Medicaid and managing health care costs

Managing Health Care Costs

Established in 1965, Medicaid is a jointly-funded federal and state government health care program. It is the largest provider of health care for children, seniors and working families in Colorado and across the nation. Medicaid’s value to Coloradans is to provide affordable, accessible health care – it’s cheaper to treat a cold than it is pneumonia.

Medicaid is also one of Colorado’s largest budget responsibilities, accounting for nearly one-fifth of Colorado’s General Fund Budget in FY 2011-12. However, it also brings in the most federal matching dollars in the state and directly supports jobs in Colorado’s health care industry. For Medicaid to be sustainable we must find ways to control costs – and that’s exactly what we’re doing.

Innovating to keep costs down

Below are just a few of the many ways Colorado is working to control Medicaid costs:

The Accountable Care Collaborative aims to contain costs and improve health outcomes through coordination of care. About 136,000 Coloradans are currently enrolled in it, and many more are expected to be by the end of 2012. In its first year, it:

  • Reduced Medicaid health expenditures by $20 million, and
  • Returned nearly $3 million to state and federal taxpayers.

Long-term care is one of Medicaid’s most expensive programs. The Colorado Access to Community-based Transition and Services works to help Medicaid-eligible residents of all ages transition from nursing facilities back into the community and access the services and support they need. This makes it possible to:

  • Help individuals who prefer to stay in their own homes do so, and
  • Reduce Medicaid costs by avoiding the high costs associated with nursing facilities.

The Hospital Provider Fee is also helping to contain health care costs. This fee is matched dollar-for-dollar by the federal government and draws in hundreds of millions of additional state health care funds.  It reduces uncompensated care and cost-shifting to hospitals, which reached $1.7 billion in 2011.

How we know it is working



Per capita costs for commercially insured (0-64)
Per capita costs for Medicaid (0-64)