Idaho adopts Medicaid budget that increases spending by $539 million

The long debate in Idaho surrounding Medicaid this year has concluded with lawmakers sending Governor Little an updated Medicaid budget (SB 1201) that would increase spending on the program by $539 million. Under the cost-sharing agreement with the federal government, nearly $74 million of that increase is from state taxpayer funds. This brings total spending on Medicaid in Idaho to approximately $5.3 billion, of which $994 million is state tax resources.  

Here are the details for SB 1201 from the Statement of Purpose:

• FY25 FTP (Full Time Positions): 237.50

• FY25 GF: $920,383,700

• FY25 Total: $4,710,390,700

• FY26 FTP increase: 68.00 – 28.6% (305.50)

• FY26 GF increase: $73,665,600 - 8.0% ($994,049,300)

• FY26 Total increase: $539,406,400 - 11.5% ($5,249,797,100)

  
  

Earlier this year, the legislature adopted an MSPC recommendation to seek a waiver to add a work requirement to the program for able-bodied individuals. In our recent Idaho poll, 63 percent of Idaho residents favor some type of work or community service requirement for physically able adults as a condition to receive Medicaid.

Congress passed the original Medicaid entitlement in 1965 as a health insurance safety net for the most vulnerable low-income people in the United States. These individuals include the poor, parents with children, the disabled, and those needing long-term care. Medicaid is a pure welfare plan financed by both state and federal taxpayers.

Although Medicaid began with a very limited enrollment, the program has exploded and is financially one of the largest budget items for every state in the union. The original program was set up such that the federal government would match the financing with states in a 50/50 percent arrangement. The federal government gradually increased its spending percentage.

The Affordable Care Act, aka Obamacare, became law in 2010, with most benefits beginning in 2014. After litigation all the way to the U.S. Supreme Court, the law was amended such that states could decide for themselves whether to expand Medicaid to any low-income, able-bodied 18 to 64-year-old person. The incentive is that the federal government would pay 90 percent of the financing of the expanded program.

Idaho is one of 40 states that chose to expand Medicaid under Obamacare.

The Medicaid program is one of the federal government’s largest non-discretionary spending programs. Inflation-adjusted spending in the first year of Medicaid was $10 billion compared to $900 billion for fiscal year 2023. In other words, Medicaid spending has dramatically increased far beyond inflation alone.

As part of the current 2025 federal budget debate, members of Congress are considering several changes to Medicaid, including possibly adding a work requirement and adjusting the cost-sharing agreement with states.