With the signature of President Trump’s marquee domestic policy bill—H.R.1, the One Big Beautiful Bill Act—the federal approach to the Medicaid program is poised to change significantly. How Colorado’s political leaders treat these changes, both from a policy and budget perspective, remains to be seen.
The White House and congressional Republicans have sought to assure Americans that these changes will not amount to health care cuts for low-income individuals. The nonpartisan Congressional Budget Office estimates that H.R. 1 will reduce federal spending on Medicaid and the Children’s Health Insurance Program (CHIP) by $1.02 trillion over the next 10 years and could result in coverage for 12 million fewer Americans. Provisions in the bill related to work requirements, citizenship verification for new enrollees, provider safe harbor taxes, a cap on new State Directed Payment increases and support for state programs available to undocumented people all amount to a ground shift in a program that more than 1 million Coloradans rely on for health care.
Many of the program-specific changes in H.R.1 are focused on areas that have long been the target of conservatives in Congress. However, states generally have broad latitude with respect to their contributions to Medicaid, which in most cases represent a 50% match to the federal program allocation.
Colorado has made policy choices over the past decade that will make the burden of reordering state Medicaid dollars particularly acute—2014’s expansion under the Affordable Care Act to individuals falling under 138% of the federal poverty level and the creation in 2022 of Cover All Coloradans, a program for undocumented people, among them. Choices regarding how to approach changes to federal support for Medicaid will have to be made at least in advance of the upcoming fiscal year beginning July 1, 2026, if not sooner.
In response to the passage of H.R.1, rumors about a potential special legislative session in Colorado are increasing, a likelihood Gov. Polis referenced back in May if federal lawmakers followed through with spending cuts. While the new Medicaid work requirement doesn’t begin until the end of 2026, the Department of Healthcare Policy and Finance, the state’s Medicaid office, will likely request additional state dollars as early as this fiscal year to fund system and programming changes to the state’s Medicaid plan.
And although the Governor’s Office of State Planning and Budget has been hesitant to publicly handicap the likelihood of additional legislative days to address changes to Medicaid, given the extent of the shifts to the program, it seems increasingly apparent that an extraordinary session will be necessary. Should it materialize, lawmakers will face some difficult decisions.
During the 2025 regular session, the JBC was reluctant to cut Medicaid programs or provider rates even while staring down the task of trimming roughly $1 billion from the state’s discretionary general fund. In a remarkable feat of budgetary creativity, the committee was able to keep programs intact and even find funding for a 2.5% across-the-board provider rate increase. However, in the face of H.R.1, the committee is dealing with a new reality.
Political pressures from provider groups and stakeholders to preserve current funding levels will increase, calls to maintain coverage for the expansion population and for undocumented people will be significant given Colorado’s political leanings, and commercial health care groups will voice concern about new pressures on the need for uncompensated care.
With so little fat left to trim from specific programs and so much at stake for individual provider groups, the governor and legislative leaders could simply opt to make across-the-board cuts that disperse funding reductions equally while not cutting individual programs entirely. While this approach would avoid the need to single out programs and align Colorado’s priorities with those of Republicans in Congress, it is unclear if this would achieve the reductions necessitated by H.R.1.
Another key element of H.R.1 is the implementation of work requirements for Medicaid recipients. While the federal legislation outlines the framework for those requirements, it will be up to states to fill in the gaps either through the passage of state statute or the promulgation of rules from state Medicaid agencies.
In Colorado, the Department of Health Care Policy and Financing (HCPF) at the direction of the Governor’s Office is likely to take the least burdensome approach to work requirements that can be devised. This will result in fewer disenrollments from the program, but it will also offer less budgetary relief than a more aggressive approach might achieve.
With changes to the program on the near horizon, Coloradans are bracing for the impacts of their elected officials’ decisions. Republicans are eager to frame this as a much-needed and long-awaited streamlining of a program that was allowed to grow beyond its intended purpose, while Democrats are surely looking to make this the central issue for the 2026 midterm elections.
Voters will ultimately decide whose version of events they prefer.
