Colorado’s record budget focuses on pandemic recovery

Governor Jared Polis approved the legislature’s historic $36.4 billion state budget on April 25th. The budget appropriates $17.6 billion in total funds to health care related spending for the coming fiscal year. 

Health care has been a key focus for lawmakers as officials address the lingering effects of the pandemic by bolstering the state’s public health and mental health care systems. Funding for HCPF, as in previous years, makes up the largest portion of the total state operating budget at 41.5% (26.8% of the general fund budget), or $14.18 billion in total funds.

 

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Total fund appropriations in the department budget include:

  •         Medical Services Premiums ($10.5 billion)
  •         Behavioral Health Community Programs ($1.13 billion)
  •         Office of Community Living ($976.16 million)
  •         Executive Director’s Office ($499.6 million)
  •         Other Medical Services ($494.7 million)
  •         Indigent Care Program ($468.7 million)
  •         Department of Human Services Medicaid ($127.6 million)

The Colorado Hospital Association (CHA), a trade group that represents over 105 member hospitals and health systems across the state, worked closely with the Joint Budget Committee  to help draft portions of the current health spending budget. CHA officials described the coming fiscal year as a “COVID hangover” where hospitals will be recovering from losing 20% of its medical workforce while playing an outsized role in pandemic response over the past two years.

“We have a number of workers, significant proportions of workers reporting high levels of severe stress, burnout, [and] other psychiatric conditions. And ultimately, if our workforce isn’t well then, we can’t care as effectively for the communities we’re trying to care for. We’re really focused on providing workforce support so that we can continue to provide care for the populations we serve,” said Katherine Mulready, Senior Vice President and Chief Strategy Officer for CHA.

“The other kind of hangover piece of COVID has really been that a number of people for periods of time over the last couple of years, haven’t been able to access the care they needed when they needed it. What we’re seeing is that people are suffering from deferred and delayed care, and they’re sicker now coming into the hospitals than we wouldn’t have expected them to be, absent the pandemic. 

“As a result, we’re having to provide higher acuity care. Ultimately, we’re concerned that that’s going to have impacts on long-term health of the population or of individual patients. We’re really focused on catching up on the backlog of services we weren’t able to provide at all times during the pandemic, to make sure that we can deliver the best health outcomes to individuals.”

Much of health spending over the next few years will be focused on COVID recovery. Statewide medical staffing shortages at hospitals and nursing homes created a health emergency at peak periods during the pandemic. Increased investments in higher education ($5.4 billion) and workforce ($311 million) are also outlined in the budget’s general fund allocation to bolster staffing and emergency response for future public health threats.

As part of efforts to support medical workforce recruitment and retention, the state budget appropriated $29 million in general funds to reimburse ambulance providers. Emergency medical services remain challenged, especially in rural areas, due to staffing shortages and financial constraints. Access to lifesaving ambulance and treatment services that residents count on when undergoing medical emergencies was cut off during the pandemic due to those limitations.

The $36.4 billion state budget does not include and account for the $1.5 billion in federal funds the state is receiving from the American Rescue Plan Act (ARPA), which will support a range of COVID recovery programs centered around behavioral health, affordable housing, and economic relief in Colorado.

CMS approved HCPF’s plan in September to use $530 million of those funds from APRA to implement initiatives to enhance, expand, and strengthen the state’s Home and Community-Based Services (HCBS) over the next three years.

HCPF’s plan prioritizes eight focus areas for HCBS reforms:

  •         Strengthen the Workforce & Enhance Rural Sustainability
  •         Improve Crisis & Acute Services
  •         Improve Access to HCBS For Underserved Populations
  •         Support Post-COVID Recovery & HCBS Innovation
  •         Strengthen Case Management Redesign
  •         Invest in Tools & Technology
  •         Expand Emergency Preparedness
  •         Enhance Quality Outcomes

“Certainly the governor’s roadmap that was published in February set us on the right track for partnerships. I’m fairly confident that we know so much more now than we did at the start of the pandemic that we will be able to respond. If COVID taught us anything, it’s that the future is inherently unforeseeable,” said Mulready. 

“If we can stick to managing COVID in the way that we have done thus far and really that kind of continuous improvement we’ve been able to implement over the last two years, as we’ve learned more about this virus and how to keep people safe, how to keep people from getting infected, how to keep people from getting hospitalized, I’m very confident in our ability to respond if we see something totally different from the next variant that the immunizations aren’t as effective or the virulence is different.”

An additional $3.8 million in general funds from Department of Human Services budget will be allocated to create the Behavioral Health Administration, which will manage the state’s behavioral health care delivery system. 

Dr. Morgan Medlock, who will head the administration as its Commissioner, said in a recent interview with State of Reform that she is focused on ensuring equity and a just system of care.

“… when we talk about those [social] determinants, we’re not necessarily talking about the risk factors that people have such as needing transportation or needing housing but we’re talking about the economic policies in the larger structure of our society that create those risks and needs. From that perspective, what we’re really talking about is justice in our structural environment and in how policies are shaped, and absolutely that determines health,” said Medlock. “We want to be a BHA that speaks to both the determinants and the influencers of health, those higher policy needs that have to be addressed, those gaps that have to be closed.”

As legislators set the rules for the new administration, debate on how to spend the $550 million of ARPA aid allocated to reforming mental health care and substance abuse treatment in Colorado under the Behavioral Health Recovery Act continues.