Hiker, damage payments are made for ALL predator kills and damage to livestock, except for coyote. Those are the ranchers' problem, since they are not protected.
Its a big pain for ranchers to apply for damage payments, since a government agent must visit the property and confirm that the animal(s) were indeed killed by a predator other than a coyote. Sometimes it can be hard to tell for sure.
Don, you're exactly right. All predators do what they naturally do! I don't believe Colorado has large enough tracts of land to support wolves plus mountain lion and bear, and co-exist with ranchers. Though wolves would probably help the over population problems temporarily in Rocky Mountain National Park, they would never stay there permanently and would eventually spread out. They've already moved down from Wyoming, and I would bet its from the packs introduced into Yellowstone.