The Idaho Spending Index serves to provide a fiscally conservative perspective on state budgeting while providing an unbiased measurement of how Idaho lawmakers apply these values to their voting behavior on appropriations bills. Each bill is analyzed within the context of the metrics below. They receive one (+1) point for each metric that is satisfied by freedom-focused policymaking and lose one (-1) point for each instance in which the inverse is true. The sum of these points composes the score for the bill.
Rating: (-4)
Bill Description: Senate Bill 1201 is an enhancement of $674,192,600 and 3.00 new full-time positions for the Department of Health and Welfare, Division of Medicaid for fiscal year 2026. This legislation appropriates a total of $5,249,797,100 and 305.50 full-time positions to the agency.
Does this budget incur any wasteful spending among discretionary funds, including new line items? Conversely, does this budget contain any provisions that serve to reduce spending where possible (i.e. base reductions, debt reconciliation, etc.)?
Senate Bill 1201 appropriates $415,226,800 in supplemental requests for FY 2025 and $674,192,600 in enhancement appropriations for FY 2026.
Included is an appropriation of $113,849,300 as an FY 2025 supplemental and $376,124,900 for FY 2026 for adjustments to population forecasts. This growth in spending is driven by a combination of three factors: increased enrollment, increased cost of services, and increased use of services. According to data provided by the department, it is not clear what mix of service use and cost is driving this increase. This bill makes adjustments for the passage of House Bill 345, which implements managed care in place of our current fee-for-service system, but the switch to managed care will have only limited success. H345 is only expected to save $15 million next fiscal year — about 2% of this year’s increase — and $27 million in the 2027 fiscal year. It is also worth noting that this motion does not appear to reflect all the costs contemplated by H345.
It is possible managed care could decrease the PMPM, though nationwide examples of this are inconclusive, and managed care contains perverse incentives that could threaten the integrity of the enrollment process. It is likely that the cost of Medicaid will continue to grow out of control without first tackling the enrollment problem.
Also included in this budget is $117 million supplemental for MMIS, the Medicaid Management Information System. This is on top of $133 million in the FY25 appropriations, and the FY24 appropriation of $144 million. It is not clear how much this project will cost when completed, but the appropriations exceed the initial estimates.
(-1)
Is the continuation or growth in ongoing spending, if any, inappropriate for the changes in circumstances, scope of the agency, or current economic environment? Conversely, is the continuation or growth in ongoing spending appropriate given any change in circumstances or economic pressures?
This legislation funds ongoing spending for the Department of Health and Welfare, Division of Medicaid at over $4.7 billion, growing from the base by over 30% in the last three years. This rate is faster than what would be prescribed by inflationary pressures and growth.
The growth in this budget is astonishing. During the COVID pandemic, the federal government enhanced its match and thousands of ineligible people were added to the books, causing Medicaid spending to soar. The extra COVID spending has gone away, the budget is larger than ever, even without enhanced federal support.
Because of the accelerated growth in this budget the last three years, a truly fiscally responsible enhancement budget for FY2026 would reverse the growth with a negative appropriation — a reduction to the base budget.
(-1)
Does this budget perpetuate or expand state dependence on federal dollars, thereby violating principles of federalism? Conversely, does this budget actively reduce the amount of federal dollars used to balance this budget?
Medicaid is a joint state-federal program. Therefore, states depend on federal support to run the program — by design. Federal spending constitutes about 65% of the total Medicaid budget. This offers a substantial amount of federal control over the program, its rules, and its operations.
What’s more concerning than Medicaid’s current reliance on federal support are efforts in this legislation to make the state even more dependent. Senate Bill 1201 provides $190.5 million as a one-time supplemental in FY 2025 and then as continuously appropriated funds starting in FY 2026, all to increase distribution from the Hospital Assessment Fund. These funds are acquired by what could only be appropriately described as legalized money laundering. It starts with the state taxing health care providers. The state then gives these funds back to the same health care providers as additional Medicaid payments. The increased payments draw in additional federal matching funds, which are then given to providers for a net gain. This appears to be “free” money since it comes at no cost to the state’s general fund, but the federal government will take on all of the added cost.
Even the Legislature’s budget writers admit what is going on. The Legislative Budget Book notes, “The Hospital assessment allows for revenue to come into the department, which will allow for other Medicaid providers to benefit from increased rates and the state benefits since the state portion of those rate increases are paid for by the Hospital assessment.”
This financing scheme improperly shifts the burden of Medicaid onto an already strained federal taxpayer by unduly growing the program and federal dependency.
(-1)
Does the budget grow government through the addition of new permanent FTPs or through funding unlegislated efforts to create new or expanded entitlement programs? Conversely, does this budget reduce the size of government staff and programs except where compelled by new legislation?
This legislation appropriates 3.00 FTP and $3,539,100 to move the Extended Employment Services program from Services for the Developmentally Disabled to the Division of Medicaid. This line item is a direct result of the passage of H345. This is a net-zero transfer within the Department of Health and Welfare. Therefore, it does not grow the overall size and cost of government.
(0)
Does this budget contain hidden fund transfers or supplemental expenditures that work to enact new policy or are not valid emergency expenditures? Conversely, are fund transfers only made to stabilization funds or are supplemental requests only made in the interest of resolving valid fiscal emergencies?
There are two particularly concerning supplemental appropriations in Senate Bill 1201. The first is for configuration changes for the final implementation of the Idaho Behavioral Health Plan at a cost of $695,500. These changes are system changes needed to move the state from the old system to the new IBHP system. Note there were several delays in implementing the plan, but this request is for costs already incurred. Therefore, as of the prior appropriation cycle for FY 2025, these additional costs should have been anticipated as part of the process for onboarding the new system.
The second concerning item is a $108,821,400 capitation rate increase in federal funding for the IBHP. Federal law requires states using managed care (that is, Medicaid managed by a private insurance company) to pay actuarially sound rates. The department noted such a large miss in the spending projections was due to projections being based on 2019 enrollment data that were likely used to exclude anomalies in the COVID-era data. But this information predated much of Idaho’s recent population growth and expansion of Medicaid to able-bodied, working-aged adults. This decision was a very costly error for Idaho taxpayers that may constitute a fiscal emergency today, but one that perhaps could have been avoided.
(-1)
