Colorado’s Medicaid department overshot budget by $120 million

The department that runs Colorado’s Medicaid program overshot its budget for the most recent fiscal year by more than $120 million after underestimating how sick its members would be.

Medicaid rolls were in flux over the last year as states started removing people for the first time since early 2020. During the COVID-19 public health emergency, states couldn’t kick people off Medicaid, meaning they spent much of the last year determining who still qualifies.

For the fiscal year that ended in June, the Colorado Department of Health Care Policy and Financing had to attempt to project not only how many people would lose Medicaid coverage, either because they weren’t eligible or didn’t return the paperwork, but also how much the remaining members’ medical care would cost.

The forecast was close in terms of the number of people who would keep their coverage, but slightly underestimated how much care they would need, department spokesman Marc Williams said. The department went over budget by 1.16%, or about $123.8 million, in the 2023-24 fiscal year, he said.

Most of the extra spending was on groups traditionally eligible for Medicaid, Williams said. The federal government pays half of the cost of care to those groups, which include people with very low incomes and those with disabilities. Federal funds cover about 90% of the cost of the “expansion” population, which includes adults earning up to 138% of the poverty line.

“This was very difficult to forecast because of so many moving parts,” he said.

Medicaid covers about 1.26 million people in Colorado and has a $16 billion budget, with about $5 billion of that coming from the state’s general fund.

The department has the authority to keep paying Medicaid claims when they exceed its budget, Williams said. When lawmakers return in January, the state legislature will vote on whether to approve the overspending amount, he said. If they vote not to do so — an unlikely scenario — the department would have to take the amount it overspent out of the current year’s budget.

Rep. Shannon Bird, a Westminster Democrat and chair of the Joint Budget Committee, said this year’s budget could be tight, but lawmakers will have to make adjustments to provide needed services.

Lawmakers will have a better sense of the state’s financial situation in September, when they receive their next quarterly forecast, she said.

“It’s not ideal,” she said of the budget overrun.

Denver Post reporter Seth Klamann contributed to this report.

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