Proposed Medicaid cuts in the federal budget have health care leaders in Southwest Colorado – including CommonSpirit Mercy Hospital, Axis Health System and Southwest Memorial Hospital – on edge as they prepare for potential revenue losses tied to reductions in Medicaid enrollment.
“The challenge for us is clear and present,” Mercy CEO Josh Neff told community health care leaders at a meeting on March 17.
Nearly 19% of the hospital’s $1 billion in 2023 gross charges came from Medicaid, and Neff said Mercy expects about $15.2 million in monthly revenue from the program this year.
For Axis, which provides mental and behavioral health services across the region, Medicaid payments make up 40% of the system’s revenue.
“It's going to impact our ability to provide care,” Axis CEO Shelly Burke said in an interview with The Durango Herald. “... Maybe services have to be eliminated at a time when people actually want more access locally.”
A decrease in Medicaid enrollment will significantly reduce health systems’ revenues and could jeopardize vital services not only for Medicaid enrollees, but for the broader community.
“None of the providers that I know run Medicaid-only programs,” Burke said. “We're all here to serve our community.”
Congress passed a stopgap spending measure on March 14 to keep the federal government open through the end of September.
That gives lawmakers the spring and most of summer to negotiate the federal budget. House Republicans passed a resolution calling for the extension of $4.5 trillion in 2017 tax cuts and up to a $2 trillion spending reduction to offset the cost.
President Donald Trump’s tax cuts, set to expire in December, keep more money in most Americans’ pockets but disproportionately benefit wealthier taxpayers, according to nonpartisan analyses.
To extend the tax breaks, the budget plan instructs the House Energy and Commerce Committee to cut $880 billion or more over the next decade. The committee oversees a wide range of programs, including environmental regulations, communications technology and health care. Republicans say cuts to Medicare are off the table. But Medicaid accounts for about 93% of the committee’s remaining expenditures.
Although congressional Republicans say “we’re not going to cut benefits for people who rightly deserve (them),” as House Speaker Mike Johnson said on CNN several weeks ago, outside analysts say it is virtually impossible to cut $880 billion without touching the Medicaid.
Medicaid, which provides health insurance to low-income families, covers one in five Americans.
Colorado’s Medicaid program covers 22% of residents in La Plata County and more than 36% in Montezuma County.
Spending reductions can take many forms. Rep. Jeff Hurd, the Republican representing Colorado’s 3rd Congressional District, who voted for the budget resolution, expressed support last week at a virtual town hall for exploring “work requirements.” About one-third of Hurd’s constituents are on Medicaid, and up to 58,000 could lose coverage, according to an estimate by a left-leaning think tank.
Hurd has said protecting Medicaid is a priority, but in the town hall he limited his support to “those who most need it.”
His office did not respond to a request for comment on this story.
An estimated 92% of Medicaid recipients are already working or would otherwise likely qualify for the program, Mannat Singh, executive director of the nonpartisan Colorado Consumer Health Initiative, said Monday.Enforcing work requirements is inefficient and places a heavy burden on county-level staff who administer Medicaid, said La Plata County Health Human Services Director Martha Johnson.
Although Medicaid fraud is often cited as justification for cutting the program, the reality is more complex. Fraud does occur, but Speaker Johnson has frequently claimed there is over “$50 billion a year in fraud alone.” He is referencing a Government Accountability Office figure in which he conflates fraud with payment errors. The number actually refers to $50 billion in payments that were too high, too low or improper – and still too little to close the funding gap.
Despite repeated pledges from congressional Republicans not to reduce Medicaid, health providers in Southwest Colorado are preparing for just that.
And with good reason.
“Colorado is particularly at risk,” Singh told meeting attendees Monday.
The state pays 36% of the cost for Medicaid patients, while the federal government covers the remainder. Colorado has significantly expanded coverage since the 2010 passage of the Affordable Care Act, and care for low-income residents is straining the state’s already tight budget.
If the federal government caps Medicaid spending or cuts funding, the financial burden shifts to the state – which lacks the resources to fill the gap. The result is a cascading effect.
“I don’t even know how to describe the domino effect of the billions lost,” Singh said. “People are going to lose coverage and access to care and the price is going up.”
During the so called Medicaid unwind – a 14-month period that began in May 2023 requiring Medicaid enrollees to reverify their eligibility for the first time since the COVID-19 public health emergency began – La Plata County’s Medicaid enrollment dropped 40%.
From 2018 to 2024, Mercy reported a 45% increase in “self-pay” patients – those without any form of insurance.
“We’re on track to do $32 million in uncompensated care this year,” Mercy CEO Neff said Monday.
That figure is about double the total from recent years, he said, largely due to the unwind. Uninsured individuals are less likely to seek preventive care and more likely to require expensive emergency care later, La Plata County Public Health Director Tracy Anselmo noted on Monday. Mercy will take care of anyone who walks through the door, Neff said, but providing uncompensated care makes it harder for the hospital to expand and secure services.
Services like obstetrics practices and behavioral health treatment are the “poster child” service lines often first on the chopping block, a spokesperson for the Colorado Hospital Association said.
The health care landscape in rural Colorado is far from abundant, Axis CEO Burke warned. While it’s still unclear which services Axis might have to cut if revenue drops dramatically, she’s certain of one thing: “Anything that impacts rural resources has a magnified fallout in a rural community.”
To that end, smaller hospitals in the area that lack the support of a large system like CommonSpirit Health could be greater danger, Neff warned.
“If these cuts happen, there is a real risk that the hospital in Cortez closes,” he said. “There is a real, real risk that the hospital in Pagosa closes.”
rschafir@durangoherald.com
