Colorado Cuts Medicaid Benefits

Published August 6, 2009

The state of Colorado has cut Medicaid benefits to many low-income residents, with citizens classified as developmentally disabled taking the largest hit, losing up to 50 percent of their benefits.

The cuts, which took effect July 1, reflect a change in the state’s Medicaid reimbursement rate policy. Previously, state officials and care providers taking Medicaid-enrolled patients negotiated the terms of each contract individually. Now, at the behest of the federal Centers for Medicare and Medicaid Services, the state is imposing a standardized, one-size-fits-all reimbursement regime.

CMS urged Colorado officials to make the change after a federal audit of the state Medicaid program found discrepancies in the state’s allocation decisions.

Government Programs ‘Unreliable’

Paul Guppy, vice president for research at the Washington Policy Center, said the cuts “illustrate the weakness of depending on the government for health care services.”

Linda Gorman, a senior fellow and health care economist at the Denver-based Independence Institute, says the state could use revenue from newly imposed taxes to supplement the Medicaid program if it really wanted to help developmentally disabled citizens.

“The state just passed a 5.5 percent tax on hospital bills,” Gorman said. “The tax is supposed to be raising about $600 million a year by 2012. If these Medicaid cuts are so devastating, surely responsible lawmakers will be able to redirect some of the new funding that results from this tax to those who are said to need it so badly.”

The Colorado cuts are another example of why the government should not be trusted with running health care, said Guppy. “The president wants to force 300 million Americans into depending on the government for their health care, and government health care programs are finding themselves subject to cuts,” he said.

“Government entitlement programs now are already in trouble, and Obama wants to do the same for everyone in America,” Guppy added. “The [Medicaid] cutbacks in Colorado demonstrate how unreliable government-run health care is.”

Krystle Russin ([email protected]) writes from Texas.