Expenses grew faster than payments in 2022 and 2023, narrowing hospitals’ margins on patient care, while a stock market downturn cut into the value of their investments. In 2024, the trend reversed, according to the new reports, with insurance payments growing slightly faster than the cost of providing care.

Still, Colorado hospitals say their finances aren’t on a solid footing as the next challenge looms: Medicaid work requirements will kick in Jan. 1, and people who lose coverage will almost certainly become uninsured. Medicaid doesn’t cover most hospitals’ full costs, but they collect little or nothing from patients without insurance.

The state’s hospitals made about $101.6 million on patient care in 2024, up from $11 million in 2023, according to the .

That translates to roughly $99 in profit per patient in 2024 — up from $11 per patient in 2023, but far from the pre-pandemic level of $1,367 per patient in 2019.

Counting investment income, hospitals came out ahead by about $1.9 billion in 2024, with most of the profit going to large facilities. Total profits were about $407 million higher than in 2023, but still about $381 million below 2019 levels.

The releases two legislatively mandated reports, which lag by one year, on hospital systems’ finances each January. A third report, on , lags two years, so the data only covered 2023.

The overall profits conceal significant variation.

Out of 85 facilities reporting data, 22 lost money overall, down from 32 in 2023, according to the . Overall profit margins ranged from a high of 33% at in Fort Collins to a low of -182% at , which opened in Colorado Springs that year.

Smaller and independent hospitals were more likely to lose money.

Hospitals didn’t perform as well without investment income included, however.

When looking at patient care and related operations, 45 hospitals lost money, and only 28 made 4% or more, which the considers a sustainable profit margin.

Which method generates a better picture of hospital finances is a perennial bone of contention. State officials describe reserves and investments as important for understanding facilities’ total wealth, while the hospital association likens them to retirement accounts that no one wants to tap for daily expenses.

Kim Bimestefer, executive director of the Department of Health Care Policy and Financing, described 2024 as a time of stabilization for hospitals, because payments started growing faster than expenses for the first time since 2021. Both have roughly doubled over the last decade, she said.

“At the other side paying all of this are consumers and employers, so we’ve got to recognize the sustainability of that, how do we work together to get it down, but also recognize where the hospitals are struggling,” she said.

Complete data from 2025 isn’t yet available, but the numbers from the first nine months of the year suggest hospitals continued “treading water” last year, said Tom Rennell, senior vice president of financial policy and data analytics at the hospital association.

Inflation remains high and the cost of uncompensated care is increasing, so 2024 was a challenging year, he said.

“Everyone’s just kind of hanging in there,” Rennell said.

Uncompensated care, which is the sum of charity care hospitals provide and bills they can’t collect, increased by about $171.7 million, or close to one-third, from 2023 to 2024.

The department attributed the increase to the end of the COVID-19 public health emergency, when states had to start verifying Medicaid eligibility again and recipients lost coverage. The Census Bureau estimated the uninsured rate in Colorado rose from 6.7% in 2023 to 7.9% in 2024.

, the city’s safety-net hospital, provided $174.7 million in uncompensated care, or about one-quarter of all unpaid services in the state, followed by , in Aurora, at $76.1 million and , in Colorado Springs, at $24.4 million.

The cost of uncompensated care will almost certainly increase in the coming years.

Medicaid work requirements under H.R. 1 — known as the “big beautiful bill” — will take effect in January 2027, and people who can’t navigate the process won’t have another option for health insurance, said Jennifer Tolbert, deputy director of the Medicaid and uninsured program at , a nonprofit that does health policy research, polling and journalism.

States will have some control over the resources they put into finding data so that fewer people have to file their work hours manually, but an increase in the number of uninsured people is inevitable, she said.

“Regardless of how much data-matching states are able to do, people are going to fall through the cracks,” Tolbert said.

Donna Lynne, CEO of Denver Health, said the state’s plans to hold Medicaid rates flat for the next few years, combined with cuts under H.R. 1, will force difficult choices in hospitals that serve large numbers of low-income people.

Colorado faces a budget gap approaching $1 billion, and Medicaid accounts for one-third of state spending.

“We’re not crying wolf. The bottom is going to fall out,” she said during a on Feb. 11. Denver Health lost about $20.5 million on patient care and related services in 2024, and had a 0.2% profit margin with investments.

The coming increase in the uninsured rate means that hospitals will need to do more to help patients navigate the Medicaid enrollment process and to provide the assistance their communities need most, said Sophia Hennessy, policy and research lead coordinator at the .

Federal law requires nonprofit hospitals, which are exempt from most taxes, to spend money on “community benefit,” which can include free care, health-promotion programs and medical research, among other things.

The state’s community benefit report showed nonprofit hospitals spent about $1.4 billion on community benefits, exceeding the value of their tax exemptions.

Training and recruiting providers, mostly at the and , accounted for the largest share, followed by charity care and unspecified other programs.

“Hospitals are, net, doing strong, and we want to see more of an investment in Coloradans,” Hennessy said.

Rennell disagreed that hospitals’ overall position is strong. Most are financially shaky and expect the situation to get worse as more patients lose their insurance next year, which could force some to close or reduce services, he said.

“Our hospitals are taking that seriously, yet feeling the road ahead is going to bring difficult choices,” he said.

Funding from the sales tax that Denver voters approved last year through Ballot Issue 2Q helped pay to renovate the unit, known as the Integrated Medical and Psychiatric Care Unit, or IMAP. Denver Health projected the sales tax would raise about $65 million, which it could use to support mental health and addiction treatment, emergency services and primary care.

With the 12 adult beds from the previously closed unit added in, Denver Health will have 57 beds for adult psychiatric treatment and 21 for teenagers, CEO Donna Lynne said.

“I thought it was just outrageous that we couldn’t open all the beds we have at Denver Health,” she said during a ribbon-cutting Friday morning. “The 2Q (sales tax) money is going to help us support these services.”

The unit is the first of its kind in Colorado, serving people who have mental health symptoms severe enough to warrant psychiatric hospitalization, but also have an unstable physical condition requiring hospital care. It can’t take people whose conditions are serious enough that they need an intensive care unit, though.

Psychiatric hospitals vary in the level of medical care they can provide, but most won’t take patients with another serious condition, said Dr. Bobbie Jo Dodson, the IMAP medical director.

For example, someone who had poorly controlled schizophrenia and dangerously high blood sugar normally would have to spend a few days on a regular medical unit to get their blood sugar under control before they could go to a unit set up for mental health treatment, she said.

“It makes sense that both illnesses can and do decompensate at the same time,” she said.

On a medical unit, psychiatric patients typically have to stay in their rooms, because they don’t have designated common areas and the hallways aren’t set up to prevent patients from hurting themselves or others, Dodson said. Also, while the nurses and technicians do their best, those working on a medical floor don’t have expertise in caring for patients who are seriously mentally ill, she said.

Frances Vaughn, a behavioral health technician who will work on the new unit, said she frequently sees patients who need to transfer between the medical and psychiatric floors. Having them stay in one place will reduce hassles for the patients and allow staff to work more efficiently, since they won’t have to send someone down to the medical floor to supervise the patient at all times.

“When they get to medical (units), they still have to have one-to-one” supervision, she said.

Denver Health designed the unit for safety, with furniture patients can’t lift and fixtures that bend if someone tries to use them as a ligature point, said Kimi McBryde, behavioral health project manager.

Patients who need medical equipment that they could use to harm themselves or others will still need one-to-one supervision during that part of their treatment, but the rooms have sliding doors that they can lock to make sure patients can’t hurt themselves with the outlets needed for that equipment when they aren’t using it, she said.

“When this (sliding door) is closed and locked, it’s just a psych room,” she said.

Patients might still need to transfer between units if, for example, their mental health stabilizes, but they aren’t physically healthy enough for discharge, Dodson said. Providers have discretion to determine if a transfer makes sense, or if a patient is close enough to discharge that they should stay in place a bit longer, she said.

The unit will stay busy because people with serious mental illnesses have more chronic conditions than those without major psychiatric conditions, said Dr. Chris Thurstone, chair of behavioral health at Denver Health. They have a life expectancy 15 years shorter than the general population, and early cardiovascular disease is one of the biggest contributors, he said.

“We’re going to stop having all these silos, and we’re going to integrate medical care the way it should be,” he said.

H.R. 1, known as the “Big Beautiful Bill,” blew a roughly $783 million hole in the state budget in July, because Colorado’s tax laws automatically adjust to stay in harmony with the federal government’s. The legislature opted to undo some of those changes during a special session in August and gave Polis the authority to fill the rest of the gap.

About $79.2 million of the $252 million in cuts , which runs Medicaid in the state. The list includes a mix of reductions in the rates paid to people who provide care, unused funds swept from specific programs and plans to review some care types more strictly before paying.

The largest cut, worth roughly $38.3 million, would roll back most of a 1.6% increase that most providers expected to get this year. Since providers received slightly higher rates in the first months of the fiscal year, it will work out to about a 0.4% increase, which is in line with recent years, the department said.

Denver Health estimated the rollback would cost the city’s safety-net hospital about $5 million. The health system isn’t planning any layoffs or service reductions, but could cut back on nonessential maintenance and technology updates, CEO Donna Lynne said. As it was, the increase only partially offset growth in costs in recent years, she said.

“We were already trying to absorb the difference between medical inflation and the 1.6%,” she said. The hospital costs rose about 5.1% in 2024.

The Colorado Hospital Association said its members were “disappointed” with the rollback, especially since they expect to lose Medicaid funding under provisions of H.R. 1 in 2027 and beyond. An unknown number of patients will lose Medicaid coverage due to new work requirements, and states won’t be able to draw down as much federal funding for hospitals because of limits on provider taxes.

“We recognize the tough choices required in this budget process, but reductions to provider rates — particularly alongside other health care cuts stemming from H.R. 1 — add to the challenges ahead,” the association said in a statement. “CHA and our members remain committed to working with the governor and legislators to identify solutions that protect health care funding and sustain access to care across Colorado.”

Dentists also will receive less for treating Medicaid patients than they anticipated, with about $2.5 million in reductions to planned increases. The Colorado Dental Association said it was waiting for details about which services would take cuts, and how deep they would go.

Other Medicaid cuts include:

• $7 million from reviewing applied behavior analysis claims for improper billing. The therapy attempts to teach daily living skills to people with severe autism.
• $6.1 million from requiring prior authorization for more than 24 psychotherapy visits in one year
• $5.6 million that Colorado was going to spend to keep children covered by Medicaid until age 3. The Centers for Medicare and Medicaid Services revoked permission for the state to do that.
• $4.4 million from a fund to raise pay in nursing homes above $15 per hour. The state’s minimum wage will be over $15 next year, making the fund largely irrelevant.
• $3 million from reducing the “community connector” benefit to bring kids with disabilities into integrated settings
• $3 million from reducing incentives for behavioral health care improvements
• $2.7 million from benchmarking the state’s rate for applied behavior analysis for autism to 95% of the rate in comparable states
• $1.7 million from requiring prior authorization to administer 17 or more drug tests to the same person in one year
• $1.5 million from starting payments to small, rural and pediatric providers in January 2026 instead of July 2025
• $1.5 million from reducing the rate paid to family caregivers for people with disabilities
• $750,000 from reducing incentives to coordinate primary care
• $500,000 in unused funding appropriated for family planning services to undocumented people
• $500,000 from training for providers about screening patients for substance misuse and referring them to treatment
• $131,000 in funding to advertise Cover All Coloradans, which offers Medicaid-like coverage to undocumented people

Initially, pharmacies couldn’t administer the updated shots in Colorado unless a patient had a prescription. The state allows pharmacists to administer vaccines recommended by the Centers for Disease Control and Prevention’s advisory committee, but not other shots.

Dr. Ned Calonge, chief medical officer for the state health department, responded by issuing a standing order — essentially, a prescription for every resident – allowing them to get vaccinated at retail pharmacies.

But that order doesn’t guarantee insurance will cover the shots or that pharmacies will choose to stock them. Last year, fewer than half of people over 65 nationwide received an updated COVID-19 shot, with uptake dropping further in younger age groups, raising questions about whether health care providers will believe demand is high enough to justify buying the vaccine.

“The standing order provides accessibility. It doesn’t necessarily provide availability,” Calonge said Tuesday.

The last week that would require state-regulated plans to cover COVID-19 vaccines without out-of-pocket costs for people of any age, assuming the division passes it as written. Insurance cards from state-regulated plans typically have CO-DOI printed in the lower left corner.

The state’s rule doesn’t apply to federally regulated plans, which account for about 30% of employer-sponsored insurance plans in Colorado, Calonge said. Typically, however, those plans try to offer competitive benefits, since they mostly serve large employers, he said.

“My hope would be they would want to keep up with other insurers,” he said.

This isn’t the first time that people on state-regulated plans have had benefits not guaranteed for people with federally regulated insurance.

Colorado capped the cost of insulin and epinephrine shots to treat severe allergic reactions in state plans, but couldn’t require the same for plans the state doesn’t oversee. In those cases, it offered an “affordability program” requiring manufacturers to supply the medication at a lower cost for people who aren’t covered by the state caps, Medicare or Medicaid.

At least two Colorado insurers surveyed by The Denver Post said all of their plans will cover COVID-19 vaccines, while others hedged.

Select Health, which sells Medicare and individual marketplace plans in Colorado, said its plans currently cover COVID-19 vaccines without out-of-pocket costs for everyone. Kaiser Permanente Colorado said in a message to members that it will pay for the shot for anyone 6 months or older.

Donna Lynne, CEO of Denver Health, said the health system’s insurance arm is waiting on clarification about when it should cover the vaccines. Denver Health Medical Plan offers multiple plan types, some state-regulated and some under federal rules, she said.

“It’s less of a decision on our part than understanding what the health department and the insurance department are saying,” she said. “You can’t have one insurance company saying they are doing it and one saying they aren’t doing it.”

Anthem said it considers immunizations “medically necessary” if the American Academy of Pediatrics, American Academy of Family Physicians or the CDC’s vaccine advisory committee has recommended them, but didn’t specify whether it would charge out-of-pocket costs for medically necessary vaccines.

If those bodies stated that certain people could get a particular vaccine — but not that they should — Anthem would decide about coverage “on an individual basis,” . The other groups have recommended the shots for people over 18 or under 2, with the option for healthy children in between to get a booster if their parents wish.

The state’s Medicaid program is still waiting for guidance from federal authorities about whose vaccines it can cover, according to the Colorado Department of Health Care Policy and Financing, and .

For most of the COVID-19 vaccines’ relatively brief existence, they were free and recommended for everyone 6 months and older. In 2024, the federal government stopped paying for them, which meant uninsured people no longer could be sure they could get the shot without paying.

Almost all insurance plans still were required to pay for the shots, though, because the CDC’s Advisory Committee on Immunization Practices recommended them.

In previous years, the committee recommended updated shots within days of the U.S. Food and Drug Administration approving them. In late August, the increasing their risk of severe disease, including asthma, obesity and diabetes.

Doctors still could prescribe the vaccine “off-label” to healthy people, in the same way that they prescribe adult medications for children when an alternative specifically approved for kids isn’t available.

This year, however, , and may not recommend the shots when it does. Secretary of Health and Human Services Robert F. Kennedy Jr. dismissed all of the committee’s members earlier this year and replaced them with new appointees, most of whom oppose COVID-19 vaccines.

The committee’s decision also will determine whether the Vaccines for Children program can supply the shots for children who are uninsured, covered by Medicaid or are members of American Indian tribes, Calonge said. If the committee decides not to recommend the vaccines, those children likely won’t have another option to get the shots, he said.

When states and the federal government passed laws linking coverage to the committee’s recommendations, they did so expecting that it would also remain an apolitical arbiter of the evidence for vaccinating the population or specific subgroups, said Cathy Bradley, dean of the Colorado School of Public Health.

Now, that premise is in doubt, and states are looking for other ways to ensure access, she said.

Allowing anyone who wants a COVID-19 vaccine to get one from the provider of their choice is an important first step for Colorado, because the vaccines remain effective in preventing severe illness, Bradley said. As the situation develops, the state will likely need to come up with other partial solutions to preserve access, she said.

“It’s a different path for everyone, depending on what your coverage is,” she said.

CEO Donna Lynne recently told the that the hospital expects a $64.2 million annual loss, mostly because patients who currently have Medicaid will lose coverage, but keep coming for care.

“This is going to create a big problem for us,” she said.

Starting in 2027, people covered under the Medicaid expansion, which raised the maximum income to 138% of the poverty line, at least 80 hours each month.

The work requirement exempts people who are pregnant, “medically frail,” disabled veterans or parents of children under 14. In the few states that attempted to add work requirements, thousands of people became uninsured, including some who had jobs but struggled to navigate the paperwork.

providers would lose a combined $10 billion over five years due to provisions of Congressional Republicans’ tax-and-spending law H.R. 1, known as the “big beautiful bill.”

AdventHealth, CommonSpirit Health, HCA HealthOne and Intermountain Health said they hadn’t calculated the bill’s effects, but would work to protect vulnerable patients.

UCHealth said it hasn’t estimated an impact, because the state’s decisions could blunt or worsen the effects. Four of its hospitals are in the top eight Medicaid providers, by dollar amount of care provided, and all provide significant uncompensated care, spokeswoman Kelli Christensen said.

Children’s Hospital Colorado, which consistently ranks near the top of the state’s hospitals by share of patients covered by Medicaid, didn’t say what the cut’s financial impact could be, but said it could be “hugely disruptive” to children’s access to care in the state.

The city projects the sales tax Denver voters approved in 2024 will bring in about $65 million in its first year, though the amount could change, depending on whether economic conditions cause residents and visitors to spend more freely or to close their wallets. The tax adds 34 cents to a $100 purchase in the city.

The wording of the ballot question doesn’t allow Denver Health to simply replace any Medicaid revenue it loses with sales tax dollars. The tax proceeds must go to emergency and trauma care, primary care, pediatrics, mental health care, and addiction treatment and recovery services.

Denver Health roughly broke even in 2024, with about a 1% profit margin. It narrowly lost money in 2023, despite receiving $5 million from the state. It ended 2022 about $35 million in the red.

While patients becoming uninsured will have the biggest impact on hospitals, H.R. 1 also limited the “lookback period” to 30 days, Lynne told the council committee on Aug. 21.

If a person who is eligible for Medicaid, but not enrolled, gets care and enrolls within 90 days, the hospital or clinic that cared for them can get paid retroactively. Shortening that period will increase uncompensated care, because the state can’t always process the paperwork to determine someone is eligible within a month, she said.

Denver Health serves an unusually high number of people covered by Medicaid. In June, about 47% of patients had Medicaid as their insurance, and 10% were uninsured, Lynne said. Roughly one in 10 uninsured patients last year was a newcomer or migrant, she said.

The hospital system declined to discuss how it would close a new budget hole.

“Denver Health is committed to working closely with the state to mitigate some of these impacts on both us and our patients during this unprecedented time,” Denver Health said in a statement.

Denver voters agreed to increase the sales tax by 0.34 percentage points, which works out to 34 cents on a $100 purchase, to help the city’s struggling safety-net hospital.

Ballot question 2Q allowed Denver Health to use the proceeds for emergency and trauma care; primary care; mental health care; addiction treatment and recovery services; and pediatric care. All are services that typically don’t turn a profit for health systems.

Assuming the economy doesn’t fall into a recession, Denver Health expects to receive just over $5 million per month from the tax, which took effect in January.

The $65 million from the sales tax this year and the city’s annual $30.7 million contribution will help to offset some of the roughly $145 million in uncompensated care that Denver Health expects to provide in 2025, CEO Donna Lynne told a Denver City Council committee on .

But it won’t be enough to make up for deep cuts to Medicaid if Congress follows through this fall, because a disproportionate share of the system’s patients rely on the program, she said.

“2Q lets us breathe for this eight-month period” before possible cuts, she told the committee.

House Republicans passed a budget calling for $880 billion in cuts over the next decade. Medicaid is the only program large enough for that level of cuts that Republicans haven’t promised to protect, though The Associated Press reported Wednesday that enthusiasm for deep cuts has waned as lawmakers confront the possibility that their constituents could lose their health insurance.

Denver Health has struggled financially since 2021 as the cost of uncompensated care rose faster than other revenues could offset it. The health system lost about $35 million in 2022, then turned a $17 million profit in 2023 – still a narrow margin for an organization with a budget that tops $1 billion.

One-time funds from the state and Kaiser Permanente helped keep Denver Health afloat, but hospital leaders pitched the sales tax as a more permanent, if incomplete, solution.

The largest share of this year’s sales tax revenue, estimated at $36.2 million, will go toward offsetting the cost of emergency care, including care to uninsured people and the roughly one-third of ambulance runs that Denver Health can’t collect payment for, Lynne said.

“Our goal… was to maintain our funding in what we call priority areas,” she said.

About $16.1 million will go toward primary care, including a new clinic planned for southeast Denver and services at existing outpatient locations, Lynne said.

Pediatric services will receive a smaller share, with about $2.5 million earmarked for a new school-based clinic and other services to children. The pediatric share is smaller because most care that children receive is relatively inexpensive, she said.

The system also plans to spend about $13.9 million on mental health care and $2 million on addiction treatment and recovery services.

A significant share of that will go to open 10 “med-psych” beds for people who need both inpatient mental health treatment and hospital-level care for physical ailments, Lynne said. When those beds open, possibly by the end of the summer, they’ll be the only option in Colorado for people with those needs, she said.

“We tried to balance what we need that the (city’s $30.7 million) medically indigent payment doesn’t cover with some new services,” she said.

“These cuts would impact millions of Americans (and) thousands of people in my congressional district in order to pay for a huge tax cut for billionaires,” U.S. Rep. Diana DeGette, a Denver Democrat, said during a press conference Wednesday.

The Republican-controlled House Budget Committee has asked several committees to reduce their spending by hundreds of billions of dollars.

Despite supporting the top Republicans including President Donald Trump and House Speaker Mike Johnson have maintained that they don’t support cuts to Medicaid services, saying that they only want to “eliminate fraud.”

As of October, 1.1 million Coloradans were or the Children’s Health Insurance Program, according to KFF, formerly known as the Kaiser Family Foundation, which provides health care policy information.

While there aren’t yet specific proposals on how to cut Medicaid, Republicans have floated a few ideas, including creating a work requirement for participation in the program. But that wouldn’t save very much money since the vast majority of Medicaid enrollees are already working, attending school or serving as a caregiver for another person, DeGette said.

Another idea is to change the federal government����ap reimbursement to a per-person limit, shifting costs to the states. That could be a big problem for Colorado.

State lawmakers are already facing roughly $1 billion hole in the state budget. Medicaid accounts for roughly a third of Colorado’s general-fund expenditures, with much of that money going to care for older residents or those with disabilities. The state Medicaid program overshot its budget by $120 million last year, and rising expenses are one part of the state’s budget crisis this year.

As a result, state lawmakers will be watching the federal discussions “very closely,” said Sen. Judy Amabile, a Boulder Democrat and a member of the legislature’s Joint Budget Committee. Lawmakers of both parties have expressed concern over what cuts to the program would mean for Colorado patients and for the safety-net providers who treat them.

Under the Affordable Care Act, Colorado expanded Medicaid in 2013, and the federal government now picks up 90% of the new costs.

State legislators haven’t started studying potential options for implementing cuts because it’s unclear which way the federal discussions may settle, Amabile said.

“If this was another year when we weren’t under the gun with our own budget-balancing problems, maybe (federal cuts) wouldn’t hit as hard,” she said Wednesday. But if more cuts do come down, lawmakers “are going to have to make some tough choices.”

Joining DeGette on Wednesday was Donna Lynne, the CEO of Denver Health. She expressed worry about the impact of any Medicaid cuts for the safety-net health system, which potentially could result in service cuts and layoffs.

In a statement to The Denver Post, U.S. Rep. Gabe Evans, a Fort Lupton Republican who represents north Denver suburbs, didn’t directly address possible Medicaid cuts but said he would support “commonsense spending reductions.”

“While we only have topline numbers from the proposed budget, I look forward to working with my colleagues in Congress to protect hard working families,” he said in the statement.

U.S. Rep. Lauren Boebert, whose Eastern Plains district includes Douglas County, accused Democrats of fearmongering and failing “to provide any plan of their own to cut government waste.”

“President Trump has said he does not want to cut Social Security, Medicare, or Medicaid and I stand with him on that commitment,” she said in a statement.

Jeff Tieman, CEO of the Colorado Hospital Association, said any cuts to Medicaid could be devastating for rural hospitals in the state, which work with razor-thin and sometimes negative margins.

“It would mean that people lose coverage and lose access, but it would also mean that we have to close down services, close down hospitals,” he said.

Jim Garcia, CEO of the Tepeyac Community Health Center, a Denver clinic primarily serving the Latino community, said about 10% of his clinic’s revenue comes from Medicaid.

More specific information about potential Medicaid cuts is expected in the coming weeks and months.

The Associated Press contributed to this story.

“To me, it’s big loud voices — but I don’t see the substance,” Denver City Councilwoman Serena Gonzales-Gutierrez, one of the measure’s three sponsors, said of the advertising and emails those industries have directed her way.

The ban would prohibit the sale of nearly all flavored tobacco products within city limits, including flavored offerings for e-cigarettes, vaporizer cartridges and nicotine pouches as well as menthol cigarettes. It was introduced at the council committee level in late October, with backers portraying it as a matter of protecting young people’s health by making products that are already off-limits for them less appealing. On Monday, it will get its first reading before the full council.

Behind the scenes, some of the biggest players in the tobacco business have been working to derail the measure. The city of Denver’s shows that lobbyists have registered this year on behalf of — the tobacco manufacturer behind Winston, Kool and other cigarette brands — as well as industry giant .

Other recent registrants include the Colorado Wyoming Petroleum Marketers Association, which has paid for advertisements in opposition to the ban on Instagram and in The Denver Post. The organization represents the interests of companies and individuals who sell supplies to convenience stores, .

In a Thanksgiving Day print ad, that association called out the Denver City Council and Mayor Mike Johnston, who has signaled his support for the ban: “Instead of getting bad actors off our streets,” the ad reads, “Mayor Johnston and the City Council are fixated on banning flavored tobacco products.”

Just how much those lobbyists are spending on efforts to sway city officials has yet to be made public. Financial disclosures for activity in November and December are due Jan. 15, according to the .

But that advocacy does not appear to be bearing fruit.

On Wednesday, the council’s voted 6-1 to advance the ban for consideration to the full body. Following a first reading on Monday afternoon, council members expect to hold a courtesy public hearing about the ordinance on Dec. 16, followed by a final vote.

Observers expect it to pass — as it did once before in recent years.

Councilwoman receives dozens of emails daily

The lobbying this year has certainly caught the attention of Denver city leaders, and even officials in some neighboring jurisdictions. Denver also saw intense lobbying in 2021, when the council passed a similar measure only to see it vetoed by then-Mayor Michael Hancock.

But none of it has swayed Gonzales-Gutierrez’s commitment to banning flavored tobacco products. For the mother of three, the dozens of teens, educators and medical professionals who have spoken in support of the ban during public comment sessions before the council over the last month have carried much more weight.

“I think, in particular, kids coming is incredibly important because that is the impetus for this — thinking about young people having access to these products and just limiting that access,” she said.

She noted that the proponents’ side has its own coalition of supporters. Among them are the , a registered lobbying group; the American Heart Association; the American Lung Association; and Donna Lynne, the CEO of .

The most visible way opponents have lobbied council members has been through emails utilizing prewritten templates. Gonzales-Gutierrez says she is receiving 35 to 45 such emails a day.

Sponsors have made good-faith efforts to work with local businesses, she said. She pointed to a change to the bill that exempted hookah tobacco in part because of its cultural significance for people with Middle Eastern and North African roots.

The lobbying effort has referenced the city of Golden’s ban on flavored tobacco and nicotine products that took effect on Jan. 1.

— the Coalition for Health, Opportunity, Innovation and Consumer Education — ran a wraparound ad in Wednesday’s edition of The Denver Post that implored the Denver City Council: “Don’t repeat Golden’s mistake.” CHOICE is a nonprofit funded by Philip Morris, according to its website.

The ad refers to Golden’s decision to set up a $100,000 fund to support smoke and vape shops and convenience stores that lost revenue as a result of the ban.

“Denver can’t afford to make the same mistake,” reads the ad, which claims that a flavor ban would cost Denver north of $20 million in economic activity each year.

Golden Mayor Laura Weinberg was part of the unanimous vote that passed that city’s ban last year. She supported a similar measure in 2019. That one was tabled in hopes that the legislature would pass a statewide flavored tobacco ban, she said, but that never came to fruition.

Weinberg said the city had a history of using one-time grants to support local small businesses impacted by special circumstances, so the fund for smoke shops and convenience stores was not an outlier.

To her knowledge, two businesses that exclusively sold vape and tobacco products have gone out of business since the ban took effect. She expects impacted businesses that use the grant money to pivot away from a reliance on flavored tobacco products will be stronger after that transition.

Overall, she said, the ban has had a positive impact.

“I think it has been a win for our city,” Weinberg said. “It was a big ask from our community that we do this. There were real concerns for the health of the community — not just kids, but overall for the health of who we are as a city.”

Vape shop lobby is preparing for loss

Lobbyists working for independent vape shops are already projecting that Denver will adopt its proposed ban and are pivoting to efforts to mitigate the economic damage to their clients. They have sought to center responsible small business owners — a majority of whom are members of racial or ethnic minority groups, they emphasize — while keeping their distance from the big tobacco companies involved.

“There’s clearly an agenda, and they most likely have the votes,” said Joe Miklosi, who represents the , a group of independent vape shops that has 25 dues-paying members in Denver.

Miklosi has argued Denver will hurt adults trying to ween themselves off deadly combustible cigarettes. Now his hope is that council members will delay the effective date of the ordinance — from 90 days after adoption to a year out — to give business owners time to make plans for their futures.

He said a third shop in Golden was likely to close before the end of the year after losing 80% of its revenue following that city’s ban.

“People are going to lose their homes as well as their businesses,” he said.

There is at least one firm “no” vote on the Denver City Council: Kevin Flynn. He also opposed the 2021 attempt to ban flavored tobacco and nicotine products.

Flynn says his opposition isn’t driven by lobbying. Nor it is driven by studies and research around the health effects of these products. He knows tobacco products are bad for people. But he said he had yet to be convinced that placing a prohibition on products that are legal for adults is an effective way to keep them out of the hands of children. Colorado’s minimum age to purchase tobacco products is 21.

“All it is going to do now is lead to a black market, and it’s going to lead to trouble,” Flynn said. “It’s going to create more police interaction with our young people, and I thought our progressive policy is (that) we want to diminish that.”

Political activists, observers and even supporters say the proposal suffered from the lack of a clear spending plan that could be explained to voters upfront. Without more detail, they said, big promises to deliver relief for struggling renters and to provide a leg up for people fighting to buy homes in a deeply unaffordable housing market didn’t carry sufficient weight.

Some of those observers also lamented that efforts to build a coalition backing the measure failed to secure support from several progressive organizations that could have mobilized the few thousand additional voters it needed to pass.

“This was winnable,” said Robin Kniech, a former Denver city councilwoman with a deep background in housing policy work, in an interview last week. “In trying to provide something for everyone, they failed to articulate any specific outcomes for anyone.”

All told, Ballot Issue 2R would have been the largest dedicated sales tax in city history — a 0.5% addition to the city’s rate that would have generated an estimated $100 million per year in revenue for the affordable housing cause. That money would have paid for investments in new mixed-income housing developments, preservation of existing affordable housing, rent subsidies, down payment assistance for homebuyers and more, according to the campaign.

Despite the scope of that ask, Kniech and others said the campaign still fell short on those cornerstone elements of winning campaigns.

Close election losses can sting the most. And Issue 2R suffered a very close loss: It fell short by just a shade over 1%, or 3,706 votes, in posted by the .

“The worst type of defeat is when you lose by 1%, because you’re going to say everything mattered,” said Deep Singh Badhesha, a Denver-based progressive political activist who supported 2R.

Maybe a few more well-placed yard signs could have made a difference, Badhesha said. Or perhaps one more key endorsement.

In the wake of the measure’s failure, thoughts in city hall are turning toward what comes next.

Johnston, in a statement to The Denver Post on Friday, emphasized that Issue 2R was not the only path to deliver on his promises to bring more affordable housing to the city that elected him mayor last year.

“We will continue to work around the clock to create innovative solutions to our housing challenges, partner with the state and federal governments, improve our own processes and reevaluate our programs to ensure they are as effective as possible,” Johnston said. “I look forward to sharing more on our path forward in the coming weeks.”

National debates may have played role

City Council members who backed Issue 2R are left to look at smaller, incremental moves the city can make to reduce the city’s severe and growing shortage of housing affordable to low- and middle-income residents. Those include ongoing discussions about how the city spends money from its existing and — and if that spending can be shifted to better meet the needs, members say.

In the meantime, some who co-sponsored the legislation referring 2R to the ballot this summer also lamented the lack of clarity around what it was meant to do.

The tax went from a big idea pitched by the mayor at a press conference in front of city hall to a record-setting sales tax increase on the ballot in the span of just four months. Had it passed, city housing officials were slated to prepare a detailed first-year spending plan that could be reviewed and voted on by the council in January.

“People have to be really familiar with what a sales tax is going to do and how it’s going to be administered,” said City Council president Amanda Sandoval, one of those co-sponsors. “As much work as we did, just the clarity of the plan was not there. (That’s) what I heard from my voters.”

Sandoval said she also encountered misinformation — something she traced to noise coming from the presidential campaign about immigration and other issues. Some voters, she said, told her they didn’t want to support a tax that would raise money to house more migrants and people who are homeless.

That perception created another barrier, she said — causing some to believe 2R was focused on those issues in Denver rather than on supporting multigenerational families and people like Sandoval’s own children, who are worried about their ability to afford homes in the city.

“The hurdles that were in front of us with the rhetoric from the presidential campaign, I don’t know how we could have done it differently,” she said.

Councilman Darrell Watson is no stranger to the finer points of city housing policy. He previously chaired the Denver board, a body organized to provide guidance on city housing policy and spending. He also pointed to the challenges of selling a sales tax increase at a time when economic uncertainty and the still-looming shadow of inflation colored many voters’ decisions, from the presidency on down — even in a place like deep-blue Denver.

“Folks are still worrying about their pocketbooks, but I think sales tax measures are always tough,” Watson said. “It was not as clear-cut a message as some of the other issues that were on the ballot.”

“Promise what you can deliver”

Denverites did pass another large sales tax increase this year. Ballot Issue 2Q, a new 0.34% sales tax designed to raise $70 million per year to shore up the finances of Denver Health, the city’s safety-net hospital, won support from 55.7% of voters. With its passage, Denver’s effective sales tax rate will increase to 9.15%.

The Denver Health tax campaign entered election season with a head of steam after months of stakeholder engagement and then council referral to the ballot. Denver Health CEO Donna Lynne, on election night, credited the measure’s early lead to its leaders being clear with voters about what the tax would pay for.

Denver Health representatives explained that the money would support focus areas that included emergency and trauma care, pediatric care, and addiction treatment and recovery.

“We have talked to voters directly in detail about Denver Health, and they understand our service. And I think that����ap what’s making the difference,” Lynn told The Post after initial results rolled in.

From the time Johnston introduced the separate tax proposal that became Ballot Issue 2R, he pitched it as the critical funding source Denver needed to fill a projected affordable housing gap of 44,000 units over the next decade.

Kniech also saw this as a campaign strategy mistake. The housing shortage is so complex, she said, that voters already doubt the ability of government leaders to make a difference.

“Follow the Denver Health model — promise what you can deliver,” Kniech said. “There is no need to risk the public trust by overstating what one city can accomplish with one funding source.”

Badhesha, the political activist, pinpointed another weakness identified by other observers. Despite building a coalition of supporters that included many recognizable nonprofit organizations and affordable housing builders, 2R’s campaign didn’t receive endorsements from some grassroots groups.

To him, that hinted at potential missed opportunities to rally the extra 4,000 or so votes needed to pass it. Notably, 30,943 voters skipped the question on their ballot.

Badhesha pointed to two progressive organizations that he belongs to — the Denver chapter of the and the — that supported other city measures this cycle but skipped 2R. There will always be a subset of voters who stand steadfastly against any new taxes, he said, which is why mobilizing progressive groups is critical.

For Councilwoman Diana Romero Campbell — another lifelong Denverite worried about how her adult children will be able to afford to stay in the city — 2R’s loss was painful but galvanizing.

“Clearly there is no silver bullet,” she said of the city’s affordable housing needs. “And it feels like this is our job. We have to figure it out.”

While it made up ground in later returns after Tuesday’s election, the measure was rejected on 51% of city ballots counted so far, according to the latest results released by the Denver Elections Division on Friday evening.

That’s a slight improvement over preliminary results released Tuesday, when the measure had a rejection rate of 52.2%. The shift since then is a demonstration that voters who turned out on Election Day — casting ballots more likely to be processed on subsequent days — were more supportive of the tax measure.

But with an estimated 30,000 ballots left to be counted, 2R still trailed by 6,145 votes. The mayor, in a statement at 5:59 a.m. Saturday, acknowledged that the deficit was too steep to overcome.

“We are grateful to the council members, housing advocates and community leaders who took on the challenge of addressing our affordability crisis head-on. We knew this would be a difficult struggle, but thanks to their courage, 2R fell short by the narrowest of margins and Denverites continue to speak loudly about the need to confront rising housing costs across Denver.” Johnston said in that statement.

He added that 2R was not the only avenue the city had to tackle its housing affordability challenges and he will continue to look for new solutions.

A recent assessment by the determined that Denver will need to build or preserve 44,000 units of affordable housing over the next decade to meet the city’s demands. Without a significant boost in the amount of financing available, the market is on pace to produce only 19,000 affordable units over that timeframe, Johnston said when announcing the tax initiative this summer.

Johnston and supporters cast 2R, which would have raised an estimated $100 million per year initially and grown with the economy over its 40-year lifespan, as finally moving beyond the city’s many half-measures. It would have created a long-term funding source that they thought would turn the tide on Denver’s affordable housing shortage.

Groups including the Colorado Coalition for the Homeless, the Colorado Hotel and Lodging Association, the Mile High United Way and numerous nonprofit and for-profit development firms supported it.

But ultimately that coalition could not sell the record sales tax increase to most voters.

The City Council’s earlier had a lunchtime discussion of the first-year spending plans for 2R revenue on its agenda for next week. As of Friday evening, that schedule had been changed to say simply a “discussion on topics related to housing and homelessness.”

Denver voters have been happy to support sales tax increases to fund priorities in the city’s recent history. They approved six dedicated sales tax streams combined in the 2018 and 2020 elections. Those included 0.25% rate hikes to fund the city’s Homelessness Resolution Fund and the Parks Legacy Fund dedicated to acquiring and maintaining parks and open space.

Denver Ballot Issue 2Q, a sales tax increase that shared the ballot with 2R on Tuesday, coasted to a victory with 56% of the vote as of Friday’s updated results. That measure, a 0.34% rate increase, is projected to bring in $70 million per year to shore up the finances of Denver Health, the city’s ailing social safety net hospital.

“We are incredibly grateful to the Denver community for recognizing the importance of protecting health care access for all,” Denver Health CEO Donna Lynne said in a victory statement on Friday evening.

In neighboring Adams County, voters roundly defeated an affordable housing sales tax measure this year. County Ballot Issue 1A received just 30% support, according to .

That measure sought to raise the countywide sales tax rate by 0.15% and bring in $22.2 million per year. That would have allowed the county to add 6,000 affordable housing units to its stock over the next 20 years, according to , the county’s housing authority.