Federal Funding at Risk

An interactive graphic and analysis show where federal cuts would hit hardest in Colorado’s state budget

May 21, 2025

July 28, 2025

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UPDATE: Federal Budget to Bring Large Medicaid Cuts

On July 4, President Trump signed the Republican-backed budget bill, which makes historic cuts to health and social service programs.

This installment of CHI’s series on the impact of federal funding cuts to Colorado’s state budget will focus on Medicaid impacts. The Department of Health Care Policy and Financing (HCPF), which administers Medicaid (Health First Colorado) and other health coverage programs for low-income Coloradans, receives three-quarters of every federal dollar that comes to the state. As a result, it will be among the hardest hit by the new budget.

However, most of the Medicaid cuts do not take effect until at least 2027. Some of them phase in over a span of years. The graphic on this page uses a model from KFF, a national health policy research group. KFF modelled the Trump budget’s effects over the next 10 years and found that Colorado can expect a 16% cut in Medicaid funding compared to the current baseline. The cuts start small and get bigger through the next decade.

The budget contains an array of Medicaid cuts. CHI is looking at four of the larger changes, which fit into two categories — indirect cuts through paperwork barriers that will lead to people losing coverage, and direct cuts.

Paperwork Barriers

The new law introduces requirements that will make it harder for eligible Coloradans to prove they qualify for Medicaid coverage.

Work requirements. Beginning in 2027, most adult Medicaid members will have to prove they are working, volunteering, or in school for at least 80 hours a month. Exemptions will apply to people with disabilities, older adults, some parents, and more. CHI analysis finds that the vast majority of Coloradans on Medicaid would continue to qualify under these rules. However, the Urban Institute estimates that the work requirement’s paperwork barriers would lead to 95,000 to 108,000 Coloradans losing their Medicaid coverage.
Eligibility checks. Beginning in 2027, states will have to verify Medicaid eligibility twice a year instead of once a year. Like work requirements, these checks can impose a high paperwork burden on people who otherwise would qualify for coverage.

Direct Cuts

In addition to the administrative changes described above, the new law also reduces some Medicaid funding outright. The biggest reduction is in the hospital provider fee cap. Most states, including Colorado, charge a fee to hospitals that is used to draw down federal Medicaid matching funds. Starting in 2028, the maximum allowable fee will get smaller every year until it is a little more than half its current size. The cap could lead to an annual cut of up to $2.5 billion by 2032, according to HCPF — more than a fifth of all current federal funding for the department.

More than 375,000 Coloradans use Medicaid through the Affordable Care Act’s eligibility expansion. This group will be subject to the highest paperwork barriers. Altogether, the budget President Trump signed into law will make more Coloradans uninsured and put financial pressure on health care providers.

These cuts will jeopardize health care for many Coloradans — not just those in Medicaid. A cut in Medicaid funding is ultimately a cut to health care providers, because most Medicaid funding goes to paying doctors and hospitals to provide health care for Medicaid members. Federal cuts of this magnitude could force the closure of hospitals and safety net providers in the coming years.

Correction: An earlier version of this report incorrectly stated that the bill would lower funding for states that operate a health coverage program for immigrants without documentation. The Senate removed this provision from the bill.

Interactive graphic | updated May 21, 2025

Where Colorado’s Health and Social Services Are Vulnerable to Federal Cuts

Political news comes too fast for anyone to stay fully informed. Each day brings new developments in federal job cuts or tariffs being raised or lowered. State leaders are especially concerned about large cuts in federal funding proposed in the president’s budget

With a new interactive graphic, the Colorado Health Institute aims to help readers understand how federal funding cuts for the states could affect Colorado.

Federal funds make up about 30% of Colorado’s state budget. Major cuts force state leaders to make difficult decisions, especially in health and social services.

The first step in addressing this challenge is to understand its scope. With this in mind, the Colorado Health Institute created this interactive graphic to provide an easy-to-read way to learn where the state is most likely to feel the impact of federal cuts. We plan to make regular updates to this work as policies in Washington take shape.

More than half the federal funds that come into Colorado go to just one division of the budget — medical services premiums in Medicaid. This is the money the state pays health care providers to help Coloradans with low incomes or disabilities. It amounts to nearly $7.9 billion. Roughly $2.5 billion more goes to other services within the Department of Health Care Policy and Financing (HCPF), including behavioral health and community-based care for people with special needs.

Another $700 million in federal funding supports social programs in the Department of Human Services, such as food assistance and the Behavioral Health Administration.

A third of the state’s public health funding comes from the federal government. Most of the Colorado Department of Public Health and Environment’s federal funding pays for disease control and prevention, although the agencies that deal with hazardous materials and water pollution also rely heavily on funds from Washington. (See Table 1.)

Table 1. Health and Social Services Make Up Eight of the Top 10 Divisions in Federal Funding

The state legislature does not have the funds to make up for major federal cuts in these areas. The Congressional Budget Office estimated in May that proposed Medicaid cuts would cause 7.7 million people nationwide to lose insurance over the next 10 years. Another 6 million would lose coverage because of proposed changes to private insurance through the Affordable Care Act. A higher number of uninsured people puts a strain on safety-net providers.

Risks Extend Beyond Health Care

The dollar amounts of federal funds for health and social services dwarf those in other areas of the state budget. But other services still lean heavily on federal support — as users can see by clicking on any of the wedges in this graphic.

In the Department of Education, for example, more than $800 million in federal funds goes to local school districts. Most of this money is for school lunches and special education.

More than a third of the Department of Transportation’s budget comes from the federal government. It pays for work on federal highways such as Interstate 70, which spans the state from Utah to Kansas, or U.S. 287, which runs from Wyoming to Oklahoma.

Even in the smaller wedges, federal funds play an important role. For example, nearly 25 cents of every dollar used by the Department of Early Childhood comes from the federal government.

Defining the Problem Is the First Step to Solving It

Problem-solving requires a clear understanding of the problem itself. What is at risk, and what does not need immediate attention? Clearly, health care, public health, and social services are most vulnerable to federal funding cuts.

On the other hand, Colorado is relatively self-sufficient in many areas of government, including public safety, the court system, elections, natural resources, and energy. Colleges mostly get their money from state taxes and tuition, although this graphic does not account for the loss in federal research funds that go directly to universities.

With the problem defined, it’s easier to talk about solutions. CHI will make future updates to this work that reflect new federal actions — and possible ways for the state to deal with them.

Using the Graphic

This interactive sunburst-style graphic offers multiple ways to examine where Colorado depends on federal funding. It traces federal funds to 85 divisions in 19 state government departments.

Divisions — based on categories in the state budget, or “Long Bill” — are shown on the outer ring. The inner ring shows the cabinet-level department for each division. Popup boxes on the outer ring show a description of the division and its level of federal funding, both as a dollar amount and a percentage.

The size of the wedges in the main graphic reflects the dollar amount of federal funding. At the top level, it’s clear that Medicaid funding accounts for nearly three-quarters of all federal funding. But this graphic allows users to zoom in on specific departments, either by clicking on them or choosing them in the dropdown menu at the top left. By zooming in, users can learn important context about the role of federal funding in smaller departments.