February 17, 2026

Challenges Facing Medicaid and Department of Health Care Policy and Financing in Colorado: A Guide for Policymakers

Key Findings

• Between 2015 and 2025, HCPF spending grew by 101%, from $8 billion to $16 billion, while the rest of the state budget grew by just 64%. Real health-care spending continued to grow even during post-pandemic declines in Medicaid enrollment.
• The agency’s total spending growth over the last decade is higher than the combined growth rates of Medicaid enrollment and medical inflation. CSI estimates that the agency could have spent as little as $10.8 billion in 2025 without underlying cost increases added by state and federal policy.
• Between 2018 and 2024, Medicaid enrollment rose by 7.6% while HCPF’s total FTE employment and spending by the Executive Director’s office rose by 72% and 101%, respectively.
• HCPF faced criticism for its management of Medicaid eligibility redeterminations after pandemic-related protections expired in 2023. 48% of these redeterminations resulted in disenrollments in Colorado while the national average was 31%. Between 2023 and 2025, Medicaid coverage in Colorado fell from an all-time high down to nearly its 2015 level.
•  There are opportunities to reform state programs, including RAC audits and the Hospital Transformation Program, to save state funds and reduce needless costs for providers in advance of federal Medicaid cuts.

Introduction

Colorado’s Medicaid program, Health First Colorado, faces a suite of long-term financial problems likely to grow even more severe over the next few years. Some officials will hold the One Big Beautiful Bill Act (OBBBA), federal legislation signed into law last July, responsible, but Colorado’s Medicaid program has been on an unsustainable path for years.

Health First Colorado is administered by the Department of Health Care Policy and Financing (HCPF), whose footprint in Colorado’s government has been growing for decades, especially since the state opted into Medicaid expansion in January 2014. High costs, strict regulations, concerns about quality of care, and fraud all plague Health First Colorado. HCPF’s budget has consistently risen faster than other state spending even through periods of declining Medicaid enrollment—between 2015 and 2025, HCPF spending doubled while the rest of the state budget grew by 64%.[i]

Recent policy changes are responsible in part for HCPF’s extreme spending obligations. The Colorado legislature enacted 182 new health care bills between 2019 and 2025, many of which expanded HCPF and raised the costs of providing public insurance. These bills created new bureaucracies, expanded covered services, and added regulations on public and private providers. The incremental cost of these new policies totals at least $858 million per year in state spending alone.[ii]

Beyond the bills specific to the healthcare sector, legislators have enacted a total of 350 new bills that affect hospitals directly or indirectly through environmental regulations, workforce laws, or other matters.[iii]

Throughout the 2026 session, legislators are likely to propose bills that address the prospective impacts of the OBBBA, whose changes to Medicaid will not take effect until 2027. Their ability to enact more policies like those described above may be limited this year by statewide revenue shortfalls and concerns about the OBBBA.