DENVER – Colorado would lose $340 million in federal funding in 2020 when Medicaid provisions under Obamacare run out under the GOP-sponsored American Health Care Act, and the state stands to lose $14 billion in federal funds by 2030, according to analysis on the proposal released Thursday by the Colorado Health Institute.
The report says the state will have to choose between cutting up to 600,000 Coloradans from Medicaid by 2030 or making cuts to the state budget the nonpartisan CHI says would be “historic.”
CHI’s analysis shows that once Medicaid provisions, including Colorado’s expansion of Medicaid under the Affordable Care Act, are cut, that the state would start losing about $200 million in federal funding each year starting in FY 2020.
By 2030, federal funding through Medicaid to Colorado would be $2.26 billion less in that fiscal year alone than the state would have received under an unchanged ACA, according to the CHI analysis. The losses would amount to approximately $6 billion total over 10 years just from the AHCA change to a per-capita allotment system.
Under the ACA and Colorado’s decision to expand Medicaid in the state, the feds match state Medicaid spending dollar-for-dollar and matches 90 percent of state funds for people eligible under its expansion.
But those expanded members would not receive the federal funding match starting in 2020, and a provision that would force anyone with a lapse in Medicaid coverage for more than two months two pay a penalty to the insurance company.
The CHI analysis says that more than 20 percent of Medicaid members gain and lose eligibility each year, and under the AHCA, those members would not be able to rejoin the program to receive the expanded match.
“This provision of the AHCA would quickly whittle away at Medicaid eligibility, and by 2030, hardly anyone would be left from the ACA expansion,” the Chi report says.
The per capita allotments under the AHCA, which would set federal funding for Medicaid enrollees in each state on the basis of their age or disability status, would cost the state approximately $1 billion, according to CHI.
In 2023 alone, projections show a loss of $930 million to the state budget -- a number comparable to the current state budget for higher education.
"The state would absolutely be faced with some hard decisions," said CHI policy analyst Emily Johnson. "We kind of think that that's a big enough chunk of money that we just don't have lying around right now in our state budget."
"So if you're spending an extra billion dollars per year on Medicaid, that's $1 billion that's not...going to K-12 education, higher education or these other really key state funding sources," she added.
When the state opted to expand Medicaid and establish the state Medicaid program, Health First Colorado, expanded Medicaid membership has grown to be about one-quarter of the state’s population, according to CHI.
Its report projects there will be 1.6 million Coloradans eligible under the Medicaid expansion by 2020. But its projections show that 600,000 people who would have been eligible under that expansion would no longer be eligible by 2030.
“CHI expects that most people in this group would lose their Medicaid eligibility under the AHCA and become uninsured again,” the report says.
The report adds that an idea floated by some House Republicans to immediately do away with the Medicaid expansion under the ACA “would result in a much faster loss of federal funding and Medicaid membership in Colorado.”
To make up for the estimated $14 billion in budget losses by 2030, the report says that Colorado legislators would have four options:
Cut Medicaid eligibility
Cut provider pay
Find “unspecified innovations” to save money
But the report says that “of the four, only cuts to eligibility seem likely to be able to fully bridge the gap in federal funding.”
Cuts to Medicaid and its expansion has worried lawmakers and health care providers since the first drafts of the AHCA started making their way through Washington in February.
The new head of Medicaid, Seema Verma, and Health and Human Services Secretary Tom Price earlier this week sent letters to each of the country’s governors that criticized the Medicaid expansion under the ACA and urged them to impose further premiums and charges on recipients.
Gov. John Hickenlooper’s office issued the following statement to Denver7 about the letter Wednesday:
"The Governor has received the letter from Secretary Price and Administrator Verma. Colorado's Medicaid expansion helped protect Colorado's most vulnerable, including many working adults and those who struggle with mental health issues. We will continue to work to make sure that all Coloradans have access to affordable health coverage.”
The statement came after he said on a Fox News program over the weekend that the "repeal and replace" process pushed by Republicans has "gone haywire."
It also found there would be 14 million fewer Medicaid enrollees, and that older people would be hit hard by premium costs that would skyrocket under the AHCA.
The CHI said earlier this week that about a half-million Coloradans gained health insurance through the ACA – 400,000 through Medicaid expansion and 100,000 through Connect for Health Colorado, the state’s health insurance exchange set up under the ACA.
The CHI report notes that the AHCA and health care change “remains a work in progress” and said it would update its projects and analysis as any changes to the bill are made. It has so far made it through several House committees without significant changes.
The House could host a vote on the bill as early as Friday.
For more information on the CHI methodology for compiling the report, click here.