Polis Warns One Big Beautiful Bill Threatens Colorado Medicaid

The rain is falling on the steps of the Colorado Capitol in Denver. It’s May 29, 2025. A man stands there, holding a sign that reads “MEDICAID CUTS KILL.” Beside him are U.S. Reps. Gabe Evans and Lauren Boebert, speaking about the federal funding bill that has become a flashpoint for the state’s healthcare system. That man, and the thousands of people relying on the safety net he represents, are about to face a new threat.

Gov. Jared Polis is calling it “disastrous.” In a letter sent to federal regulators last week, the governor argues that newly proposed rules intended to implement H.R. 1 — the Republican-backed One Big Beautiful Bill Act — go far beyond what was signed into law last year. The rules, as proposed, could cost Colorado hundreds of millions of dollars annually in funding for both Medicaid and health insurance affordability programs.

This isn’t just bureaucratic red tape. It’s a sledgehammer aimed at the mechanism that keeps health insurance costs down for people in the valley and across the state.

The bill imposes work requirements for some Medicaid members, kicking in on Jan. 1, 2027. But the bigger financial hit comes from a change to how states leverage taxes or fees on healthcare providers, like hospitals. Colorado has a fee called the Healthcare Affordability and Sustainability Hospital Provider Fee. It’s simple in theory: the state charges hospitals a fee based on patient revenues, then asks the federal government to match it.

For the 2024-2025 fiscal year, that fee brought in $1.42 billion. The feds matched it, sending billions back to Colorado. The state then redistributed that pooled money. Hospitals received about $1.9 billion, netting more than $483 million through the program. The rest? It funds Medicaid programs, most crucially the state’s share of the Affordable Care Act’s Medicaid expansion. That expansion allows Colorado to extend coverage to people earning just over the poverty line, a lifeline for nearly 400,000 Coloradans who might not otherwise afford health insurance.

Polis writes that the new rules would expose the state to “substantial and ongoing losses of federal financial participation.” He warns this could require unwinding programs that stabilize Colorado’s commercial insurance markets. The state budget is already struggling to close deficits and rein in Medicaid spending. Adding this loss would put even more strain on a system that is already under pressure.

The part everyone skips past is the complexity of how state and federal funds interact. The Daily Sentinel reported on similar tensions in other states, but here in Colorado, the stakes are tied directly to the hospital fee. If Washington stops matching that money, or changes how it’s calculated, the entire funding chain breaks.

Stand there long enough and you see the ripple effects. A hospital loses revenue. The state loses its match. Medicaid expansion shrinks. Insurance premiums rise for the people who can no longer afford them.

The proposed rules are not yet final, but the state’s reaction is clear: this is a threat to the financial architecture of healthcare in Colorado. And that matters because it determines whether a neighbor can keep their coverage or watch it vanish into the red ink of a federal reinterpretation.

Back at the Capitol steps, the rain has stopped. The man with the sign is gone, but the issue remains. The rules are on the table, and the state is waiting to see if Washington will hold its ground or let the funding stream dry up.