Gov. Jared Polis Signs $46.8B Budget With Medicaid Cuts

Rep. Emily Sirtota called it a “zero-sum game.” A dollar here means a dollar less over there. That’s the blunt reality facing Colorado’s healthcare system as Gov. Jared Polis signed the $46.8 billion state budget on May 8. The fiscal year 2026-27 plan closes a roughly $1 billion gap, and Medicaid took the biggest hit.

Let’s do the math. Medicaid has eclipsed K-12 education as the single-largest chunk of the state’s general fund. It now accounts for roughly one-third of all spending from that fund. To balance the books, lawmakers had no choice but to cut healthcare spending while preserving education funding. The result is a 2% reduction in reimbursement rates for most Medicaid providers.

For folks around here, that 2% cut sounds small. It isn’t. Providers are already squeezing margins. When you combine that with the broader cost pressures, the impact on local clinics and hospitals is immediate. The budget also caps adult dental benefits at $3,000. If you need more than that, you pay the difference. It’s a hard limit.

The state’s spending gap didn’t appear out of nowhere. It’s the result of several compounding factors. The legislature is bound by TABOR, the Taxpayer’s Bill of Rights, which limits revenue growth to population growth plus inflation. That’s a rigid constraint. Meanwhile, costs for Medicaid services have surged. Inflation is one driver. Expanded benefits are another. But the biggest shock is the demand for expensive, long-term care services. Colorado’s population is aging. Older folks need more care. That care costs more.

The budget targets specific areas to claw back costs. It limits billable hours for at-home caregivers of family members with severe disabilities to 56 hours per week. That’s a hard cap on hours. It also phases out, by Jan. 1, automatic enrollment for children with disabilities to receive 24/7 care as adults. You’ll have to requalify. The system won’t just roll you over anymore.

Cover All Coloradans is also getting trimmed. This program provides identical coverage as Medicaid to low-income immigrant children and pregnant women, regardless of immigration status. Created in 2022, it was supposed to be a steady expense. It wasn’t. Spending on the program grew more than 600% beyond its original estimate. It went from roughly $14.7 million to an estimated $104.5 million for the 2025-26 fiscal year. That’s a massive overrun.

The cuts include an end to long-term care services for new enrollees. Dental benefits are capped at $1,100. And there’s an annual enrollment cap of 25,000 for children 18 or younger. Once you hit that cap, you’re out. No exceptions.

On paper, these adjustments close the $1 billion gap. In practice, they shift the burden to providers and patients. The 2% reimbursement cut affects every clinic that takes Medicaid. The dental caps mean families pay out-of-pocket for routine care once they hit $3,000. The caregiver hour limits mean families might need to hire additional help or reduce care hours.

Rep. Sirtota noted that the year “challenged each of us in a myriad of ways that put our values to the test.” That’s political speak for “we had to pick winners and losers.” Education won. Medicaid lost. The budget preserves K-12 funding. It cuts healthcare to make up the difference.

The bottom line for locals is simple. Expect tighter budgets for providers, which may mean fewer accepting new patients. Expect higher out-of-pocket costs for dental and long-term care. And expect a stricter eligibility process for those transitioning from childhood to adult care. The state saved money. You’re paying for it in service limits.