State officials warn of $158M Medicaid over‑expenditure and hundreds of millions more in forecasted growth

OSPB Director Mark Ferrendino told the Commission on Medicaid that the office will post a September forecast showing a $157.9 million general‑fund over‑expenditure for the department as of June 30, 2026 and a preliminary multi‑hundred‑million‑dollar increase in the budget outlook for the coming fiscal years. Ferrendino said forecasts produced with 50% of year‑to‑date data are inherently uncertain but the size of the over‑expenditure — and an additional $443 million in near‑term forecast increases cited by the department — require urgent attention from the General Assembly and the governor’s office.

Health Department Executive Director ‘‘Director Hammer’’ said the over‑expenditure is real and pointed to three headline drivers: pharmacy expenditures (including lower rebates staying in state because of federal policy changes), rapid growth in community‑based long‑term services and supports (especially personal care and homemaker services), and increases in behavior‑health capitation payments. ‘‘This is our responsibility to work collaboratively with you all to make sure that we do everything we can to bring down that forecasted over‑expenditure,’’ Director Hammer said, adding the department will work on administrative efficiencies and program integrity in the current fiscal year.

Ferrendino framed the problem as structural as well as cyclical: Colorado’s Medicaid share of the general fund has grown sharply since COVID and, absent policy changes, could crowd out other state services. He warned of choices ahead — from broad budget reductions across state priorities to targeted changes aimed at slowing Medicaid growth — and urged collaboration on the November 1 budget submission. Legislators on the commission pressed staff for line‑by‑line breakouts and for the department to publish slides and underlying numbers, a request Ferrendino and the department committed to meet.

What’s next: the administration will submit a November 1 budget request to the General Assembly and the department said it will return with more detailed proposals, dollar estimates for potential actions and stakeholder engagement materials. The Commission heard repeated requests from members for verifiable, itemized numbers and for independent reviews of forecasting assumptions.