing a hat and a red dress, with an American flag draped over her shoulder, gestures with her hand as she speaks to a crowd of protestors.

Happy Wednesday, Colorado, and welcome to a policy-packed edition of The Temperature.

The lilacs in my Denver neighborhood are in bloom, and that means I’ve been spending a lot of time smushing my nose into bushes in strangers’ yards. There’s something about the annuality — annualness? — of their blossoms that is reassuring, like a memory water slide whooshing directly back to carefree spring and summer days of youth.

That feeling can be even more powerful now, when, as the items below demonstrate, we are facing a time of tremendous policy change — and not just because of federal upheaval. Massive, multibillion- and multimillion-dollar programs with deep, complex impacts on the infrastructure of our lives are now suddenly resting on rickety foundations, and what happens next if they topple is as uncertain as it is scary.

But the lilacs bloomed again. If they can do it, so can we.

Dr. Judy Brinkman, an OB-GYN, holds a poster during a “Hands Off!” protest April 5 outside the Colorado Capitol in Denver. “I am in health care, so health care, Medicare, and Medicaid … it’s my life’s work,” Brinkman explained. (Alyte Katilius, Special to The Colorado Sun)]*

Colorado is looking at $1 billion in cuts to federal Medicaid funding under the emerging GOP budget in Washington, and that would likely throw the state legislature into a special session to slash the program, Gov. Jared Polis’ budget director told health care leaders last week.

Speaking at the Colorado Hospital Association’s Hospitals on the Hill — a lobbying day for health care leaders that also features informational sessions for those leaders — Mark Ferrandino, the director of the Office of State Planning and Budgeting, was blunt in his assessment.

“Just to be clear to everyone,” Ferrandino said, “if that’s the cut, we are not backfilling, which means we have to make cuts both in Medicaid and other places in the state budget to deal with it.”

Medicaid is the state’s most expensive program. The agency that runs the program has an $18 billion budget for next year. More than $10 billion in that budget comes from federal funds, meaning Colorado could be facing a 10% cut in that funding if Ferrandino’s projections are correct.

Colorado contributes about $5 billion to the Medicaid program out of the state’s general fund, making it the largest source of general fund spending. When Ferrandino says the state will not backfill, he means the state won’t chip in more general fund money to make up for the possible federal cuts. We just don’t have the cash.

This is especially true because next year will see another tight budget, regardless of what happens at the federal level. Ferrandino described what lawmakers did this year to close a $1.2 billion budget gap as essentially punting the problem into next year.

“It is going to be a more difficult budget,” Ferrandino said. “We are going to have to look at cuts. I will say Medicaid … if not controlled is going to eat up the entire state budget. Which is going to mean we have to make difficult decisions in the health care space.”

The combination of these two funding crises has sent Colorado officials and health care leaders into overdrive in the past couple of weeks to fight against federal cuts to Medicaid.

Earlier this month, Polis and Lt. Gov. Dianne Primavera sent a letter to Colorado’s Congressional delegation urging them to reject cuts to Medicaid. The envisioned cuts could mean a loss of 12,000 jobs, $1.3 billion in state GDP and $82 million in state and local tax revenue, the pair argued.

“Children, hardworking individuals, people with disabilities, seniors, and safety net providers are not political pawns or talking points,” they wrote in the letter. “These cuts would mean losing access to lifesaving care with devastating consequences.”

The Colorado Health Policy Coalition, a group of more than 80 health care organizations from across the policy spectrum, followed that with its own letter opposing cuts.

And, most intriguingly, Colorado U.S. Rep. Jeff Hurd, a Republican who represents western and southern Colorado signed onto a letter urging House leadership to preserve Medicaid. Nearly one-third of people in Hurd’s district are covered by Medicaid, the highest percentage of any Colorado representative.

If the cuts do happen, Ferrandino said state officials do not yet have a plan for what they would slash — in part because it remains uncertain exactly which areas of Medicaid the GOP may target.

“I don’t know what we will do,” he said. “I don’t know what the legislature will do. I know we’ll be in a special session, so we’ll see all of you in July or September or August to deal with it.”

State Sen. Barbara Kirkmeyer, R-Brighton, speaks at a news conference Thursday at the Colorado Capitol. Patient advocates and labor representatives spoke in support of a bill that would require hospitals to file detailed reports on how much money they make off the federal 340B prescription drug discount program. (Jesse Paul, The Colorado Sun)

$700 million

The annual value of the 340B program to Colorado hospitals

Two opposing bills dealing with a prescription drug discount program that benefits hospitals appear stalled at the state Capitol. But that’s not the surprising part of this story.

The debate has to do with a federal program, called 340B, that we’ve written about before — it requires pharma companies to provide discounts on the purchase of outpatient drugs to hospitals that treat a lot of Medicaid patients. The program is worth $700 million a year to Colorado hospitals. Many small and safety net hospitals say the program is vital to keeping their doors open, but critics say the program has been used by big health systems to expand their profits.

So, the bills: One, Senate Bill 71, is backed by hospitals and started out as a way to block pharma from limiting the 340B program in Colorado. The other, Senate Bill 124, is supported by patient-advocacy groups but also some pharma companies, and it started out as a requirement that hospitals use 340B proceeds to provide financial assistance to patients and also to provide more transparency in how much they make off the program.

As they have moved through the legislature, the bills have come closer together. Senate Bill 71 now has some transparency requirements in it; Senate Bill 124 has dropped the financial assistance component and picked up some protections for hospitals.

The main differences now are how much transparency they require of hospitals (supporters say 124 requires more detail), and which hospitals they protect from pharma attempts to limit 340B (71 still protects all hospitals, while 124 protects only critical access and sole community hospitals).

Both bills have yet to receive a committee hearing in the House.

Here’s what’s most surprising, though: While the bills appear to be approaching a consensus, the bills’ supporters remain far apart on who they think 340B should benefit. And that may be driving the legislature’s indecision — especially since support for the bills doesn’t split along party lines.

Supporters of 124 called a news conference last week to urge lawmakers to create oversight for the program so that patients paying full price for their meds can benefit more directly from the discounts reaped by hospitals.

“Where are these discounts going if they’re not being passed onto patients?” asked Bridget Seritt, the founder of the group Advocates for Compassionate Therapy Now. “And the short answer is no one knows.”

Supporters of 71, though, said 340B is intended to be a hospital-assistance program to compensate hospitals that treat a lot of Medicaid patients to the detriment of their bottom lines. Josh Ewing, the Colorado Hospital Association’s vice president for rural health, said he thinks patient advocates are being genuine in their concerns. But he said the narrative around 340B at the Capitol is being distorted by “a web of lies” from the pharmaceutical industry.

Without 340B’s benefit, Ewing said, “the rural hospitals I work with — they’re not going to be there.”

The website for OmniSalud, Colorado’s program that provides health insurance subsidies to people regardless of immigration status, on Feb. 20. (John Ingold, The Colorado Sun)

Colorado may raise the amount of a fee charged to health insurance companies to guard against likely decreases to federal insurance subsidies. But the proposal — which supporters say is necessary to keep the state’s wildly successful reinsurance program from shrinking — is generating a surprising amount of heat.

House Bill 1297 is scheduled tomorrow for a long-awaited hearing in the House Finance Committee, where it faces uncertain prospects. The bill would increase the fee on insurance premiums by 1 percentage point, bringing the fee to 2.15% of premiums for nonprofit carriers and 3.1% of premiums for for-profit carriers.

Supporters want to increase this fee because Colorado’s reinsurance program — which helps insurers in the individual market pay their highest-cost claims, allowing them to keep down premium prices for everyone — is likely to see a dent in its funding. Pandemic-era enhanced federal insurance subsidies for people who buy coverage on their own are set to end this year.

If they do, Colorado will receive a lot less money from the federal government to fund the reinsurance program. The state projects the program will by the 2026 fiscal year be millions of dollars short of what it needs to sustain its support for insurers at the current level.

The fee increase is intended to replace that. But the bill would also change how the money from the fee is allocated, steering more toward a program that provides subsidies to help immigrants, regardless of legal status, purchase insurance. (The federal funding, roughly $300 million a year currently, all goes toward reinsurance.)

Cue the heat.

In comments to Colorado Politics, Kevin McFatridge, the executive director of the Colorado Association of Health Plans, an insurer trade group, said state insurance commissioner Michael Conway threatened in a meeting to defund the reinsurance program in favor of the program for immigrants if insurers didn’t get on board with supporting House Bill 1297.

“He emphasized that he tried to be friendly with the original proposal but is now prepared to ‘get ugly’ and pursue a more aggressive approach if the bill does not pass,” McFatridge said.

The meeting was open to the public but not recorded, so it’s not possible to independently verify what was said.

Conway, in an interview with The Sun, said he wasn’t threatening anything but rather was trying to explain the difficult choices he believes the state will face if the bill doesn’t pass.

“The words never came out of my mouth that we were going to defund reinsurance,” he said. “It’s just a ridiculous statement.”

As viewed through a fisheye lens, a maintenance worker March 25 cleans the hand rail on the stairs in the rotunda of the Colorado Capitol. (AP Photo/David Zalubowski)

14

Days left in the 2025 Colorado legislative session

As of today, there are officially two weeks left in the legislative session. And, in addition to the bills above, there are still quite a few pieces of health care legislation hanging in the balance.

Here’s where they stand:

New: Yes, bills are still being introduced. A big one dropped last week in Senate Bill 290, which creates a fund to provide “stabilization payments” to hospitals, clinics and other health care providers that care disproportionately for low-income patients.

The money will come from the interest on the state’s Unclaimed Property Trust Fund, as well as from grants and donations. Supporters say they aim to build up more than $100 million in the stabilization fund. The bill unanimously cleared its first committee hearing.

On its way: Senate Bill 196, the measure we’ve written about before to codify in state law current federal health insurance requirements for coverage of preventive services, has made it to the House floor. It picked up an amendment along the way to address the concern that the bill could accidentally sink high-deductible insurance plans in the state.

To the governor: A bill that expands Colorado’s right-to-try law to make it easier for terminally ill or severely debilitated patients to request access to experimental, personalized treatments has cleared both chambers. House Bill 1270 now needs only the governor’s signature to become law.

Stuck: One of the most hotly fought-over health bills of the legislative session, House Bill 1174, is stalled. The bill would give the state authority to dictate hospital prices charged to people covered through small-group insurance plans and also to people covered by the state employee health insurance plan. Such “rate-setting,” as the idea is known, is an approach that progressive Democrats have long favored. Hospitals say it could be financially ruinous. The bill cleared committee in the House in March, but it hasn’t budged on the floor since then.

Signed: Colorado has now officially changed how it sets its school vaccination rules to RFK Jr.-proof them. Gov. Jared Polis signed House Bill 1027 earlier this month.

Dead: A bill that would have expanded the authority of the Colorado Attorney General’s Office to review proposed mergers and acquisitions of hospitals and other medical providers died in committee. “All this bill did was require transparency,” Sen. Cathy Kipp, D-Fort Collins, said moments before asking the committee to kill her bill this year so she could work more and bring it back next year.

(Chart by John Ingold, The Colorado Sun)

Earlier, we talked about the high stakes in a battle at the state Capitol over prescription drugs. Here’s another way to look at the staggering amount that Coloradans — and their insurance providers — spend on medication.

The above numbers come from the Center for Improving Value in Health Care, which collects a whole bunch of data on medical claims in Colorado. We charted the 15 drugs with the largest combined “allowed amounts” — that’s what insurers have negotiated to pay for the drugs.

A couple other caveats: This is not the total amount spent on these drugs. This data comes only from the commercial insurance market, so it doesn’t include spending through Medicare or Medicaid. It also doesn’t include data from a whole bunch of self-insured large employers.

So this is more of a way to understand which drugs drive the most spending, and that answer is pretty clear: Humira, the blockbuster drug used to treat arthritis, plaque psoriasis, Crohn’s disease and other conditions. It’s on this list three times — each of a drug’s different formulations or administration methods gets its own line in this data.

Humira’s high cost — in the $50,000 per person per year range — and its relatively large number of patients is what pushes it to the top of the list. But you could slice this data differently and come up with a different insight.

For instance, looking at which drugs cost the most per patient yields a podium with three drugs — Ruconest, Takhzyro and Orladeyo — all used to treat hereditary angioedema.

CIVHC has a whole bunch of data on prescription drug and other health care costs on its website. We got this particular dataset by filing a request for the info here.

Whew, that was like receiving a master’s degree in health policy during the course of a single newsletter. Go ahead and put that on your resume; you can list us as a reference.

Remember when this newsletter just wrote about how bad the Rockies are? (They’re still comically terrible, BTW.) Let’s recapture some of that carefree spirit this afternoon. Those lilacs aren’t going to sniff themselves.

— John & Michael

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