Idaho Legislature’s budget committee sets Medicaid budget close to governor’s requests

The Idaho Legislature’s powerful budget setting committee on Monday set budgets for Idaho Medicaid — largely at levels the governor asked for.

The Joint Finance-Appropriations Committee on two similar 13-6 motions voted to allocate state and federal funds for portions of Idaho Medicaid, Idaho’s largest state government program that offers health insurance assistance to roughly 262,000 Idahoans. 

JFAC’s actions on Monday will create a budget bill, or bills, that need approval by the House and Senate to pass, and must avoid the governor’s veto. 

The budget areas affected include extra funds for this fiscal year, which ends in June, and funds for so-called budget enhancements, which are essentially not barebones budget items, for the next fiscal year. The 2026 fiscal year starts in July.

JFAC has already set Medicaid’s barebones, or maintenance budget, which state lawmakers describe as funds that agencies need just to keep essential services going — without new initiatives. 

The largest chunk of funds JFAC set aside Monday were almost $674.2 million for Medicaid enhancement funds and trailer appropriations for fiscal year 2026, an 11.5% increase from last fiscal year. JFAC’s actions on the budget area came in about $12 million less than Gov. Brad Little had requested. 

That 11.5% increase isn’t just inflation, said Rep. Rod Furniss, R-Rigby, who moved for the approval of the enhancement budget items.

“So the 11.5% in the real world of health insurance has never equated to an inflation number, and it’s probably more reasonable than we would realize,” Furniss told JFAC.

“This budget helps people that are indigent. It helps … mothers that are pregnant. It helps disabled people and children. … Unfortunately, this is a budget that we really need to take care of for our people.  And sometimes we forget that,” he added.

How JFAC set Idaho Medicaid’s enhancements budget for next fiscal year

Here’s how JFAC’s budget-setting broke down:

Reducing Medicaid’s budget by $15.9 billion in trustee and benefit expenses as a result of House Bill 345, a bill that is headed to the governor for final consideration that proposes sweeping Medicaid policy changes to save costs. 

Transferring about $1.5 million from Medicaid trustee and benefit expenses to program operating costs to pay contract consultants for work related to the Medicaid cost bill, based on estimates by the Idaho Department of Health and Welfare.

The Medicaid budget’s tense history in the Legislature wasn’t lost in Monday’s budget-setting hearing. 

Sen. Carl Bjerke, R-Coeur d’Alene, who cosponsored the Medicaid cost bill, said the bill takes a new approach.

“This budget has always been one that people seem to tiptoe around. Nobody really gives it a bear hug now,” Bjerke told JFAC.

The enhancement Medicaid budget approvals also included an extra $376.1 million for Medicaid Population Forecast Adjustments, which accounts for a range of things, including increased Medicaid utilization and increased state costs as a result of the federal government reducing Idaho’s federal share of Medicaid contributions, through what’s known as the Federal Medical Assistance Percentage, or FMAP for short. (The federal government reduces FMAP rates for states as their economies outperform other states, and increases it as states’ economics underperform other states.)

How JFAC set Idaho Medicaid’s supplemental budget for this fiscal year

JFAC also approved a motion to allocate more than $415.2 million in extra funds — mostly from the federal government — for this fiscal year, which is called a supplemental budget. Those funds are for five policy areas:

$1.35 million for managed care external quality review, which are federally required outside evaluations of managed care organizations, which are private companies that manage Medicaid benefits.

$659,500 for system configuration changes for the Idaho Behavioral Health Plan, Idaho’s largest contract for managed Medicaid mental health care.

$113.85 million for updated Medicaid forecasts, which are updated estimates by Health and Welfare for program costs through the rest of this fiscal year. That is entirely federal funds.

$108.82 million for a capitation rate increase for Idaho Behavioral Health Plan contractors, which is due to higher-than-expected utilization of mental health care, the Idaho Capital Sun previously reported. That is entirely federal funds. 

$190.5 million for the Hospital Assessment Fund, which is part of a complex hospital Medicaid tax and state revenue structure.