CHI’s New Analysis of Medicaid Expansion in Colorado

We all knew Colorado’s Medicaid expansion would have a huge impact on the state. But few expected it to be this much, this fast.

The state Medicaid expansion was larger – and costlier – than almost anyone anticipated. As of June 30, 2015, an additional 289,000 Coloradans have enrolled in Medicaid. This has cost nearly $1.6 billion, 29 percent more than initial projections, according to a new analysis by the Colorado Health Institute.

The federal government has picked up most of this tab, with less than five percent coming from state coffers. Right now, Colorado’s only costs related to expansion are covering the “welcome mat” enrollees who were already eligible under pre-expansion criteria but hadn’t enrolled.

But in 2017, Colorado’s share of Medicaid expansion expenditures will start to grow. States will be responsible for 10 percent of the newly eligible Medicaid expenses by 2020.

If expenditures continue to grow at recent rates, we estimate that Colorado will be spending $222 million annually on Medicaid expansion by the time the program is fully ramped up in fiscal year 2020-21. Revenues from the Hospital Provider Fee are slated to cover these costs in order to spare the state’s General Fund from having to pay for them.

While it is important to analyze the costs of Colorado’s decision to expand Medicaid eligibility, it is also important to consider the benefits. By mid-2017, 363,000 Coloradans will have gained health insurance through Medicaid due to expansion. These residents will have better access to care and stronger financial security. The state may even save money by reducing spending on programs for the uninsured and by improving the health of its most vulnerable residents.

The benefits to enrollees, potential economic stimulations and cost savings were all part of Governor John Hickenlooper’s rationale when he proposed implementing the ACA expansion.

The decision to expand Medicaid was more costly and has covered more people than almost anyone expected. Effects on the state’s economy and residents will continue to play out for many years to come. In the meantime, CHI will be dusting off our crystal ball and watching the tea leaves. Stay tuned for updated predictions and calculations as we continue to follow Medicaid expansion in Colorado.