Colorado Faces 611% Cost Surge as Medicaid-Like Benefits Cover All Coloradans

(COLORADO) — Colorado’s Cover All Coloradans program is costing $104.5 million for fiscal year 2025-26, far above the $14.7 million projected when Democratic lawmakers passed the bill in 2022, pushing the state’s immigrant coverage expansion into the center of a broader budget fight.

The program provides Medicaid-like health benefits to children and pregnant immigrants regardless of immigration status. It launched on January 1, 2025, and quickly drew attention at the Capitol as spending outpaced expectations.

What began as a coverage expansion has become a fiscal and political issue for lawmakers writing the next state budget. Current-year costs have risen 611% above the original projection, and projected costs for fiscal year 2026-27 are now $127.4 million.

Those numbers turned the program into one of the sharper spending debates in a year when Colorado is already trying to close a large gap. The first several months of spending showed the forecast was too low, with expenses running $18 million above expectations in the first six months.

Enrollment appears to explain much of that jump. Nonpartisan fiscal analysts had initially estimated 3,700 enrollees, but actual participation reached nearly 28,000.

That gap between projected and actual participation helps explain why costs climbed so quickly after launch. The pressure point is not limited to the design of the benefits themselves, but the scale of demand once the program opened.

Cover All Coloradans now sits inside a larger state budget squeeze. Colorado faces a projected shortfall of $850 million to $1 billion for fiscal 2026-27, while lawmakers also contend with rising Medicaid costs and revenue losses tied to federal tax changes under the GOP-backed One Big Beautiful Bill Act.

Governor Jared Polis proposed a $50.5 billion budget, up 3.9% from the prior year. That proposal still requires spending cuts, leaving legislators to weigh how much support they can continue for coverage programs as competing priorities pile up.

The way Colorado pays for the program adds to the budget pressure. The state covers children’s benefits entirely with state dollars, while pregnant women receive some federal matching funds, though that support is limited because beneficiaries cycle off shortly after birth.

That funding structure means a large share of the expense falls directly on the state, especially on the children’s side of the program. As enrollment rose well past early assumptions, the burden on the state budget grew with it.

For supporters of the expansion, the enrollment surge also shows unmet demand. For budget writers, it means the state’s estimate missed the scale of take-up by a wide margin, and they must now account for that difference in a budget year already defined by tradeoffs.

Lawmakers have responded, but only in narrow ways so far. They recently approved minor adjustments, including a $750 annual cap on dental benefits.

Those savings are small beside the overall cost of the program. Joint Budget Committee staff had recommended far larger reductions, including savings of $17 million for next year, but the changes adopted to date fall far short of that mark.

That leaves the bigger question unresolved. Republicans have argued that the program should be eliminated, while its future now depends on the full legislative budget debate after the Joint Budget Committee finalizes the budget.

The political argument around Cover All Coloradans is likely to grow as those deliberations move forward. Democrats who backed the bill in 2022 are now confronting costs that are much higher than first projected, while Republicans can point to the widening gap between what the program was expected to cost and what it now requires.

At the same time, the enrollment surge makes the debate harder to frame as a narrow budget correction. Nearly 28,000 people enrolled after the state expected about 3,700, showing demand at a scale that reshaped the cost picture within months of the launch.

That participation level is central to the current argument. If the state had seen enrollment near its original assumptions, the fiscal debate around the program would look very different.

Instead, the rapid take-up moved Cover All Coloradans from a policy change into a budget test. Colorado lawmakers must now decide whether to sustain, trim or overhaul a program whose first year has become a case study in how enrollment can outstrip legislative forecasts.

The fight also arrives as other coverage programs for non-citizens face their own funding questions. Omni Salud, another Colorado program tied to health coverage for non-citizens, received $18 million last year from health insurance fees.

House Bill 1297 would increase those fees to finance additional coverage expansions. The proposal would double the fees and help fund expansions including $75 million more.

That has widened the health financing debate beyond one program. Supporters and critics are also arguing over what higher fees could mean for household costs, especially when affordability is already under strain in other parts of Colorado’s insurance market.

One estimate tied to the fee debate suggests the increase could add $100/month or $1,200/year for a family of four. That example has become part of the broader argument over how the state should pay for expanded coverage and who ultimately absorbs the cost.

Affordability concerns extend beyond fee proposals. Federal subsidy cuts have also raised marketplace premiums for some residents, with one example showing costs rising from $238 to $470/month.

That means lawmakers are not debating Cover All Coloradans in isolation. They are weighing it against other insurance costs, premium pressures and financing proposals that all land on families, state accounts or both.

In that environment, even modest policy changes can carry political weight. A $750 annual cap on dental benefits may save some money, but it does little to answer the larger question of how Colorado should manage an immigrant coverage program that has expanded far faster than expected.

The same is true for next year’s forecast. Projected costs of $127.4 million for fiscal year 2026-27 show that the issue is not limited to one year of unexpected expenses but is shaping into an ongoing budget obligation.

How lawmakers respond will matter well beyond this program. The debate touches on the state’s willingness to maintain health coverage expansions when participation is high, state dollars are tight and other health funding proposals are drawing scrutiny.

Colorado’s budget writers now have to reconcile several pressures at once: an enrollment surge in Cover All Coloradans, a projected budget shortfall of $850 million to $1 billion, rising Medicaid costs, revenue losses from federal tax changes under the GOP-backed One Big Beautiful Bill Act, and separate proposals that would raise health insurance fees to support more coverage.

That combination has turned what might have been a technical adjustment into a larger test of the state’s health policy priorities. Cover All Coloradans was designed to extend Medicaid-like health benefits to children and pregnant immigrants regardless of immigration status, but its first year has become defined as much by budget arithmetic as by coverage policy.

The debate is now likely to hinge on whether lawmakers view the higher spending as a warning, an obligation, or both. With the budget still being assembled, the future of the program remains tied to a wider fight over how much Colorado can spend, whom it will cover, and how far state leaders are willing to go to finance that coverage when demand rises faster than expected.