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Hickenlooper: Medicaid waivers not a budget option

DENVER — Gov. John Hickenlooper on Thursday dismissed a Republican idea to explore waivers from Medicaid spending to alleviate budget pressures, saying it's a requirement Colorado can't get out of.

Medicaid will account for nearly 82 percent of the increase in the state's general fund spending, as cuts to education and public colleges continue next year. Republicans have suggested that the state should explore the possibility of getting waivers from the fedral government that will allow Colorado to spend less on Medicaid.

Rep. Cheri Gerou, the chair of the Joint Budget Committee, brought up the issue again while the Democratic governor talked to lawmakers about his proposed budget, which he unveiled earlier this month.

"We need a little bit of a Band-Aid," Gerou said, prompting one of the more lively exchanges in an otherwise uneventful hearing.

"Specifically, so what would we ask for a waiver from? Do we want to take people off of Medicaid rolls?" Hickenlooper asked.

"No I don't think we want to take people off of Medicaid rolls," Gerou responded.

Hickenlooper insisted that Medicaid waivers are not possible and that the new federal health care law prevents states from restricting eligibility.

"We can't cut Medicaid. It's against the law," he said after the hearing.

The Legislature will debate the budget in the spring. Some of what Hickenlooper proposes can change based on two revenue forecasts before the budget is adopted.

Hickenlooper is proposing $679 million in cuts to balance a general fund budget of about $7.4 billion next year. Cuts include about $89 million to K-12 education and about $60 million from public colleges. The education reductions are not as dramatic as they've been in the past.

This year's budget cut spending on K-12 schools by more than $200 million, to $2.8 billion. Higher education was cut $125 million, to $624 million.

Hickenlooper is also proposing eliminating a $98.6 million property tax break next year for seniors. Lawmakers have done away with the tax break in the past to balance the budget but the voter-approved aid for seniors is scheduled to be reinstated next year. Hickenlooper said lawmakers need to pass legislation to suspend it again, or cuts will be necessary in other areas of the budget, most likely education.

Republicans have said they oppose Hickenlooper's proposal and that it could set up a fight over what other parts of the budget should be reduced.

The tax break known as the "homestead exemption" allows homeowners 65 years and older to deduct 50 percent of the first $200,000 of property value on their taxes. Only seniors who have lived in their homes for at least 10 years qualify.

Hickenlooper's budget also asks for about $64 million in severance taxes that go to local governments.

But the discussion Thursday centered on the growth in Medicaid spending. Under Hickenlooper's budget, Medicaid next year would account for $185.6 million out of the $227.1 million increase in the general fund.

"It's really a reflection of the continuing duress on our economy and how many people are out of work and slipping into poverty," he said.

Over six years, Colorado's Medicaid enrollment has grown by about 72 percent, or 281,000, according to the governor's office. Meanwhile, general fund revenue for next budget year is still projected to be 5 percent under the pre-recession 2007.

Gerou could not describe what a Medicaid waiver would look like or the amount of savings to the state. She said wants Hickenlooper to be open to discussing the idea.

"That's the point. I want to have that conversation. I don't think everybody's thought everything out," she said.

"This is the problem. They don't know exactly what they want," said Democratic Rep. Mark Ferrandino, another JBC member. "They hear nationally, 'Oh, we just want waivers.' But what those waivers really mean is reductions in either services or kicking populations off of the Medicaid rolls."