The Budget Reconciliation Package, formally titled the One Big Beautiful Bill Act (OBBBA), passed and was signed into law by the President in the first week of July, leaving many concerned about its projected impacts on children and families. We at Illuminate Colorado are diving into the bill’s final provisions to understand how they impact Colorado children, families, and those who serve them.

The Strengthening Families Protective Factors and OBBBA

At Illuminate, we recognize the vital role of federal programs in promoting the Strengthening Families Protective Factors:(1)

• • Parental Resilience
  • Social Connections
  • Knowledge of Parenting & Child Development
  • Social & Emotional Competence of Children
  • Concrete Supports

Programs, such as SNAP and the Child Tax Credit, serve as evidence-based concrete supports, ensuring families have access to basic food and nutrition and financial supports, while other programs like Medicaid, CHIP, and premium tax credits for marketplace health insurance plans increase access to healthcare, which plays a role in promoting all five of the protective factors.(2) Although OBBBA made several updates that could promote protective factors, the bill largely made cuts to vital programs and instituted more intensive requirements that decrease access to needed supports and harm children and families.

Learn more about our guiding frameworks and the Protective Factors here.

Cuts to Programs that Enhance the Health and Wellbeing of Children and Families

Unfortunately, OBBBA cuts funding and institutes more intensive eligibility criteria and verification requirements that decrease access for several federal programs that strengthen families.

Medicaid and the Children’s Health Insurance Plan (CHIP)

As passed, OBBBA will result in over $1.02 trillion in cuts nationally to Medicaid and CHIP between federal fiscal year (FY) 2026 and 2034. The bill establishes work requirements for the Medicaid expansion population (adults under age 65 with an income above 100% and at or below 147% of the Federal Poverty Level), requiring redeterminations for Medicaid members in this population every six months. These requirements will go into effect on January 1, 2027. Exemptions will exist for certain populations, including children, parents and caregivers with custody of a child under the age of 13, and those who are pregnant.

In Colorado, 75% of adult Medicaid members are already working, 13% of Medicaid enrollees are adults age 65 + or are disabled, and 36% of Medicaid enrollees are children.(3) Of the 25% of adult Medicaid members who are not working, some will qualify for exemptions to requirements.

OBBBA also reduces retroactive coverage from three months to one month. Under this reduction, Medicaid members would only have coverage for services received one month before Medicaid approval, greatly reducing retroactive coverage.

The Colorado Department of Health Care Policy and Financing expect more intensive eligibility requirements, reductions in retroactive coverage, and other Medicaid-specific components of the bill will result in many direct and downstream consequences, including: (4)

• • An estimated increase of at least $57 million in unfunded administrative state costs to implement work requirements
  • An estimated increase of 3,700 new case workers needed to implement Medicaid work requirements, nearly doubling the current number of county caseworkers in this role.
  • Loss of Medicaid coverage for 116,000K-193,000 Coloradans
  • Unpaid claims for providers
  • An increase in uninsured Coloradans
  • Reduced state revenue to cover the costs of care for uninsured Coloradans and unpaid claims
  • Health care facility and hospital closures, especially in rural areas that have higher rates of Medicaid members
  • Lay offs within Colorado’s healthcare workforce
  • Reduced capacity to serve the healthcare needs of Colorado children, individuals, and families regardless of insurance coverage

Premium Tax Credits for Health Insurance

OBBBA also cuts $193 billion nationally through FY2034 by restricting premium tax credits, which subsidize the cost of marketplace health insurance plans to individuals who are not eligible for Medicaid and do not receive employer-sponsored health insurance. The bill makes those who enrolled in a marketplace plan during a special enrollment period ineligible for premium tax credits. In addition it requires enhanced verification of eligibility factors, such as household income, documentation status, place of residence, and family size.

Connect for Health Colorado and other healthcare policy experts project that increased administrative burdens and restricted eligibility requirements will likely result in direct and downstream consequences, including: (5)

• • An estimated loss of $620 million in premium tax credits to Coloradans
  • Loss of health insurance coverage for an estimated 112,000 Coloradans (43% of those currently enrolled in marketplace plans) who are unable to afford health insurance without the support of tax credits
  • Increased costs to states who must implement verification requirements
  • An increase in uninsured Coloradans
  • Reduced revenue that covers uninsured Coloradans and unpaid claims
  • Health care facility and hospital closures
  • Lay offs within Colorado’s healthcare workforce
  • Increased barriers to access to needed healthcare services for children and families

Supplemental Nutrition Assistance Program (SNAP)

OBBBA also cuts the federal SNAP budget by $186 billion nationally through FY2034. To accomplish these cuts, OBBBA removes exemptions to work requirements for veterans without a qualifying disability, people experiencing homelessness, former foster youth aging out of the system, and adults ages 55-64. In addition, it institutes a time limit on benefits received by parents with children ages 14-17 who do not fulfill the work requirement under the exemption. Under OBBBA, many immigrants, including refugees and asylees, will no longer be eligible for SNAP due to narrowed eligibility criteria.

The bill also eliminates the SNAP Education program, which funds cooking, grocery shopping, nutrition, and other skillbuilding classes for low-income individuals, children, and families.

Experts project that OBBA will result in:(6)

• • Loss of some or all SNAP benefits for 298,000 Colorado families
  • An average cut in SNAP benefits of $49 per month for 49,000 families with children
  • $175 million in new, unfunded Colorado state costs

Increases in Tax Credits for Families and the Professionals Who Serve Them

Although OBBBA makes unprecedented cuts to vital family strengthening programs, the bill made updates to several tax credits that will likely have mixed impacts for Colorado children and families.

Child Tax Credit (CTC)

OBBBA makes several updates to the Child Tax Credit that will result in increased benefits for some families and a loss of access for other families. The bill extends the CTC by eliminating an end date to the refundable and nonrefundable CTC, increases the non-refundable credit amount to $2200 (a $200 increase), and requires cost-of-living adjustments to the credit amounts.

However, the bill also requires that a family claiming the credit provide the Social Security Numbers of at least one caregiver with custody and the child. Although not explicitly named in the bill, this excludes many lawfully present families from receiving the federal CTC, creating a barrier to this evidence-based financial wellbeing support for many.

Additional Updates to Tax Credits & Exemptions

OBBBA also updates several federal tax credits that can be claimed by businesses, employers, and family-serving professionals, including:

• • Increasing the Child and Dependent Care Tax Credit
  • Increasing and expanding the Employer-Provided Childcare Credit
  • Extending, updating criteria, and increasing opportunities for employers to claim the Paid Family and Medical Leave Employer Tax Credit
  • Increasing allowable exemption amounts under the Dependent Care Assistance Program

Fiscal Responsibility and Prioritizing the Health and Wellbeing of Children and Families

Although many of the cuts and updates to federal programs that strengthen programs were framed as fiscally responsible, it is important to note that the fiscal and social costs of OBBBA are more complex than simple budget cuts. Many of these cuts will directly and indirectly result in increased costs to states, shifting the cost burden to Colorado taxpayers. The downstream consequences of Medicaid work requirements, cuts to health insurance premium tax credits, and cuts to SNAP will likely result in family entrance into other more costly systems, such as child welfare and emergency healthcare, due to reduced access to the supports and care needed to remain healthy and well.(7) Although enhanced eligibility criteria and verification requirements, including those associated with Medicaid work requirements, may seem like cost-saving, fraud-busting measures, they can do more harm than good.(8)

Recognizing the direct and downstream impacts of these policies, as included in OBBBA, the reduction in federal costs will result in immediate increased costs to states, harms to children and families, and longer-term federal and state costs resulting from downstream consequences.

Moving Forward with Gratitude, Creativity, and Hope

We at Illuminate Colorado are grateful for the collaboration, energy, and countless hours our partners in prevention dedicated to educating our Colorado Congress members about the impact of proposed cuts and the importance of federally funded family strengthening programs. We were proud to co-author two letters alongside The Kempe Foundation, supported by additional organizational partners, which reached all Colorado Congress members and highlighted the role of these programs in strengthening Colorado families and preventing child maltreatment. In addition, we signed onto several letters authored by our state and national partners and engaged our Colorado Congress members on numerous occasions.

Moving forward, we will lead with creativity and hope, continuing to educate our Colorado Congress members on the vital role of federally funded family strengthening measures in preventing child maltreatment. In addition, we will collaborate with our local, state, and national partners, lived experience experts, and research partners to understand the impact of OBBBA’s policy changes and consider creative, responsive next steps to protect the health and wellbeing of Colorado children and families.

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