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Dr. P.J. Parmar examines Johnny Lun Ring at the Mango House clinic in Aurora, Colorado, on June 24, 2021. His father, Khang Pang (right) watches on. At far right is another of Pang's children, Noel Nang Shan Dvbe. The clinic caters primarily to refugees and turns no one away, regardless of their ability to pay. Parmar designed the clinic to survive on the Medicaid payments that many doctors across the U.S. reject as too low. (Ross Taylor for Kaiser Health News)

As negotiations over the debt ceiling drag on in Congress, one point of contention could have major ripple impacts into Colorado.

Republicans have proposed adding work requirements to Medicaid. As many as 46,000 people could lose Medicaid coverage in Colorado if the GOP-backed work requirements become law, according to an analysis by the nonpartisan Kaiser Family Foundation. That could then force Colorado officials to decide whether to spend hundreds of millions of state dollars to keep those people covered.

The work requirements — i.e., requiring Medicaid recipients to work or to look for work as a condition of receiving coverage — are part of a bill passed by House Republicans to raise the federal debt limit. They are now one of the major sticking points as congressional Republicans, Democrats and the White House attempt to come to an agreement on the debt ceiling.

How Medicaid works

Medicaid is the joint state and federal program to provide health care coverage to people who are low income or disabled. The budget for the program is massive — at roughly $14.2 billion for the current budget year, it makes up more than a third of the total state budget.

But money that the state receives from the federal government pays a big chunk of the Medicaid tab, approximately 60% of it. This means that, while Colorado administers the Medicaid program in the state, federal rules to ensure access to that cash also play a big role.

After an increase in enrollees during the COVID pandemic, Medicaid now covers about 1.7 million people in Colorado, or about 1 in 4 Coloradans. The enrollment figure is expected to decline over the coming year, though, as pandemic-era rules end.

The work rules in the Republican proposal would require people ages 19 through 55 to either work or participate in another activity like job training or community service. People who are disabled would be exempt from the rules, as would people who are pregnant, those who serve as a caretaker and those who are going to school at least part time.

Estimating the impact

An earlier Kaiser Family Foundation analysis found that most Medicaid recipients nationwide, around 61%, already work full-time or part-time. Those who don’t work are usually disabled, acting as a caregiver or in school. Only about 9% of Medicaid recipients aren’t working due to being “retired, unable to find work, or were not working for another reason.”

This uncertainty over how broadly the work requirements would apply has led to different estimates for how many people will be affected.

The Biden Administration has said approximately 21 million people across the country would be at risk of losing Medicaid coverage under the GOP proposal. But two other analyses put that number a lot lower.

The Kaiser Family Foundation estimated that the proposal would impact 1.6 million people, including 46,000 in Colorado. A separate analysis by the Congressional Budget Office places the number slightly lower, at around 1.5 million. The CBO analysis did not provide a breakdown for individual states.

If the GOP proposal becomes law, states would have the ability to keep these Medicaid recipients covered — they would just have to pay for them using solely state funds. That could get pretty pricey, though.

The KFF analysis estimates that Colorado would need to spend $242 million a year to continue coverage for Medicaid recipients iced out by federal work requirements. That ranks Colorado 15th in the country for potential spending to keep people covered.

(Kaiser Family Foundation)

What will state officials do?

Officials at the state Department of Health Care Policy and Financing, which administers Medicaid in Colorado, have not said what they would do in response to work requirements.

If Colorado were to decide to continue coverage for those who don’t meet the work rules, the money to do so would need to be approved by the legislature. But Marc Williams, a spokesman for the department, said talks among state leaders aren’t even that far along. Instead, he said, “the devil is in the details.”

States do not have guidance on how information on the work requirements would be gathered and reported — nor on who would pay for the administrative costs of verifying the information, which would also impact the rules’ financial hit on Colorado.

“Given that the negotiations haven’t identified those operational details, it’s not a good use of our resources to speculate on the various scenarios that may or may not emerge in the final budget agreement,” Williams wrote in an email.

Negotiations in Washington, D.C., are reaching crunch time, as the country could begin defaulting on its debt as early as June 1 without a deal to raise the debt limit. It is also possible, though, that lawmakers could punt on a short-term solution while leaving debate over the bigger issues — including Medicaid work requirements — still in play.

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John Ingold

John Ingold is a co-founder of The Colorado Sun and a reporter currently specializing in health care coverage. Born and raised in Colorado Springs, John spent 18 years working at The Denver Post. Prior to that, he held internships at the Rocky Ford Daily Gazette, the Colorado Springs...