In the midst of one public health crisis, another is about to hit.
The sudden shutdown of large parts of the economy is forcing major cuts to the state budget. Those impending cuts threaten to put on ice much of the progress Colorado has made on health priorities.
Potential cuts outlined by the legislature’s budget committee staff this week include steps that would have been unthinkable two months ago, including eliminating the entire Child Health Plan Plus (CHP+) insurance program for kids from families with low incomes. Ending CHP+ would double the uninsured rate for Colorado children to an estimated 8.9 percent, according to the 2019 Colorado Health Access Survey. This rate is already trending in the wrong direction, as it has risen since reaching a low of 2.5 percent uninsured in 2015, but removing a coverage option that insures about 5 percent of the state’s kids would certainly exacerbate the problem. For detail on current children’s insurance rate trends, see CHI’s new blog on the topic.
Other potential cuts identified by the budget committee’s staff could affect some of Colorado’s most celebrated health achievements of the past decade. A sampling:
- Eliminating the dental benefit for adults in Medicaid.
- Ending the reinsurance program after just one year. The program had reduced consumer prices by 20 percent or more on the state’s expensive individual health insurance market.
- Delaying for a year Medicaid’s new residential treatment benefit for substance use disorder.
- Cutting 20 percent of the budget for school-based health centers, family planning initiatives, and other health programs.
- Scrapping a planned $2.5 million effort to increase childhood immunizations.
None of these cuts has been made yet, but even before COVID-19 hit, legislators were looking at a tight budget. Now they are expecting an estimated $3 billion hole in the budget, so Coloradans should expect some heart-wrenching news coming from the state Capitol. Legislators on the Joint Budget Committee return to work May 4 to begin planning cuts, and the full legislature returns May 18. State leaders want to pass a budget by the end of May for the fiscal year that begins July 1.
As for new programs that aren’t in the budget yet — forget about them. It’s hard to imagine legislators this year creating a public option for health coverage or other items on Gov. Jared Polis’ agenda for saving money on health care.
Polis provided a preview late on April 30, when he ordered state departments to immediately cut spending by $229 million to get the state through the current fiscal year, which ends June 30.
The Budget-Cutting Playbook
Colorado has recent experience with large budget cuts. Legislators went through several years of austerity during the Great Recession of 2008-09 and the slow recovery that followed. They will face the same dynamics this month. Here’s a bit of what to expect.
Medicaid enrollment will rise. The state is running out of money, but it will see higher demand for public assistance programs, chiefly Medicaid. The Department of Health Care Policy and Financing is expecting Medicaid enrollment to grow by a quarter-million people this year — a result of massive job losses. However, the new Medicaid members are likely to be adults in fairly good health and probably won’t cost as much to cover as current members.
Get to know GF, CF, and FF. That’s general fund, cash funds, and federal funds — the three main categories of the budget. Legislators have the most control over the general fund, which comes from state taxes. They have some power over cash funds, which are fees paid to the state for specific purposes, such as state parks admissions or court fines. They have the least say over federal funds, which must be used for the purpose directed by the federal government. This means that programs that use general funds, such as the reinsurance program, are most vulnerable. In fiscal emergencies, legislators can also take from cash funds. Many public health programs are funded by tobacco and marijuana cash funds, which puts these programs at risk.
Cutting smart. Legislators will do whatever they can to avoid cutting Medicaid, even though it makes up a quarter of the general fund. That’s because every dollar the state spends on Medicaid brings in a federal match of up to 90 percent. Legislators would need to make up to $10 in cuts to save a dollar in the state budget. Other state programs also draw down federal matching funds, which will impact legislators’ calculations about where to make reductions.
Public Health Advocates Should Prepare for Change
The month ahead for the state budget will feature one impossible choice after another. But that’s just the beginning of longer-term, deeper changes in health policy.
Jonathan Samet, dean of the Colorado School of Public Health, looked into the future in an April 27 blog.
“State and local budgets will shrink immediately and priorities will be reset. In such circumstances, public health invariably suffers,” Samet wrote.
More broadly, Samet expects to see fundamental changes in public health priorities for the next several years. Public health had started to focus on the social conditions that play a large part in people’s health and quality of life, such as neighborhood conditions, income, education, and clean air and water. But that work is likely to be put on hold while governments address the damage of the pandemic, Samet wrote.
Can Anyone Come to the Rescue?
Two courses of action might be able to temper the looming cuts. But Coloradans shouldn’t pin their hopes on either one.
The first option is the emergency provision in the Taxpayer’s Bill of Rights (TABOR). Ordinarily, TABOR forbids tax increases without a vote of the people, but it does allow the legislature to temporarily raise taxes in an emergency. However, TABOR’s rules make the option highly unlikely. Two-thirds of the legislature would have to vote to raise taxes, and this would be a very difficult vote for Republican legislators. Even if legislators found a supermajority to raise taxes, they couldn’t do so until they spent down the entire TABOR emergency reserve. That’s nearly impossible, given that 40 percent of that reserve is in non-liquid assets, like state buildings.
A second option is a bit more realistic: help from Congress. Colorado and most other states are required to balance their budgets. Congress has no such rule. The federal government in the past has borrowed money to help states and local governments during recessions, and it provided some help in one of the coronavirus stimulus bills this year. Speaker of the House Nancy Pelosi said this week that states need another $1 trillion to cope with the virus-induced recession. Republican leaders have spoken out against aiding cities and states.
The political disagreement means that federal aid is far from certain. Still, it’s Colorado’s only chance to mitigate the cuts legislators will have to make this month.
New Poll Shows the Character of Colorado
If there’s any good news in this situation, it’s that Coloradans are well informed about the difficult days ahead, and they are displaying a high degree of resolve and concern for others.
Two-thirds of Coloradans (64 percent) say that businesses should stay closed in order to reduce the threat of spreading the virus, according to a survey released this week by Healthier Colorado and the Colorado Health Foundation. Remarkably, people who have lost their jobs or had their pay cut as a result of the pandemic are just as likely to prioritize fighting the virus over reopening businesses.
More than half (53 percent) of respondents say the pandemic has harmed their mental health. But the worry they are feeling isn’t just self-centered — it’s on behalf of others. Roughly three-quarters of Coloradans worry about cuts to programs that provide rent assistance, food for the hungry, mental health support, and protective equipment for essential workers.
Overall, the survey shows Coloradans have no illusions about the economic damage they are suffering, but they are willing to take it in order to protect others from this deadly virus.
It’s been generations since people have had a chance to share this sense of resolve mixed with compassion. And it appears that Coloradans are rising to the challenge of their lifetimes.
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