Colorado Governor Announces Budget Cuts
On Thursday, August 28, Colorado Governor Jared Polis announced significant cuts to help address an estimated $783M shortfall in the state’s budget due to federal funding and tax code changes in H.R.1. Colorado had planned to increase reimbursement rates for Medicaid providers by 1.6%, or about $38M, which has now been reversed. Governor Polis also announced his intention to reduce spending on higher education by $12M, reduce grant funding for programs, and redistribute other funds, like Colorado’s affordable housing fund, to close the gap. The state has also implemented a hiring freeze, saving an estimated $3M. The governor noted that no spending cuts were made to K–12 education or public safety efforts. However, Colorado’s reserves will have to be utilized, with the governor allocating $325M from its Rainy Day fund. This comes as the state legislature adjourned its special session on August 26 with the passage of several bills, one of which changes the state’s tax provisions on businesses and business owners to raise state revenue by about $150M (Colorado Newsline, August 28; The Colorado Sun, August 28; The Colorado Sun, August 27).
Colorado is the latest state to announce reductions to state Medicaid spending resulting from an expected reduction in federal Medicaid funds resulting from H.R. 1, or the One Big Beautiful Bill Act. In last week’s Sellers Dorsey Digest, we described how North Carolina and Idaho have each announced plans to reduce Medicaid provider reimbursement rates for some services. This comes as most states recently enacted budgets for fiscal year 2026. Because the timing of the passage of H.R. 1 did not align with most states’ budget processes, it is likely additional states will need to revisit budget assumptions for the coming fiscal year, and, like Colorado, may be looking to rate reductions and other cost containment mechanisms to make up for new shortfalls. In the meantime, Sellers Dorsey plans to release its Summary of FY2026 Enacted State Budgets on September 9, 2025, providing an overview of where each state stands on its overall and Medicaid spending for next year. We will continue to track these important state budgetary actions so that readers can understand how cost containment efforts impact states’ baseline budgets.
Massachusetts Insurers to Return $75.6M in Rebates
Health insurers in Massachusetts will return $75.6M in rebates to more than 350,000 consumers and small businesses after failing to meet the state’s minimum medical loss ratio (MLR) requirement of 88%. The rebate total is higher than the $51.6M issued in 2024, a change linked to reduced medical claims during the COVID-19 public health emergency. Blue Cross Blue Shield of Massachusetts, the state’s largest insurer, will account for the largest share, issuing $43M in rebates to about 17,500 individual policyholders and 19,400 small employer groups. State regulators have not yet released detailed rebate data for other insurers (Health Payer Specialist, August 27).
Nebraska Lawmakers to Review Medicaid Rate Cuts for Autism Therapy
Nebraska lawmakers will hold a hearing on September 5 to discuss recent Medicaid reimbursement rate cuts for applied behavioral analysis (ABA) services for children with autism. The rate reductions, implemented on August 1, range from 28% to 79%, raising concerns among advocates that access to these therapies could be affected. ABA therapy supports children with autism and other developmental or social communication delays. The Health and Human Services Committee, led by Senator Brian Hardin, will hear testimony from stakeholders, and the public is welcome to attend. The Nebraska Department of Health and Human Services noted that while the state currently has the highest ABA reimbursement rates in the country, costs have surged more than 2,000% since 2020, from $4.6M to $85.6M last year, creating concerns about long-term program sustainability. The hearing will be livestreamed on the Nebraska Public Media website (Nebraska Examiner, August 29).
US District Judge Denies Maine Family Planning’s Suit Against Trump Administration
On August 25, Chief US District Judge Lance E. Walker denied the Center of Reproductive Rights’ (CRR) suit against the Department of Health and Human Services (HHS), which argued the restrictions on federal funding for certain clinics that provide abortion care included in H.R. 1 violated the equal protection clause. The CRR had filed the suit on behalf of Maine Family Planning (MFP), the state’s largest sexual and reproductive health clinic network in the state. With the funding ban under H.R. 1 allowed to go into effect, the network argues it will likely have to cut services across the board. Clinics under MFP provide not only abortion care, but also HIV and STI testing, treatment and prevention services, contraceptive care, and cancer screenings, as well as primary care in certain rural and underserved areas. Currently, the network is not accepting new Medicaid patients for primary care services and may have to discontinue these services all together come the end of September (CBS News, August 28; Center of Reproductive Rights, August 25; O’Neill Institute, August 26).
