Healthcare freefall: Subsidy cuts, insurance gaps reshape how Coloradans will seek care
By
Thelma GrimesAugust 23, 2026 | updated 31 minutes ago
Editor’s Note: Colorado’s healthcare system is entering a period of accelerating instability — a “tsunami,” as multiple leaders describe it — driven by collapsing hospital finances, shrinking Medicaid reimbursements, disappearing services and a political fight over who is responsible for this unraveling. Healthcare Freefall is a multipart series examining how Colorado arrived at this moment, what H.R. 1 will do next and why communities across the state are bracing for deeper shocks
Colorado hospitals are bracing for major shifts in how patients seek care as Medicaid eligibility tightens in 2027, state funding drops and insurance enrollment rates surge
Health officials have warned the changes will reshape a healthcare system already in distress
With rising costs for basic primary and OB care, experts expect more people to rely on emergency departments for needs typically handled in outpatient clinics. Hospitals — from small rural facilities to large urban safety‑net systems — anticipate increases in uninsured, underinsured and charitable‑care cases
Health officials said the impact will vary by size, location and patient mix, but the core concern is the same: when fewer people have stable coverage, emergency departments become the default entry point, driving up uncompensated care and straining already-thin margins
Where will patients go?
Essey Yirdaw, senior director for data and analytics at the Colorado Hospital Association, said hospitals are bracing for more people in the community to lose insurance, a shift she called both troubling and consequential for patients. Without coverage, she added, people are forced into difficult choices — paying for premiums they may not be able to afford or using that money for essential items, such as gas or rent
Emergency rooms treat everyone, regardless of the severity of their condition or whether they have insurance. Yirdaw said the challenge is that ERs are built for urgent, acute problems — not the routine, preventive care people usually receive from a primary care or OB provider
When residents go without insurance and can’t qualify for Medicaid or other state-funded programs, Yirdaw said, they often end up in the emergency room, where care is expensive and not the right setting for treatable conditions that should be handled by a primary care provider with proper follow‑up
Patients who start using the ER for everyday issues that a regular care physician could handle more easily and cheaply aren’t the only problem, Yirdaw said. When people skip the paperwork required to meet the new Medicaid qualifications — and can’t afford plans on the state marketplace version of the Affordable Care Act — they become uninsured. At that point, many begin avoiding care altogether, ignoring symptoms and problems until they turn into emergencies
Both rural and urban hospitals expect to see more uninsured and underinsured patients in 2027, though the effects will vary by community
Denver Health, which serves a large share of Medicaid patients and immigrants, reported that it already cares for individuals who require extended stays because appropriate placement options are limited
CEO Donna Lynne said the hospital will continue providing emergency and critical care but noted that changes to Medicaid reimbursement may require closer evaluation of how long hospitals can keep patients who no longer meet coverage criteria
Lynne estimated that H.R. 1, the federal budget approved last year, could reduce Denver Health’s budget by about $65 million annually. She said the hospital is not considering closing its emergency department but acknowledged that broader systemwide reductions could affect how safety‑net hospitals operate
Hospital leaders in Colorado emphasized that they do not control what patients owe. Insurers set deductibles, coverage levels and reimbursement rates, leaving many families with high out‑of‑pocket costs. Marketplace plans have climbed in price, and employer‑sponsored insurance has also grown more expensive over the past five years, prompting some patients to delay procedures or skip medications
Gov. Jared Polis has long argued that hospitals bear some culpability. He said high hospital bills and steep pharmaceutical prices remain among his biggest frustrations
High deductible employer plans have become common, creating situations where patients pay premiums but still face large deductibles before coverage begins. Many arrive at hospitals assuming their insurance will cover treatment, only to learn their plan leaves significant gaps, said Tom Rennell, senior vice president of financial policy for the Colorado Hospital Association
Employer‑provided insurance covers 52.2% of Colorado residents — about three million people. Roughly 6.7% rely on individual plans. Coverage is nearly universal among large employers, with 92% of businesses with 50 or more employees providing insurance options, according to the Colorado Health Institute
It is far less common among small businesses, where only 22.9% offer employees’ insurance. That leaves many workers turning to the marketplace, Medicaid, Medicare or going without coverage entirely
Rennell said that, after the pandemic in 2020, more than 300,000 Coloradans were removed from Medicaid, adding significant strain on hospitals. He noted that under H.R. 1’s Medicaid budget mandates for the next decade, many current enrollees are expected to lose eligibility. That shift has hospitals worried about how residents will seek care through the rest of 2026 — and especially in 2027, when the major requirements take effect
The state’s Medicaid program currently covers 1.4 million people — about one in four residents. Hospitals now receive roughly 67 cents for every dollar spent treating Medicaid patients
In fact, the Medicaid population expansion that occurred during the pandemic was meant to be temporary, an emergency response to a crisis that was expected to go away at some point, with the high enrollment also “unwinding.” One assumption underlying the estimates saying hundreds of thousands would lose health coverage is they would simply not find another way of insuring themselves, such as by going back to the workforce and getting insurance through an employer
Some hospital leaders have accused Colorado’s health officials of botching that Medicaid “unwind.”
Cuts are also coming to the state’s Cover All Coloradans program, which was approved by the state legislature in 2022. The program provides healthcare coverage to women and children living in the country without documentation. Colorado had seen a surge in people arriving in the state after illegally crossing the U.S. border with Mexico in the last few years
Of the roughly 40,000 who arrived here, the estimate was half stayed. The rise in healthcare costs for this population coincided with the illegal immigration surge in metro Denver
Initially, the program was budgeted to cost $14.7 million in the 2025-26 budget, but it actually cost nearly $105 million with nearly 30,000 patients enrolled
Charitable care costs increase
Charity care is becoming a larger share of hospital budgets, and the pressures are mounting
Hospitals said the number of patients who cannot pay their bills is rising even with expanded outreach, payment plans and financial‑assistance screenings
Since 2021, charity care has increased 112% — a $208 million jump — according to the Colorado Hospital Association. The Colorado Health Institute estimated that roughly 345,000 residents have no insurance or government assistance, a trend that hospital leaders warn will deepen the uncompensated‑care burden
Facing a $1.2 billion budget deficit, state lawmakers changed enrollment qualifications, a move that could limit access for immigrants residing here illegally who previously qualified
Hospitals said the underlying cost of delivering care — staffing, equipment, facilities and 24‑hour operations — must be recovered somehow. When bills go unpaid, the financial strain shifts to insured patients and local communities. Those pressures can force hospitals to scale back services, and in rural areas, the risk of closure is acute
Rennell said hospitals are already weighing which services they may need to shed to stay open, decisions he described as painful in small towns, where providers know their patients personally
Closures would devastate rural economies, where hospitals are often the largest employer, hospital leaders have said. One elected official said at least 10 Colorado hospitals have said they are on the verge of shutting down, a trend she called unsustainable
Hospitals confront trade-offs
Hospital leaders said they are increasingly vulnerable, with some publicly warning they face the risk of closure. Many noted that beyond providing care, rural and frontier hospitals serve as economic anchors for their communities
Colorado has so far avoided the rural hospital closures seen elsewhere, but the Colorado Hospital Association said the trend may be shifting
Nearly seven in 10 hospitals operate on slim or negative margins, and the group estimated the state could lose $10.4 billion in federal funding by 2032 under H.R. 1. Without a way to replace that money, officials warned the entire system — from urban safety‑net hospitals to small rural facilities — will feel the strain
To avoid closure, hospitals are experimenting with ways to manage the shift toward more patients relying on emergency rooms for basic care. One of the most common strategies is cutting departments and specialty services. Some hospitals have eliminated labor and delivery units, others have reduced cancer care programs and many are searching for additional cost‑saving measures
Rennell said these reductions — and the effort to stay open — will likely continue as roughly 75% of Colorado hospitals operate on margins he described as unsustainable and financial outlooks that are unlikely to change any time soon
Continued regulations have also created more obstacles for general-care physicians and OB providers, especially in rural communities. While there are fewer regular medical clinics in rural communities, those in urban areas are increasingly stopping Medicaid patient acceptance altogether
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Thelma Grimes
Reporter
