Colorado’s Health Care Landscape

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Executive Summary

Colorado has a strong record of delivering coverage to its residents. The state has deployed a variety of creative tools to meet these goals while incrementally reducing health care costs. This performance is recognized by national performance ratings and when comparing the state’s record to peers. At the same time, the state faces considerable federal headwinds that will likely reduce coverage and increase consumer out-of-pocket costs in the near term. In addition to this challenging terrain, the state has demonstrated some weakness in administering and overseeing core programs, particularly Medicaid, that compound these dynamics.
This report provides an environmental landscape assessment of Colorado's health care system. It relies on objective data to calculate its performance on key metrics, contrasts those outcomes with regional peers and national standards, and offers potential policy initiatives to improve system-wide performance. In doing so, it integrates a wide array of sources that includes government, independent think tanks and other research organizations, key state expert informants, and industry stakeholders. The report identifies the sources for its claims so that readers can determine the weight they choose to afford them.

Key Findings
  1. Colorado is a national leader in covering residents and other key metrics, but access to affordable, quality care remains a challenge. Approximately 94% of state residents have some form of insurance. Colorado ranks 10th overall on the Commonwealth Fund's 2025 State Scorecard. The state tends to perform below average on access to providers and the corresponding upward pressure this puts on prices.
  2. Incoming policies from the federal government pose a substantial threat of disruption. The expiration of enhanced premium tax credits and cuts to Medicaid will increase costs and reduce coverage for over 100,000 Coloradans. The Department of Health Care Policy and Financing projects the state could lose up to $550 million in hospital provider fee funds by 2032. Overall, the state may lose from $900 million to $2.5 billion a year in federal matching dollars, depending on how strategically it addresses these changes.
  3. Recent Medicaid spending growth is unsustainable. Spending in the state Medicaid program, Health First Colorado, increased approximately 66% from 2019 to 2025, even though enrollment declined over that same period. Long-term services and supports, behavioral health, and pediatric mental health care were the key drivers of these increases. The Governor's requested increase in the Medicaid budget for the current fiscal year was the largest in over two decades and contributes to the state's $1.5 billion budget shortfall. Payment rates, wages, benefit decisions, increased demand, and lapses in programmatic oversight are key sources of this cost growth. [1] [2] The September 2026 Legislative Council Staff forecast projects a $1.58 billion General Fund shortfall for FY 2027-28, with Medicaid the biggest component. [3]
  4. The state has pursued creative initiatives that have mitigated these challenges. The current governor's administration and the state legislature have adopted and funded a new reinsurance program, a public option program, and additional premium assistance. These programs collectively reduced projected average net premium increases for subsidized individual marketplace consumers in 2026 from 174% to 101%, according to the state's Division of Insurance.
  5. Price volatility is concentrated in particular regions and populations. Premiums in the Western Slope are over 50% higher than along the Front Range, and approximately 5% to 6% of Medicaid enrollees are the source of approximately 45% of overall program spending.
  6. Access to affordable, quality care is a challenge despite coverage wins. Many Coloradans with coverage still face substantial, often unaffordable bills for out-of-pocket costs, due to high deductibles and coinsurance. As a result, approximately 700,000 Coloradans had medical debt in collection in 2022.
  7. How Colorado addresses federal policy changes will be decisive in determining systemic impacts. The state's management of Medicaid unwinding during the COVID pandemic resulted in an unnecessarily high degree of coverage losses. It should improve its eligibility processing systems, which rely on often inefficient county administration and outdated technology, to successfully navigate this challenging environment.

Policy Options
‍The final sections of this report describe key questions driving the state’s health policy debate and conclude with a menu of policy options the state may choose to pursue, including both government-led initiatives and more market-oriented approaches. These options include an assessment of their timeframe and overall feasibility of implementation.
First Tier Questions: Perhaps most importantly and urgently, Colorado should address its plan for the expiration of state premium assistance in 2027, its most effective and efficient approach to addressing new Medicaid work and redetermination requirements, and how to ensure that rural, safety net, and other more vulnerable providers might be supported to maintain access to care.
Lower-hanging fruit: Relatively modest initiatives that can incrementally improve access and reduce cost may include enhanced enforcement of insurer network adequacy requirements and mental health parity, protections for consumers facing medical debt, investing in rural health care workforce, strategically recalibrating provider scope of practice, and continuing to ramp up program integrity programs.
Longer-term, systemic questions: Broader health care industry trends, such as those relating to provider consolidation and highly concentrated Medicaid spending, are not unique to the state, nor are they easy to resolve. Layered on top of these shared challenges are the state’s unique funding dynamics governed by the overlay of TABOR. More ambitious, less predictable paths such as all-payer spending regulation and the federally endorsed Basic Health Program have gained preliminary traction in a small handful of states. They have the potential to deliver more substantial improvements to cost, coverage, and access, but they are highly contested and a strong evidence base for predicting their results is not yet available.

Introduction

The purpose of this report is to provide policymakers with an introduction and landscape analysis regarding Colorado’s health care system. It sets a preliminary baseline at the time of drafting (fall 2026), describes the potential impact of ongoing implementation of enacted policies, and evaluates policy options that could be adopted to improve system performance.

Structure of the Report

The report begins by outlining the key findings and ongoing policy changes. For each, it describes the evidence base for those determinations and corresponding respective confidence intervals. It then analyzes the state health care landscape across six domains: coverage, affordability, access, state Medicaid program, the state policymaking apparatus, and how Colorado performs in comparison to national benchmarks. Throughout, the report references regional peer states: Arizona, Nevada, New Mexico, Utah, and Washington. These peers share similar geographic and demographic characteristics with Colorado.

Categorization of Source Materials

Three categories of sources shape the findings and policy considerations included in this report: independent government, think tank, and academic outlets; national surveys and rankings; and Colorado stakeholders.

Table 1 describes the sources’ key findings presented in the report. Table 2 provides similar analysis of the policy changes shaping Colorado’s health care landscape.

Table 1. Source Categories and Confidence Levels
Finding Tier 1 Tier 2 Tier 3 Confidence
~94% statewide coverage CHAS; Census ACS Commonwealth Fund Connect for Health CO High
System outperforms nationally on most metrics, underperforms on access HRSA; Chartis; HCPF Commonwealth Fund; MoneyGeek composite CO Rural Health Center High
Federal policy changes likely to reduce coverage and increase consumer costs CO Dept of Insurance; Cong'l Research Service, Cong'l Budget Office n/a Connect for Health CO; CO Assn. of Health Plans High
H.R. 1 bringing substantial Medicaid funding cuts HCPF; JBC; CBO; RAND; KFF n/a CHA; CCLP High
Underinsurance and medical debt rates Commonwealth Fund; Urban Institute n/a CCLP; CO safety net providers Moderate-High
Administrative capacity and execution partially responsible for Medicaid coverage losses HCPF; KFF n/a CCLP Moderate-High
Provider consolidation increases health care costs GAO; Georgetown CHIR; HCPF n/a CHA (disputes conclusions) Moderate-High (contested)
State behavioral health approach is in transition and hasn't resolved access gaps HCPF; DOI n/a BHA; providers Moderate
Projected coverage losses CBO; RAND; HCPF (ranges differ) n/a Varies by sector Low-Moderate
Growth in Medicaid costs with declining enrollment HCPF/Manatt; HHS OIG; JBC n/a ABA providers (dispute remedy, not spending data) High
Medicaid program integrity concerns HCPF/Manatt; HHS OIG; JBC n/a n/a Moderate-High
Table 2. Policy Changes Impacting Colorado through 2027
Change Timing Who is affected Projected effect State response
Enhanced premium subsidies expired Jan 2026 ~225,000 marketplace enrollees Premium increase of approximately 101%; ~75,000 more uninsured State Premium Assistance; reinsurance
Supplemental state premium assistance 2026-2027 176,000+ individuals below 400% FPL ~$10.6M/month cost; avg net premium ~$131/month Extended through 2027
State reinsurance program 2026 Individual market enrollees Reduces premiums 21.3% statewide (more in rural areas) Fully funded
Federal Medicaid work requirements Jan 2027 ~375,000 Medicaid expansion adults Coverage loss primarily via administrative churn Screening tools; outreach
Federal Medicaid six-month eligibility redeterminations Dec 2026 Same as above Additional churn; effect may be modest due to existing state cadence Income checks already take place quarterly
New immigrant eligibility restrictions Oct 2026 / Jan 2027 ~7,000 lawfully present immigrants Increase in uninsured rate Limited options
Decreasing cap on matched Medicaid provider fee FFY 2028 Medicaid financing $900M-$2.5B annual funding loss by 2032 Constrained by TABOR
Rural Health Transformation funds FFY 2026-2030 Rural hospitals and providers CO eligible for $200M+ from first cycle Apply for and deploy funds

Coverage

Baseline Data
According to the Colorado Health Institutes 2025 Colorado Health Access Survey (CHAS), 5.9% of Coloradans are uninsured. [4] A separate instrument, the Census Bureau’s American Community Survey, determined Colorado's rate of uninsured was 7.9% in 2024, compared to a national average of 8.2%. [5] It should be noted that these figures do not reflect subsequent cuts to federal funding for Medicaid and commercial insurance coverage.
Key Issues
As is the case across the country, employer-sponsored insurance is by far the largest source of coverage in Colorado, representing 53% of the state population. [6] Medicare covers 12.3% of Coloradans, and 6.7% of residents obtain coverage through the individual market. The remainder of covered individuals are enrolled in the state Medicaid program, though that figure fell by 600,000 people to 1.2 million covered lives from 2023 to 2024 due to the unwinding of enhanced coverage during the COVID pandemic. The state’s 34% decline in Medicaid coverage during this period was one of the largest in the U.S. Top-line rates of coverage stayed consistent, however, which likely reflects migration of many of these lives into employer coverage or the individual market, which often impose higher shares of out-of-pocket spending. [7]
Almost 350,000 Coloradans continue to be uninsured, likely due to a combination of enrollment challenges, language barriers, and immigration-related concerns. This population has higher than average rates of unemployment and is more likely to be Hispanic and speak a language other than English at home. [8] Some regions of the state, for example, Southwest Colorado, have higher rates of uninsurance and Medicaid coverage than the front range. [9]
Most Vulnerable Populations
Some regions of the state and demographic subpopulations are more likely to be impacted by the ongoing implementation of federal policy changes that are projected to reduce healthcare coverage and access. Coloradans acquiring coverage through the individual market are particularly vulnerable; 51.1% of Connect for Health Colorado enrollees are age 50 to 64, a pre-Medicare range that typically yields higher premiums. [10] Rural and mountain region Coloradans, those above the 400%-of-poverty income threshold for premium subsidies, immigrants, and modestly higher income, Medicaid-enrolled adults are also more likely to lose coverage than other residents. Medicaid enrolled or eligible individuals living in densely populated areas like Denver are also at risk because those regions face a much higher administrative burden relating to enrollment or eligibility redeterminations. [11] [12]
Recent Coverage Initiatives
In addition to the Medicaid and CHP+ programs that it administers and the Connect for Health Colorado individual and small group market, the state funds and operates two programs that deliver coverage to otherwise ineligible individuals:
  • Cover All Coloradans, which provides coverage to children and pregnant individuals without regard to their immigration status. [13]
  • OmniSalud / Colorado Connect, which provides approximately 6,700 undocumented residents with coverage in 2026. [14]

Affordability

Baseline Data
While the state has taken steps to mitigate them, individual market health insurance premiums have been rising substantially, with additional increases expected in the coming years. The 225,000 residents who receive some degree of premium subsidy were projected to see their average net premiums increase by 101 percent in 2026, primarily due to the expiration of enhanced ACA premium tax credits on December 31, 2025. [15] [16] Individual market consumers whose income is too high to receive subsidies were projected to see their premiums go up by 27 percent that same year, on average. [17] For reference, someone living in Denver who is 40 years old can buy a Bronze plan for $342-412 per month, a Silver plan for $590-703, or a Gold plan for $710, while someone living in a resort area like Eagle County may need to pay over $940 per month for Silver coverage. [18] Bronze, Silver, and Gold plans cover approximately 60%, 70%, and 80% of total expected health care costs, respectively, figures referred to as their actuarial value.
Main Issues
As noted above, older individual market consumers and those living in rural areas are more vulnerable to these increasing cost trends. Those aged 55-64 were projected to experience an average net premium increase of 144 percent in 2026, with even bigger increases for those living in rural areas (Montrose: 246%; Crowley: 223%; Garfield: 200%). [19] The effect of the expiration of the enhanced ACA subsidies is the so-called subsidy cliff, which subjects households with annual income levels just above the 400% federal poverty cutoff point ($62,600 per year for an individual; $128,600 per year for a family of four) to substantially larger premiums than those just below that amount. [20] The increase in 2026 for a silver plan for a family of four in Denver was about $14,000 and up to $21,000 for a similar family living on the Western Slope. [21]
Lack of competition among carriers in rural areas is one source of these disparities. In 2026, six insurers are competing in the Denver metro area, but several Western Slope counties have only one or two carriers. [22] Also consistent with recent trends, while Colorado Access is entering several counties in 2027, many of those same areas are losing access to plans sponsored by Cigna. [23] [24]
The state has taken important measures to mitigate these challenges. The legislature adopted HB 25B-1006 in a special session in 2025. The new law reduced net premium increases from 174% to 101%. DOI projected that it would reduce consumer premium costs by a total of $220 million and keep approximately 28,000 Coloradans insured. [25] The legislation combined direct subsidies and reinsurance strategies and directed disproportionate funding to the most vulnerable areas, such as rural and mountain regions. [26]
Calibrating Estimates of Future Effects
An important factor to consider is a recent trend in overestimating the downside effects of new policies. For example, DOI had estimated that up to 75,000 residents would drop coverage in 2026. That would equate to about 25% of the individual market. So far this year, however, only 7% of consumers in that market have stopped paying for coverage. [27] [28] As Connect for Health Colorado suggested, the newly enacted state premium support may have been more successful than expected in helping Coloradans maintain their coverage. [29]
The state has already taken two key steps to protect against further declines in 2027. SB26-178 draws on marijuana taxes, redirected operating funds, and other short-term solutions to extend the premium assistance program and immigrant-focused OmniSalud through that year. [30] [31] Final 2027 individual market rates increased an average of 10 percent year over year, compared with a national median of 15 percent. State premium assistance mutes the effect of premium increases on consumers to approximately $20 per month. [32]
Additional Out-of-Pocket Cost Concerns
Nationally, 23 percent of working-age adults are underinsured, according to a 2024 Commonwealth Fund report, and 57 percent of those have avoided getting necessary care as a result. [33] Underinsurance is also a key driver of medical debt. In 2022, approximately 700,000 Coloradans had medical debt in collection for a median amount of $693 and gross total exceeding $1 billion. [34] The state took action to prevent medical debt from being reported to credit bureaus, but that new law sunsets in 2028 and is subject to a legal challenge. [35] [36]
State Policy
As exemplified by the current administration’s Office of Saving People Money on Health Care, [37] Colorado has launched an array of initiatives targeting the amount residents pay in health care premiums and coinsurance. Many of these programs have some degree of funding limitations, political controversy, or legal uncertainty.
  • The Colorado Option: this “public option” program adds so-called standardized plans to the commercial insurance market with zero dollar copays for primary care and mental health services and other regulations. In order to be included in the network for these plans, which now constitute half of marketplace enrollment, hospitals must agree to meet price caps. The program allows the state to leverage additional punitive measures if hospitals do not comply (Figure 7). [38]
  • Reinsurance: this state-administered program provides secondary coverage to carriers in the commercial market and has likely generated over $2 billion in premium savings since its initiation in 2020. [39]
  • Premium Assistance: these are direct subsidies to over 176,000 insurance customers with incomes below 400% of the federal poverty level, with a cost of approximately $10.6 million per month. [40]
  • OmniSalud: this program delivers coverage to undocumented immigrants. Due to limited funding, it is allocated on a lottery basis. Starting in 2027, enrollees will be required to contribute a modest premium. [41]
  • Drug Pricing Caps: under state prescription drug affordability legislation, the state has adopted an upper payment limit for Amgen’s Enbrel. Amgen has sued and Cosentyx-related rulemaking is in process. [42]
  • Drug Reimportation: this new initiative allows the state to import drugs from Canada, where they are often sold at a steep discount compared with the U.S. market. While this is an FDA-approved pathway to lower drug costs, Canadian manufacturers must agree to participate, and Canada’s national government has banned exportation of drugs when doing so would undermine domestic supply. [43]
In addition to policy factors, broader market forces are also driving the ongoing increase in health care costs. Provider consolidation, drug pricing strategies, administrative overhead, and the rates at which consumers utilize services all play a substantial role.
Provider consolidation is a broadly documented phenomenon, though its impact on prices is debated. The federal Government Accountability Office (GAO) has noted that the portion of physicians affiliated with hospitals grew from 30 percent to 47 percent from 2012 to 2024, while other research suggests the broader share of physicians employed by hospitals or other corporate entities is closer to 80 percent. [44] [45]
When this conversion from independent practice to hospital-affiliated entity occurs, prices can increase when facility fees are added to the pricing structure. [46] It should be noted that these findings are often derived from the Colorado All Payer Claims Database, a robust but incomplete dataset that does not account for the uninsured, some self-funded employer plans, or residents covered by federal programs such as the VA, TRICARE, and Indian Health Service. [47] Employer-based insurance is not exempt from these cost trends; employer contribution to premiums equaled 7.3 percent of total employee compensation as of June 2026, and the ability of state policy to flatten the cost growth curve for that sector is limited. [48]

Access to Care

Relevant Data
Particularly in rural areas, Coloradans face considerable challenges in accessing the care they need. This is also a challenge across the country, where less than half of primary care needs in designated shortage areas are being met by some estimates. [49] [50] In Colorado, 34.4% of counties are classified as maternity-care deserts by the March of Dimes. [51]
HCPF analysis also finds significant unmet need in rural pediatric psychiatry, pediatric behavioral health, and access to inpatient psychiatric services. [52] While commercially-generated, one national ranking identified Colorado’s health care system as the eighth best nationally, with strong performance on cost and outcomes, but mediocre when it comes to access to care. [53]
Key Issues
Nationally, a consulting firm has estimated that 40 percent of rural hospitals operate at a budget deficit. Behavioral health and primary care shortages are also persistent national issues, with 89 percent of rural areas qualifying as behavioral-health shortage areas and more than 80 percent meeting the threshold for primary care shortage areas. [54]
The state is moving to reform behavioral health care. Under governance of the Behavioral Health Administration, the state launched four regional Behavioral Health Administrative Service Organizations in 2025, aligning with administrative regions for the broader Medicaid program. [55] The previously-referenced Colorado Health Access Survey has identified some room for optimism relating to pediatric access and overall mental health outcomes, though young adults continue to face the most challenges in both regards.
Safety Net Clinics
In Colorado (as in other states), safety net clinics bolster access to care, particularly for vulnerable populations. These include federally qualified health centers (FQHCs) that receive enhanced Medicare and Medicaid payments in exchange for complying with rigorous regulatory standards. Over 40 clinics in the state operate outside of that structure, with more flexibility but typically less federal funding support.
Safety net clinics disproportionately rely on income from Medicaid-covered patients and the 340B drug discount program to offset the cost of care they deliver to the un- and underinsured. To support these clinics, Colorado has recently enacted legislation to maintain provider ability to contract with pharmacies under the 340B program, deliver FQHC support, and additional funding. [56] [57]
Funding for these organizations continues to be volatile, however. Substantial federal FQHC funding is subject to annual budget debates [58] and the new Provider Stabilization Fund is a stopgap measure, not a long-term source of dependable funding. [59] Colorado’s separate Indigent Care Program saw enrollment decline from a peak of 225,000 to approximately 40,000 enrollees before it was repealed on July 1, 2025. [60]
Related Considerations: Network Adequacy and Behavioral-Health Parity
According to a 2023 U.S. Senate Finance Committee six-state Medicare Advantage secret shopper inquiry, participating staff could only book an appointment for mental health care 18 percent of the time, even when they followed plan provider directories. Errors in such directories are associated with a fourfold increase in surprise medical bills. [61]
Colorado has taken steps to address these failures in network adequacy, which are not limited to the Medicare program, by reinforcing these standards, building on DOI’s existing parity-enforcement program. [62] [63] One hospital sector informant suggested that the state could go further in leveraging these tools to protect consumer access to care. [64]
Overview of Related State Policies
  • Behavioral Health Administration: centralizes administration of crisis, substance use, and mental health care services. [65]
  • Rural workforce and telehealth measures: expand approved telehealth use and a specialized rural midwifery program to address maternity care shortages. [66]
  • Federal Rural Health Transformation Program: a $50B fund through 2030 that provided an initial Colorado allocation of over $200 million, though questions remain about how effectively it will be disseminated. [67]
  • Above-referenced safety net-specific financing programs: FQHC support, 340B protections, and additional safety net funding. [68]
  • Standardized behavioral health review and reinforced network adequacy standards: effective January 2026. [69]

Medicaid

Data
Colorado’s state Medicaid program is Health First Colorado. As of May 2026, it covered 1,238,719 Coloradans. The related, supplemental Child Health Plan Plus (CHP+) covers an additional 93,000 children and pregnant people. [70] Taken together, this represents 21 percent of the state population, according to the CHAS report.
HCPF, which manages Health First Colorado, has a budget of $20.6 billion in state fiscal year 2027, with almost $6 billion of that drawn from the state’s General Fund; 96 percent of these funds go to reimbursing health care providers. [71]
As in other states, a small share of Medicaid members accounts for a large share of spending: people receiving long-term services and supports (LTSS) are 6 percent of enrollees but 45 percent of spending. [72]
Spending Growth and Program Integrity
Colorado faced an estimated $1.5 billion General Fund shortfall for FY 2026-27, before the cuts and restrictions from H.R. 1 took effect. The Governor’s budget request included a $2.3 billion increase for HCPF alone, the largest increase in over 20 years, net of a proposed $537 million in spending reductions. [73] [74]
Medicaid General Fund spending exceeded its FY 2025-26 appropriation by approximately $200 million. The September 2026 Legislative Council Staff forecast assumes HCPF will require another $442.5 million in General Fund support this year to break even. For FY 2027-28, the LCS projects a $1.58 billion General Fund shortfall below the required reserve and HCPF accounts for well over half of that amount (Table 3). [75]
Table 3. FY 2027-28 General Fund budget outlook, September 2026 forecast
Component $ millions
Available above reserve requirement if FY 2026-27 appropriations are held flat (Scenario A) 685.8
Less: HCPF supplemental for FY 2026-27 442.5
Less: HCPF increase for FY 2027-28 (vs. FY 2026-27 appropriation) 859.5
Less: School finance 175.0
Less: SNAP state share under H.R. 1 157.6
Less: State employee compensation 93.8
Less: Higher education 33.0
Less: Base budget annualizations -7.3
Less: Capital construction, IT capital, and controlled maintenance 314.7
Less: Increase in required reserve 196.7
Provider rate increases (none assumed) 0.0
FY 2027-28 shortfall below 15% reserve (Scenario B) -1,579.7

Scenario B takes into account legal responsibilities. The HCPF number of $859.5 million is compared to the appropriation for fiscal year 2026-27 prior to the supplement; the year-to-year change after the supplement is $417.0 million. Source: Legislative Council Staff, September 2026 forecast, Table 2.

Most of the year-to-date overrun is attributed by LCS to Community First Choice, which extended homemaker and personal care services to members not covered under the disability waivers beginning in July 2025. The cost estimates for FY 2027-28 have risen by an additional $900 million since June. [76] HCPF and the Office of State Planning and Budgeting (OSPB) identified higher utilization rates per member, especially in acute care, behavioral health, and community-based long-term care, as drivers of these costs, not enrollment. [77] Projected Medicaid spending growth for FY 2026-27 is now 9.6 percent, up from 4.7 percent in the previous forecast. [78]
Since FY 2018, Medicaid and CHP+ spending has increased almost 60 percent, rising from 26 to 32 percent of the General Fund. [79] Over the same period, enrollment fell 10.5 percent while national enrollment grew 7.5 percent.
A 2026 review by Manatt Health for the Governor’s Office and HCPF, the Medicaid Innovation, Sustainability, and Opportunities (MISO) project, found that benefit spending grew 66 percent from SFY 2019 to 2025, with the fastest growth in pediatric behavioral therapy and non-emergent medical transportation (Figure 5). Long-term services and supports reached $5.3 billion, 35 percent of benefit spending and 42 percent of its growth.
MISO attributes LTSS growth mainly to state policy choices rather than utilization alone. The Joint Budget Committee raised wages for home- and community-based care workers 13 percent from 2022 to 2025, and spending on Division for Intellectual and Developmental Disabilities waivers rose 132 percent; long-term home health spending rose 128 percent. [80]

Rate Setting and Utilization Management
The legislature has often directed Medicaid rate increases. A pediatric behavioral therapy rate increase took effect in February 2024, and inpatient hospital base rates were rebased in July 2023. In July 2025, the state reversed non-emergent medical transportation rate increases after that spending grew faster than expected. MISO identifies tiered pricing by acuity, service intensity, or geography for select behavioral health services as a potential policy intervention to address this, noting that crisis stabilization units, an alternative to hospitalization, are often reimbursed at a higher rate than hospitalization. [81]
With regard to utilization management, the legislature blocked prior authorization for outpatient psychotherapy in 2022, which precipitated an approximate doubling of Medicaid enrollees receiving more than 56 sessions per year. HCPF has since reinstated the requirement. [82] [83] After SB 24-110 limited step therapy for certain antipsychotics, pre-rebate spending on those medications rose $14.5 million. The FY 2026-27 budget contemplated repealing the recent law. [84] [85] The intention of such laws is to protect patient access to necessary medical care, but strategies like prior authorization and step therapy may be warranted in some circumstances to better assess medical necessity, as the Manatt MISO report concludes. Many stakeholders continue to advocate that any application of these measures preserve clinician discretion and avoid unnecessary delays. [86]
In February 2026, the federal HHS Office of Inspector General (OIG) found that Colorado made at least $77.8 million in improper payments for applied behavior analysis in 2022 and 2023. An additional $207.4 million may have been improper, and the OIG identified at least one potentially improper claim in each of the enrollee-months it examined. Fee-for-service ABA payments rose from $60.1 million to $163.5 million from 2019 to 2023. [87] Colorado has more than 6,600 certified behavior technicians and an estimated 1,500 to 2,000 uncertified technicians providing therapy. [88] Spending per recipient of pediatric behavioral therapy nearly tripled from $11,340 to $32,250 between fiscal years 2018 and 2024, while the number of children served rose 164 percent. Four private equity-owned providers accounted for half of the increase in recipients receiving more than 10 hours of services per week. [89]
HCPF has moved to address this increase by introducing credentialing standards for behavioral health technicians, an emergency rule for PBT providers, pre- and post-payment claim review, and billing-system edits. It will phase in licensing for behavior analysts and ABA clinics from 2026 to 2028. [90] Three state actions for which MISO estimated fiscal impacts (LTSS program integrity, standardized PBT assessment, and withdrawal-management alignment) could save $188 million to $230 million for the General Fund over five years. [91]
Providers argue that approximately 25 percent of ABA staff are in supervised training and have sought a phased grace period. [92] Colorado’s LTSS share of Medicaid spending is in line with other states, and the state ranked fifth on the 2023 AARP Long-Term Services and Supports State Scorecard. [93]
H.R. 1
As many as 110,000 Coloradans could lose health insurance under H.R. 1 (Table 4). [94] Including interactions with other non-Medicaid provisions of the law, the Congressional Budget Office estimates it will reduce Medicaid spending by $911 billion over ten years. [95] HCPF has projected that the state will lose over $550 million in federal matching funds by 2032. [96] [97]
As a Medicaid expansion state that relies heavily on provider taxes and state-directed payments, Colorado falls in the category RAND identifies as facing the deepest cuts under the law. [98] [99]
Table 4. Estimates of H.R. 1 / OBBBA fiscal and coverage changes
Source Scope Estimate Timeframe
CBO (national) Federal Medicaid/CHIP outlays ~$911B; 10M+ more uninsured FY2025-2034
CRS (national; House-passed bill) Federal health-coverage outlays $907.5B; +9.1M uninsured FY2025-2034
RAND (national) State Medicaid funds $665B; 7.6M fewer enrolled 2025-2034
KFF (Colorado) Federal Medicaid spending ~$14B (~16%) 10 years
HCPF (Colorado) Annual state loss $900M-$2.5B per year by FFY2032
DOI/HCPF (Colorado) Coverage loss as many as ~110,000 people by 2034
CCLP, reading RAND (Colorado) Cumulative state exposure more than $7B by 2034
Policy changes under H.R. 1 include:
  • Requirements that ~375,000 expansion-population adults work at least 80 hours or earn $580 per month, with some exemptions for parents, caregivers, and people with disabilities. [100]
  • Eligibility determinations every six months for this same population. Prior to this change, it has been HCPF’s policy to confirm income quarterly, so its impacts may be muted relative to some state peers. [101]
  • Termination of Medicaid, CHP+, and marketplace eligibility for about 7,000 lawfully present immigrants. [102]

FY 2027-28 will be the first full fiscal year when these three policies are fully in force. While the eligibility restrictions may reduce state Medicaid spending, the provider fee matching fund cuts add substantial financing pressure. [103]
Eligibility Determinations and Coverage
As pandemic-era coverage expansions unwound, approximately 48 percent of Colorado renewals resulted in disenrollment, one of the highest rates in the nation. [104] About two-thirds of terminations in the first six months were due to administrative factors such as outdated IT infrastructure, communications failures, and fragmented county administration, according to the Colorado Center on Law and Policy. [105] The state has reduced the rate of process-related denials by 50 percent; HCPF is taking steps to modernize the CBMS and PEAK eligibility systems and consolidate county administration. [106] How well these systems perform will be a key driver of how many of the 375,000 adult Coloradans impacted by H.R. 1 eligibility changes will be able to maintain their coverage.
State Policy
Health First Colorado is provided through the Accountable Care Collaborative. The third phase of the program, starting in July 2025, has seen the formation of four Regional Accountable Entities (RAEs) in Colorado, which coordinate care and manage the capitated behavioral health benefit. For the risk-bearing entities, PRIME by Rocky Mountain Health Plan and Denver Health’s Elevate provide the program in certain regions of Colorado. The RAEs get $15.50 per member per month and can be eligible for an additional 5 percent of their behavioral health capitation based on certain quality measures. [107]
Colorado relies heavily on hospital provider fees, here referred to as the Colorado Healthcare Affordability and Sustainability Enterprise (CHASE), to fund its Medicaid program. This fee is currently set at the federal maximum of 6 percent of net patient revenue and these hospital dollars draw a federal match used to fund coverage for adults up to 133 percent of the federal poverty level. [108] H.R. 1 ratchets down the allowable percentage that can be assessed under this program to 3.5 percent by 2032. It also caps any new state-directed payments at 100 percent of Medicare rates (Figure 6). [109] Colorado submitted proposals in June 2025 to grandfather its higher rates. The Joint Budget Committee has reported that the state anticipated $725 million in total, including $446 million in federal matching funds, for the 2025-26 fiscal year. [110] Hospital-sector informants note that CHASE and supplemental payments have historically cushioned vulnerable hospitals and that the federal limits leave less funding for that redistribution.
In May 2026, the General Assembly created a 10-member Commission on Medicaid (SB26-187), chaired by Sen. Judy Amabile, to examine options for designing a sustainable Medicaid program, including addressing implementation of the changes under H.R. 1. Its recommendations are due by December 11, 2026. [111]
Last session, to close the FY 2026-27 budget shortfall, the legislature cut most Medicaid provider rates by 2 percent and the Joint Budget Committee approved a 56-hour cap on paid weekly hours per caregiver. [112] [113] At its September 2 meeting, the Medicaid Commission discussed administrative efficiency, policies affecting so-called dual eligibles who are also enrolled in Medicare, third-party liability, extrapolation audits, managed care modeling, fixed budgets for rural providers, and copays. [114] HCPF has said it will focus on administrative efficiencies, aligning benefits, program integrity, and maximizing federal and other non-General Fund resources. [115]

State Policymaking Structure

Colorado’s health care system is governed by multiple state agencies. Medicaid and CHP+ are administered by HCPF. The Division of Insurance regulates commercial markets and oversees the Colorado Option program, reinsurance, and the Prescription Drug Affordability Board. The state established the Behavioral Health Administration to manage those services. CDPHE is responsible for public health functions and Connect for Health Colorado manages the state insurance exchange.

TABOR and Fiscal Constraints
Colorado’s Taxpayers' Bill of Rights (TABOR) caps state revenues, which are otherwise expected to exceed its limits through FY29. Legislative Council Staff, however, attribute most of the recent budget shortfall to spending rather than revenue. [116] At the same time, the state Medicaid program has recently exceeded budgeted allotments. H.R. 1 exacerbates these fiscal challenges. [117]

Public Health Infrastructure
Federal public health funding has become more volatile recently. In March 2025, federal agencies sought to terminate ~$250 million in public- and behavioral-health funding for the state. Colorado led a legal challenge that resulted in a federal court blocking the terminations. The federal government dropped its appeal that summer. [118] [119] A separate proposal to rescind more than $600 million in CDC funding from Colorado and three other states was blocked in court in March 2026 and remains in litigation. [120] [121] Other cuts have taken effect: CDPHE terminated three vaccination programs after losing $27.8 million in immunization funding. [122] This volatility has implications for the state’s ability to budget and plan effectively.

Relevant State Policies
  • Section 1332 waiver - The state’s existing waiver combines reinsurance and the Colorado Option. Its federal pass-through funding decreased with expiration of the enhanced premium tax credits. [123]
  • Titles 10, 25.5, and 27 - These elements of Colorado statute govern insurance, health care policy and financing, and behavioral health, respectively. [124]

National Benchmarks

What the Data Show
Colorado ranked 10 out of 51 on the Commonwealth Fund’s 2025 State Scorecard. A commercial composite put the state at 8th. They have separate methodologies and are cited here as independent references for considering the primary factors assessed. [125] Among regional peers, Colorado leads on outcomes and ranks behind Washington state overall and on cost, and receives a mediocre assessment on access to care and the related metric of provider capacity (Table 5).
Table 5. Colorado health system performance relative to peers
State Overall rank (of 51) Outcomes Cost Access
Colorado 8 83 93 48
Washington 7 79 100 46
Utah 18 81 79 40
Arizona 28 69 69 29
Nevada 35 55 66 24
New Mexico 40 61 45 33

Scores are 0-100 pillar indices from a 2026 commercial composite built on Commonwealth Fund, CDC, KFF, and Census data, with weights chosen by the publisher.

Of note, the state is often regarded as a laboratory for policy initiatives, particularly those designed to curb health care costs. The expanding Colorado Option, the combined 1332 waiver, a cap on drug prices that was the first of its kind in the nation, and the Canadian drug importation plan are often cited in this regard. On the other hand, some of these policies are currently subject to legal challenges or federal restrictions. [126]

Key Debates

The Colorado Option

Supporters argue that the Colorado Option has delivered meaningful premium savings and now covers half of marketplace enrollment. Rate setting is an important backstop to enforce the change when voluntary measures fail.

Critics note that the program puts hospitals under financial stress that many of them cannot afford now, especially considering the accumulation of federal reimbursement and coverage cuts.

Medicaid Sustainability

Supporters argue that the proactive approach to redesign the program, the Medicaid Sustainability Framework, and the focus on high-cost and fast-growing service areas such as LTSS would help keep the program sustainable amid federal cuts.

Critics note TABOR and the reduction of the provider fee cap put the state in a position to find $900 million to $2.5 billion in funding, and the outcomes would be coverage restrictions or provider payment cuts.

Behavioral Health

Supporters argue the BHASO reforms created a single accountable agency for regional coordination that is already improving access to these important services for some populations.

Critics note that the establishment of a new state agency disaggregates oversight and care that the state has been striving to integrate for many years.

Rural Hospitals

Supporters argue that tailored state initiatives and the infusion of federal Rural Health Transformation dollars can stabilize these vital sites of health care and jobs in rural communities.

Critics note that 40 percent of rural hospitals across the U.S. operate in the red already and that Medicaid and other cuts will likely exacerbate that. Time-limited federal funds cannot prevent the accumulating strain, and service-line reductions and facility closures are likely in the coming years.

Individual Market

Supporters argue state premium assistance and reinsurance kept 2026 enrollment steady and constrained premium increases to an average of 10 percent for 2027.

Critics note that the 2027 extension of these programs depends on short-term funding. Informants question whether, with the pending state budget shortfall, the system can rely on these measures to stabilize the Connect for Health Colorado market, especially as its risk pool ages.

Prescription Drugs

Supporters argue that upper payment limits and Canadian importation give the state effective tools to lower drug costs for consumers.

Critics note the voluntary nature of manufacturer participation and that the initial cap on the pharmaceutical Enbrel is already facing a legal challenge, a signal of ongoing litigation risk.

Medicaid Program Integrity

Supporters argue that recent Medicaid growth is due to policy choices such as wage increases and expanded access to behavioral health while a relatively small, high-need population is driving the vast majority of cost increases. Improper payments, they say, are a relatively small portion of the $20.6 billion program. [127]

Critics note that enrollment declined at the same time spending rapidly rose. Rapid increases in utilization after targeted policy changes reflect arbitrage opportunities for institutional investors that are playing an increasing role in the health care market. Critics also cite federal audit findings and intentional removal of utilization management tools as evidence that this is primarily a management problem, not uncontrollable national trends. OSPB Director Mark Ferrandino said the governor’s November 1 budget request will assume Medicaid growth at the TABOR limit, which will require “significant reductions,” and estimated that keeping growth to 4 percent would save approximately $915 million. While JBC member Sen. Barbara Kirkmeyer said lawmakers will have to look at “program-specific cuts,” meeting a limit of that kind would require broad and impactful changes to eligibility, benefits, provider rates, or utilization. [128]

Policy Considerations

Colorado's incoming governor and state leaders face significant policy choices in addressing the state of Colorado’s health system. Table 6 below identifies several of these options, the authority for implementing them, their potential effect on the state budget, impact on the system, and a brief assessment of the tradeoffs. They are not recommendations. They are offered as considerations for further investigation.

We selected these policies using four criteria: (1) the state has authority to adopt it, though in some cases federal approval must be obtained; (2) the policy would address one of the aspects of system concern that this report raises; (3) one or more Colorado authorities, another state, or the federal government has prioritized it on their agenda; and (4) there is evidence available to draw reasonable inferences about its implications, even if those are contested. The options presented below include government-led and market-based strategies. We did not include policies that are strictly within the federal government’s domain and thus generally beyond the state’s control.

Table 6. Brief assessment of policy considerations
Option Authority Fiscal effect Coverage / access effect Strongest contrary evidence or risk
Extend Colorado Premium Assistance beyond plan year 2027 State legislature Approximately $100M-$150M/year, based on prior extensions Retains coverage around 400% FPL cliff Competes with Medicaid obligations; a bill sponsor has said the state cannot sustain it past 2027; does not address underlying cost growth
Minimize H.R. 1 coverage loss via outreach and streamlined renewals HCPF (within federal rules) Administrative cost; $57M verification cost cited Reduces avoidable procedural loss Cannot offset statutory eligibility changes; strategies depend on pending CMS guidance
Target high-cost LTSS for savings HCPF Potentially large savings Protects coverage, generally Risk of reduced access or quality for high-need members
Deploy Rural Health Transformation funds State + federal $200M+ federal, no state match Supports rural access Time-limited to 2030; impact of funding unclear and contingent on allocation strategies
Strengthen provider capacity and workforce State Moderate Addresses the access weak point Long lag time before full impacts realized; competes with neighboring states for the same workforce
Stabilize the safety net (safety net clinics, provider stabilization fund, 340B) HCPF / legislature Moderate Protects access for the most vulnerable as Medicaid and other cuts are implemented Federal 340B and community health center funding are outside state control
Enforce network adequacy and behavioral-health parity DOI / HCPF Low (administrative) Improves access Reaches only state-regulated plans, not self-insured employers; limited enforcement capacity
Site-neutral payment and facility-fee limits Legislature / HCPF Potential savings to payers Lowers prices; may not change volume Hospitals argue facility fees offset losses from government programs; rural facilities may be most exposed
Scope-of-practice and licensure changes (including interstate compacts) Legislature / regulators Low direct cost Expands supply of services with existing workforce pipeline Professional associations contest quality effects; evidence on outcomes is mixed
Review benefit mandates and plan-design flexibility Legislature / DOI Could lower premiums May reduce covered services Savings estimates are contested; risks shifting cost to patients and raising underinsurance
Explore all-payer or global-budget models (e.g., CMS AHEAD) State + CMS Redesign; possible savings Stabilizes hospitals; contains cost Requires federal partnership and provider trust that informants say does not yet exist; Maryland results are contested
Consider a Basic Health Program for 138-200% FPL State legislation + CMS certification (ACA Sec. 1331) Redirects 95% of forgone federal subsidies Cheaper coverage just above Medicaid Administrative build; shrinks the marketplace risk pool; federal funding methodology can change
Consolidate health agencies or redesign Medicaid delivery (PCCM) Legislature Uncertain Aims at coordination and quality Major structural change with transition risk and no guarantee of savings
Strengthen Medicaid program integrity and utilization management (LTSS, PBT, behavioral health) HCPF rules and contracts; some elements need new statutory authority MISO projects ~$188-230M General Fund savings over five years Preserves benefits by slowing avoidable cost growth Provider groups warn credentialing and authorization limits could disrupt access, particularly for autism services; savings assume implementation capacity HCPF must build; improper payments identified to date are small relative to a $20.6B program

Fiscal and coverage effects are directional assessments drawn from sources cited above, not modeled estimates. The final column states the strongest evidence we identified against each option.

Near-Term Federal Response
  • Mitigate the effects of the loss of coverage resulting from the administrative implementation of the eligibility requirements of H.R. 1 to preserve coverage of the exempt group and assist rural regions where there is high penetration of Medicaid programs.
  • Establish a cost-effective policy that will follow the expiration of the Colorado Premium Assistance Program after the plan year 2027.
  • Increase investments in eligibility systems and county capacity, including the provision of assistance to safety net clinics through the Provider Stabilization Fund.

2027 Legislative Session Opportunities
  • Prescription drug affordability, revisions to behavioral health approach, rural workforce strategies, and rural hospital sustainability are most often cited as having a viable near-term path.
  • Network-adequacy and parity enforcement, medical-debt protections, and safety-net financing are lower-cost, largely administrative options.

Longer-Term Structural Questions
  • Hospital mergers, spending on LTSS, workforce pipeline reforms, and how TABOR interacts with Medicaid cost growth are restricted in the short-term; however, a new governor could have an impact in their priority areas.
  • Structural options raised by stakeholders and cited above are worth investigation. Maryland's all-payer pricing strategy held per-capita hospital revenue growth to approximately 2 percent per year from 2014 to 2018, though stakeholders debate causality. [129] [130] The CMS AHEAD model now has five participating states. [131] Minnesota, New York, and Oregon have adopted the Basic Health Program model. [132] [133] Consolidating HCPF, the Behavioral Health Administration, the Division of Insurance, and perhaps other state agencies and rebuilding public-health infrastructure are long-term fixes with mixed evidence regarding their likely impact.

Appendix: Sources and Methodology

Source Categories
The sources cited are assigned to one of three tiers, which we enumerate in Table 1. When referenced, we identify them and adjust conclusions based on the interests of the entity cited.

Peer-State Benchmarking
As noted above, we selected peer states due to their comparable geography, health system challenges, and available policy responses. National and multistate comparisons reflect application of consistent methodology that may differ from surveys conducted within Colorado, which is why some of their data and signals differ.

Key Informant Interviews
We selected informants from government, provider, payer, and consumer perspectives. They responded in writing in July 2026 to open-ended questions tailored to their sector.
Informants are identified by sector, not name, and each is an interested party. Their statements are treated as informed perspective, not evidence. A claim made by a single informant is attributed that way and none of the assertions in the Executive Summary or Table 1 rests on interviews alone. Factual claims were verified against documentary sources and we did not include those that could not be independently validated.

Limitations and Level of Evidence
The most recent coverage figures we have from the 2025 CHAS do not reflect H.R. 1 changes and often rely on self-reported data. Claims data from CIVHC lag one to two years and omit the uninsured, residents covered by federal programs such as the VA, TRICARE, and Indian Health Service, and some self-funded employer plans. Federal-impact figures are modeled estimates and should be read as ranges, and 2026 premium figures vary widely by age and geography. Coverage, enrollment, premium, and budget figures are based on primary-source evidence. Several national findings on underinsurance, medical debt, and provider consolidation are applied to Colorado where state-specific data do not exist and are couched accordingly. Some premium and carrier-count details come from insurance-brokerage compilations and are used only for illustrative purposes. Budget figures for FY 2026-27 and FY 2027-28 are forecasts that will likely differ from the governor’s November 2026 budget request and December forecasts. As of September 15, 2026, the State Auditor stated that the office could not complete an audit of the FY 2025-26 TABOR revenue certification. [134]

Key Terms Used in This Report

  • Health First Colorado — Colorado's Medicaid program; ~1.24 million members as of May 2026.

  • CHP+ — Child Health Plan Plus; low-cost coverage for higher-income children and pregnant people (>93,000).

  • Connect for Health Colorado — the state's individual insurance marketplace (exchange).

  • Colorado Connect — companion platform serving undocumented residents through OmniSalud.

  • Colorado Option — state-standardized plans with premium-reduction targets and a rate-setting backstop.

  • Colorado Premium Assistance (CPA) — state-funded premium subsidy for marketplace customers below 400% FPL; extended through plan year 2027 by SB26-178.

  • ACC / RAE — Medicaid’s Accountable Care Collaborative and its four Regional Accountable Entities.

  • LTSS — long-term services and supports; ~5-6% of Medicaid members but ~45% of spending.

  • CHASE — Colorado Healthcare Affordability and Sustainability Enterprise; the hospital provider fee manager.

  • Enhanced PTC — enhanced federal premium tax credits; expired December 31, 2025.

  • H.R. 1 — the 2025 federal reconciliation law (P.L. 119-21).