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Senate Bill 1456 – Health and Welfare, Division of Medicaid, Supplementals FY24 and Appropriations FY25

Senate Bill 1456 – Health and Welfare, Division of Medicaid, Supplementals FY24 and Appropriations FY25

Niklas Kleinworth
March 27, 2024

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.

Analyst: Niklas Kleinworth

Rating: -4

Bill Description: Senate Bill 1456 appropriates $4,710,390,700 and 237.50 full-time positions to the Department of Health and Welfare, Division of Medicaid for fiscal year 2025. It also appropriates several supplementals for fiscal year 2024.

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.)? 

This legislation includes a one-time rescission of $277 million for the 2024 fiscal year. Most of this is to account for more than 100,000 ineligible beneficiaries being removed from the rolls. Heading into the appropriation for the 2025 fiscal year, the division noted that it is retaining an enrollment “cushion” that is 15% higher than its projections. This means the division is over-budgeting the program by $16.3 million. The state share of these funds is $3.3 million.

These funds don’t belong to the agency, but the taxpayers. Over-budgeting the program encumbers these funds for the duration of the 2025 fiscal year. This encourages additional federal borrowing and printing. At the state level, these funds would otherwise be returned to the taxpayers. The state’s various stabilization funds, which cover unforeseen budget impacts, are already at their statutory maximum. It is wasteful to overstate the cost of this program to make it yet another savings account for the state government.


Is the maintenance budget inappropriate for the needs of the state, the size of the agency, or the inflationary environment of the economy? Conversely, is the maintenance budget appropriate given the needs of the state and economic pressures?

This legislation confirms the program maintenance budget for the Division of Medicaid of $4,457,177,800, growing it from the base by 33.8% in the last three years. This growth from the FY 2022 base is substantially higher than what would be prescribed by inflationary pressures and growth.


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?

Federal spending constitutes 65% of the total Medicaid budget. This funding also covers the salaries for 132.40 of what would be the division’s 257.50 staff members — that is, 51.4% of all positions within the division. This offers a substantial amount of federal control over the program, its rules, and its operations. 

It should be noted that the division is also expanding the amount of federal funding passing through it. House Bill 577 would expand the amount of federal funding that would be used to offer supplemental payments to behavioral health providers. The Congressional Budget Office has noted that states exploit this program to maximize the federal funding they receive. Idaho will now join the list.

Another federal funding expansion is through the passage of House Bill 633. This legislation would extend Medicaid benefits for new mothers to 12 months after having their baby. This program is really a scheme to maximize the federal share of benefits payments. This program would shift $55 million of costs for this population to the federal treasury by replacing the traditional 68% federal match rate with a 90% match.

The state should be careful about leaning on the federal government for entitlement support. Though the United States Supreme Court ruled in NFIB v. Sebelius that Medicaid funds are severable, states that accept new Medicaid funding are subject to new federal strings or risk losing the money altogether. This dramatically increases federal control over Idaho’s health care delivery system.


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?

Senate Bill 1456 would appropriate an additional 24.50 new full-time equivalent positions to the Division of Medicaid. This request is in response to a recent study that recommended the agency expand its staffing levels. These positions would expand administrative overhead within the division rather than just adding program support. They include new program managers, program supervisors, and a bureau chief. This would be nearly a 12% increase in staffing within the division with no promise that these positions will save any money. This is substantial growth in the size and ongoing cost of government.


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?

This legislation provides for several supplemental adjustments within the division. These include a $278 million one-time rescission to the program to adjust for the removal of roughly 100,000 ineligible beneficiaries, who were left on the rolls as a condition of receiving federal pandemic funding. This rescission also removes some ARPA funding and accounts for the delayed start of the Idaho Behavioral Health Plan.

There are also two other supplemental appropriations in this legislation. The first is a $17 million ongoing reduction, due to the end of the Medicaid Interoperability Program. This program paid providers as an incentive to transition medical records from paper to electronic forms. 

The second is a correction to an appropriation in response to the passage of Senate Bill 1350 of 2023. The legislation allowed the division to increase the assessment made for hospitals and skilled nursing facilities. The funds were incorrectly drawn from the Cooperative Welfare Fund; they should have come from the Hospital Assessment Fund.

All of these items are valid uses of a supplemental request.


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