Copyright The Denver Post
Gov. Jared Polis’ pitch to sharply rein in Medicaid spending and privatize the state workers’ compensation insurer ran into skepticism from the legislature’s Joint Budget Committee on Wednesday, setting up a showdown as they attempt to bridge another $1 billion spending gap. Polis, in his balanced budget proposal that was due Nov. 1, looked to restrain runaway Medicaid spending and again leaned on privatizing Pinnacol Assurance to generate money to reach that balance. The legislature will have the final say on the budget document, however, and several members of the powerful six-member, bipartisan committee questioned how the governor landed on the solution. Sen. Jeff Bridges, a Greenwood Village Democrat who’s now vice chair of the committee, called Polis’ Medicaid cuts “particularly large.” But with the low-income health insurance program representing more than a third of the $18.6 billion general fund budget — and growing far faster each year than the general spending growth allowed under the Taxpayer’s Bill of Rights — it’s a clear target. “It is not an unreasonable approach. However, it is concerning to see,” Bridges said. Polis countered that his budget proposal for the 2026-26 budget year, which begins July 1, still would allow state Medicaid spending to grow by 5.6%, or by nearly $300 million. It would be a historic increase, even if it’s less than the nearly 12% bump that would be necessary to continue providing the same services next year. His budget aims to limit some Medicaid services, including by capping dental benefits, and roll back some increases in how much the state pays Medicaid providers for their services. Polis characterized it as an attempt to rein in long-term cost increases without kicking people off the insurance. “Inputs don’t necessarily lead to better outcomes,” Polis said of higher overall spending. “So we’re focused on which investments lead to better, healthier outcomes.” He warned that without substantial changes to how the state manages Medicaid, the program will “squeeze out everything else” the state pays for: roads, support for agriculture, public safety and more. Sen. Barbara Kirkmeyer, a Brighton Republican on the committee, blasted the governor’s budget proposal as making de facto cuts to Medicaid simply because the overall budget doesn’t keep up with inflation. She noted that many counties are classified as maternal health care deserts already — meaning residents must travel for pregnancy-related care — and cuts to Medicaid will only exacerbate such rural health care struggles. “This isn’t a trim. It’s a blow to families who are already fighting just to get care,” said Kirkmeyer, who is seeking the Republican nomination for governor in 2026. “… This just isn’t a responsible budget to me.” Lawmakers also knocked Polis’ proposal, again, to privatize Pinnacol Assurance. The quasi-state entity is the state’s workers’ compensation insurer of last resort, meaning that many high-risk businesses rely on it for coverage. But Pinnacol can insure only employers within Colorado’s borders, making it less competitive with other providers that operate across state lines. Polis sought to privatize the entity in his last budget, too. But that proposal never gained traction in the legislature. It was doomed by concerns from labor interests that it would result in worse coverage for workers and by concerns that spinning it off wouldn’t deliver the hundreds of millions of dollars Polis’ office estimated. Those concerns remained on Wednesday. They’re bolstered by a 2009 state solicitor general’s memo that questioned whether the state could even take any money from the insurer if it was completely spun off from state government. “I can’t help but feel frustrated and a bit anxious with what’s laid before us,” state Rep. Emily Sirota, a Denver Democrat and the chair of the budget committee, said. “… We’re proposing to balance the budget on the back of workers and business owners.” Polis estimated the Pinnacol spin-off would net the state some $400 million, which could be used to preserve the homestead property tax exemption for older Coloradans, as well as to support other parts of the budget. But if lawmakers persist in their coldness toward the proposal, they will have another $400 million gap to fill in coming months. The governor’s budget proposal represents a starting point as lawmakers plot out the state’s spending plan for the next fiscal year. Several are also running for new offices in the 2026 election. In addition to Kirkmeyer’s bid for the governor’s office, Bridges is running for state treasurer and Sirota is running for a state Senate seat. The next several months will see a marathon of presentations from state departments arguing for more or less money or to be left untouched as the Joint Budget Committee tries to bridge the gap. But without substantial changes, it will only be the latest turn at cutting $1 billion from the budget, warned Craig Harper, the staff director for the Joint Budget Committee. “On the path that’s charted here, we will find ourselves in the same exact situation next year,” Harper said while showing lawmakers forecasts for spending and revenue. “I will be sitting here in front of you, presenting an overview, and — if we hold these revenue forecasts constant — saying ‘Guess what? It’s your turn to balance another $1 billion shortfall in (fiscal year) ’27-’28.’ ”
