Why Colorado Pays Family Caregivers & the Proof it Works
Colorado pays family caregivers through Medicaid for a variety of factors; workforce shortages, better health outcomes, economic mobility, and real fiscal savings for the state. Programs like Community First Choice, IHSS, Personal Care, Homemaker, & Health Maintenance Activities let a family member get paid, through Medicaid, to do the caregiving instead of leaving it unpaid, or leaving it undone. It's strong fiscal stewardship.
01.
THE SUPPLY PROBLEM
Colorado doesn't have enough hired hands. It has enough family.
direct care workers Colorado will need by 2028, a gap the traditional paid workforce can't fill alone.
The state's 65+ population is growing more than three times faster than the working-age pool it draws caregivers from. Family caregivers aren't the backup plan. They're the only supply that scales with demand.
- 65+ population growth49%
- Working-age labor pool14%
The Colorado Department of Health Care Policy and Financing (HCPF) has already put real money behind this: $566 million across 61 ARPA-funded initiatives between 2021 and March 2025, aimed at expanding access to care and strengthening the direct care workforce. Nationally, direct care work is already the largest workforce in the country, about 5.4 million people, and the industry expects 8.9 million job vacancies to open between 2024 and 2034 from turnover and exits alone.
Family caregivers aren't a workaround for this shortage. They're the only supply that scales with demand. A neighbor in Jefferson County, a daughter in Aurora, a spouse in Castle Rock: none of them show up in a an agency's applicant pool, but all of them are already doing the work, often unpaid.
→ Colorado Health Institute, "Closing the Care Gap," June 2020
02.
HOSPITAL ADMISSIONS
Family Caregiving keeps people out of the hospital
lower odds of hospitalization for enrollees who switched to consumer-directed (often family) caregiving, versus staying on agency-directed care.
lower chance of falls
lower odds of social decline
Medicaid enrollees studied
A matched cohort of over 10,000 New York Medicaid enrollees, tracked from 2017 to 2022. That study is New York data, not Colorado data; no Colorado-specific hospitalization study exists yet. It lines up with a 2024 systematic review in The Gerontologist, which found self-directed HCBS improves outcomes for the caregivers themselves, not only the people receiving care. Washington's Medicaid Transformation Project has separately shown reductions in hospitalizations, ED visits, and 30-day readmissions since 2017.
→ Russell, Burgdorf, Reckrey, JAMDA, 2026
03.
HEALTH OUTCOMES
Paid family caregivers carry the hardest cases, and outcomes hold up.
Nationally, people with paid family caregivers carry a heavier chronic condition load than those with a non-family paid helper. They're not the easy cases. The outcomes are still stronger, and Colorado's move toward a 56-hour weekly cap doesn't shrink that need.
PAID FAMILY CAREGIVER
Average chronic conditions
NON-PAID FAMILY CAREGIVER
Average chronic conditions
A 1% increase in state HCBS spending is associated with 47.1 fewer nursing home residents and $7.3M less institutional spending per state, with no offsetting surge in new demand.
→ Reckrey et al., NHATS data, 2024 · McGarry & Grabowski, JAGS, 2023
04.
ECONOMIC MOBILITY
Paying the caregiver pays the whole family.
Americans now receive compensation as family caregivers, out of 63 million family caregivers nationwide, more than 1 in 6.
- Paid vs Unpaid Caregivers17%
A matched cohort of over 10,000 New York Medicaid enrollees, tracked from 2017 to 2022. That study is New York data, not Colorado data; no Colorado-specific hospitalization study exists yet. It lines up with a 2024 systematic review in The Gerontologist, which found self-directed HCBS improves outcomes for the caregivers themselves, not only the people receiving care. Washington's Medicaid Transformation Project has separately shown reductions in hospitalizations, ED visits, and 30-day readmissions since 2017.
→ AARP / National Alliance for Caregiving, Caregiving in the US 2025
05.
THE BUDGET CASE
It costs the state less, too.
less per person, per year, for home and community-based care versus institutional care. That's not an estimate, it's the federal government's own numbers.
- HCBS / home care $17.4k35%
- Institutional care: $55.1k100%
Per Medicaid enrollee, per year, nationally: $145.9 billion spent on 8.4 million HCBS users, versus $82.7 billion spent on 1.5 million institutional users, in 2023.
of CO's LTSS cost growth: rate increases
utilization, more hours per person
new enrollment
Colorado's own LTSS costs did grow, 44% between FY2020-21 and FY2023-24. HCPF's own breakdown of that growth: about 49% came from rate increases the state itself approved, about 39% came from utilization, people already enrolled needing more hours of care as they age in place, and only 11% came from new enrollment. That's the state paying more for a commitment it already made, and a population aging faster than almost anywhere else in the country, not runaway spending. Colorado's HCBS waivers are also required to demonstrate they're cost neutral, or provide savings, compared to nursing home care before the state can offer them.
→ CMS / Medicaid.gov, LTSS Users & Expenditures by Service Category, 2023
→ HCPF, Medicaid Sustainability and Colorado's LTSS System
→ Colorado JBC Staff Budget Briefing, FY2026-27
The bottom line
Colorado pays family caregivers because the workforce math doesn't close any other way, and because the outcomes and cost data, imperfect as some of it is, point the same direction: people do better at home, and Medicaid spends less getting them there.
Colorado families weighing whether to enroll a relative as a paid caregiver can start with the resources below. Anyone building a case for paid family caregiving, for legislative testimony, a grant application, or a newsroom story, is welcome to use these numbers; every figure on this page traces back to a named, dated source.
Frequently Asked Questions
Why does Colorado pay family caregivers through Medicaid?
Colorado's paid workforce can't cover the need. HCPF projects the state will need about 116,000 direct care workers by 2028, and programs like Community First Choice let a family member fill that role and get paid for it.
What is Community First Choice (CFC)?
Community First Choice is a Medicaid program that allows Colorado residents with qualifying needs to direct their own personal care, including hiring and paying a family member as their caregiver, rather than relying solely on agency-assigned staff.
Does paying family caregivers actually improve health outcomes?
A 2026 study in JAMDA found Medicaid enrollees in New York who switched to consumer-directed, often family-provided, care had 55% lower odds of hospitalization and 31% lower odds of falls than those on agency-directed care. Colorado-specific outcome data isn't yet available.
Is paying family caregivers cheaper for Medicaid than nursing home care?
Yes. Medicaid spent roughly $17,400 a year per home and community-based services user in 2023, versus roughly $55,100 a year per institutional user, a gap of about $37,800 per person, nationally. Colorado's own LTSS costs grew 44% between FY2020-21 and FY2023-24, mostly from rate increases (49%) and rising utilization (39%), not new enrollment (11%).
