The COVID-19 pandemic is an unprecedented health emergency for the country, the state and our local communities. But it also has implications for Colorado’s budget that will impact local residents, patients and health care providers.
As an old lobbyist, I was there in person, to see the impact of the 2009 financial crisis on the state budget. Major funding cuts followed for years. I vividly remember the anguish in the Colorado Joint Budget Committee as huge across-the-board cuts were made to almost every program that the state managed or funded. Little if anything was spared. I was told by legislators that no program was exempt and any new legislation in the foreseeable future that required even a dollar of spending would never see the light of day. That forecast turned out to be true.
The difference between then and now is that this health crisis looks a lot worse than the old financial one. One of the latest estimates projects a state budget shortfall of $3 billion resulting from the pandemic. And no one really knows how long all of this will last.
Even though the Joint Budget Committee hasn’t formally met about the pandemic, if past is prologue, we’re almost certain to see major and long-term funding cuts. Unlike the federal government, states are required to balance budgets. And we may see cuts to the state’s health care system that lives literally depend upon, especially now. The biggest potential hit to that system could be to Medicaid, the program that offers health care coverage to those with lower incomes who can’t afford private insurance.
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Traditional Medicaid is funded equally by the state and federal government. Before the pandemic, Medicaid provided health insurance to about 1.4 million Coloradans. That’s almost 20% of the state’s population. The expansion of Medicaid under the Affordable Care Act, which covers about 380,000 Coloradans, is funded 90% by the federal government and 10% by the state.
As a result of the pandemic, at least 420,000 Coloradans have lost their jobs, so far. That increase in unemployment will create a new and unprecedented demand on Medicaid. Medicaid enrollment is guaranteed to surge. That will have a huge impact on a state budget with a $3 billion shortfall.
Rural communities, like ours, are especially dependent upon Medicaid. Rural poverty rates are generally higher, and rural residents have lower rates of employer-sponsored health insurance coverage. Before the pandemic, 20% of Garfield County residents were uninsured. A large cut to state Medicaid funding could have a huge negative impact on the health of those populations.
In addition, rural health care providers, hospitals and clinics treat a substantial number of Medicaid patients. Cuts to Medicaid could have a real impact on their fiscal longevity and their ability to continue to provide care.
To be sure, state lawmakers don’t want to cut Medicaid or de-fund a health care system in the middle of the greatest pandemic since 1918. But just like the 2009 recession, they may run out of creative options, as tax revenue plummets from the economic downturn and Medicaid enrollment and unemployment claims spike like never before.
By any measure, the COVID-19 pandemic is a once-in-a-century health emergency that has infected almost 19,000 Coloradans and killed close to 1,000 people at the time of this writing. It has and will continue to put fundamental strains on the state’s health care system. If those strains overburden rural health care’s ability to treat patients or the state’s ability to provide insurance coverage, a large segment of the rural population will face potentially life-threatening consequences.
One option to avoid this is to temporarily increase state revenue to address this emergency. Under Colorado’s Taxpayer Bill of Rights (TABOR), the Colorado General Assembly has the authority to pass a temporary emergency tax. That tax could be applied to higher income groups and very large businesses in a way that would protect smaller businesses and workers struggling through economic uncertainty.
Two-thirds of both houses could vote to declare a public health emergency and pass the tax. Emergency tax revenue would be spent only after revenue reserves are depleted and would be refunded within 180 days after the emergency ends, provided those funds were not already spent on the emergency. In addition, if this tax is not approved by a popular election it would expire at the end of the election month (in this case, November 2020).
If the COVID-19 pandemic doesn’t qualify as a public health emergency, I’m not clear what does. And this temporary funding (approximately $600 million) could help reduce the scale of that emergency in rural Colorado. Massive budget cuts that damage the most basic of services, like health care, could literally put the lives of Coloradans in jeopardy. We can’t and we shouldn’t let that happen.
Bob Semro of Glenwood Springs is a former health policy analyst for the Bell Policy Center, and a legislative and senior advocate.