BOISE, ID – The Idaho Department of Health and Welfare needs another $60 million for Medicaid this fiscal year, even after cutting pay rates for doctors and health care providers.
In its budget request released this month, the department said the supplemental budget request is needed to pay providers on time — because Medicaid expenses are forecasted to go above the agency’s set budget for fiscal year 2026, which ends in June 2026.
If providers aren’t paid, it could “lead to providers no longer contracting with Idaho Medicaid, impacting availability of services for those in need,” according to the budget request.
Recent cuts to provider pay rates, expected to save nearly $30 million this year, prevented the supplemental budget request from being even bigger, said Idaho Medicaid Deputy Director Juliet Charron, who will soon become the director of the Department of Health and Welfare.
The rising Medicaid costs that drove the need for the supplemental budget request stem from higher health care costs — with more people seeking health care services, and more intense services, she said.
Request comes amid tough year for Idaho’s state budget
Supplemental budget requests are common for Medicaid because the program’s budget is set based on projections that could be wrong.
But this supplemental budget request comes as Idaho faces a tough year for the state’s budget.
Last month, Idaho Gov. Brad Little ordered all state government agencies besides public schools to cut their budgets mid-year by 3% ahead of an $80 million projected budget shortfall. But the budget shortfall estimate didn’t account for tax cuts in President Donald Trump’s One Big Beautiful Bill Act, which could cost Idaho another $167 million to implement, the Idaho Capital Sun reported.
After the governor’s executive order for mid-year budget cuts, Health and Welfare announced it would cut Medicaid reimbursement rates for all provider types and services by 4%. The agency is accepting public comments on the cuts, which are already in effect.
The supplemental budget request for Medicaid faces a tough path forward, said State Sen. Melissa Wintrow, a Boise Democrat who serves on the Legislature’s powerful budget-setting committee.
“What is happening currently is that you’re seeing the Republicans who are controlling the Legislature being more and more hostile to the vital services that Medicaid provides for working families,” Wintrow said in an interview.
“We would not be having this discussion had it not been for $400 million in tax rebates, $50 million in voucher schemes that we said — I hate to say I told you so — we said would break the bank,” she continued. “And now the bank is broken. And we are here trying to fund basic services for people with disabilities, people who are aging, pregnant women and kids.”
After budget holdbacks, Health and Welfare expects to spend less money than the Legislature, Gov. Little approved
The supplemental request was included as part of Health and Welfare’s budget request for fiscal year 2027, which begins in July 2026.
The Department of Health and Welfare expects to spend less money this fiscal year than the Legislature and the governor initially approved this spring, anticipating about $5.99 billion in expenses compared to the $6.01 billion in appropriations. The budget request for fiscal year 2027 — which includes estimates of how much the agency will spend this year — already accounts for the governor’s ordered 3% mid-year budget cuts, Charron told the Sun.
For fiscal year 2027, the Idaho Department of Health and Welfare — which is Idaho’s largest state government agency — requested about 4.1% more funds in the next fiscal year than it expects to spend this fiscal year.
If approved, the agency’s budget next fiscal year would grow from about $6 billion a year to $6.23 billion — by nearly a quarter billion dollars.
Nearly $3 million next year would go toward implementing a sweeping Medicaid cost-cutting law passed this year, which called for work requirements, changes to how officials verify Medicaid eligibility, and a shift to private companies managing benefits.
The agency is also gearing up to downsize staffing to about 2,905 full-time positions next fiscal year, down from the 2,990 it expects to have this year and even lower than the nearly 3,030 it was approved to have this year.
The budget request is one of the first major steps in the process to fund state government.
In January, the governor typically releases his own proposed state budget. Then the Idaho Legislature, which usually meets during the first few months of the year, considers budget requests by state agencies and the governor as lawmakers craft budget bills.
Medicaid’s budget is based on projections. That’s why it often has supplemental budget requests.
Medicaid often has requests for additional funds in the middle of the state’s fiscal year — which are called supplemental budget requests. That’s because the program’s budget is set based on estimates that can change, but its responsibilities are spelled out in state and federal law.
Earlier this year, the Legislature’s Joint Finance-Appropriations Committee approved $415.2 million in supplemental funds for Medicaid last fiscal year. But in 2024, the budget-setting committee accepted a nearly $278 million reversion from Medicaid for funds the program was allotted but didn’t spend in fiscal year 2024.
Charron said the rising costs that required the supplemental budget request this fiscal year were largely driven by the traditional Medicaid population, which includes groups such as children, pregnant women and people with disabilities, rather than people enrolled in Medicaid expansion, which is a policy that covers lower income earners.
Agency officials are still digging into that to see whether specific services are driving the increasing costs, Charron said.
“But I think what we’re also seeing is that the Legislature has made some really important investments in services, because we have historically had access issues and needed to make some rate increases,” she said. “… Access has opened up, and so we’re seeing individuals receiving services.”
If the $60 million supplemental Medicaid request isn’t approved for fiscal year 2026, “provider payments will need to be held until” fiscal year 2027, according to the budget request, and the same amount will be needed then.
An error with Luma — the state’s new business system that been the subject of critical audits — also drove the supplemental budget request, officials say. Charron said about $22 million in general funds were supposed to have been released in the state’s 2025 fiscal year, but instead got released this fiscal year.
Medicaid work requirements, twice-a-year eligibility checks included in budget request for fiscal year 2027
For fiscal year 2027, Health and Welfare also requested roughly $2.9 million to go toward work to implement a Medicaid cost-cutting law passed this year, through the Idaho Legislature’s House Bill 345, and the federal One Big Beautiful Bill Act.
One request for $1.87 million would go toward Medicaid work requirements, which would include changing the eligibility system to process and track work requirements and exemptions, finding a vendor for work management, and supporting “participants in securing full-time employment, ideally with benefits or at a sufficient wage to allow them to purchase coverage” through the state’s insurance exchange, Your Health Idaho, according to the budget request. Funding for that request would be split between federal funds and the state’s general fund.
A separate $1 million request would go toward changing Medicaid eligibility systems to shift toward twice-a-year annual eligibility checks, up from the once annual checks in place now. That change would be mostly funded by the federal government, which would contribute $900,000, compared to Idaho’s contributions of $100,000 from the state’s general fund.
Both requests call for new staff — for a total of 17 positions. But the agency said it will transfer funding for vacant positions for the roles.
This story first appeared on Idaho Capital Sun.