Idaho Medicaid spending rises; analysts cite expansion launch, provider rate increases and pandemic timing

The Joint Finance-Appropriations Committee heard Thursday that Idaho’s Medicaid spending has grown sharply since the Medicaid expansion went into effect in January 2020, driven by a mix of factors including the timing of expansion, pandemic effects, provider rate increases and changes to hospital reimbursement.

“Today we're talking about the division of Medicaid,” Alex Williamson, budget and policy analyst with Legislative Services, told the committee as she opened the briefing. Williamson said the Milliman modeling used at the time of the expansion was a “best guess” and could not have anticipated the COVID-19 pandemic and subsequent utilization shifts.

The committee was shown that the expansion population — adults with incomes at or below 138% of the federal poverty guideline — began mid‑fiscal year 2020, so full-year costs first appear in fiscal 2021. Williamson told members that certain populations drive disproportionately higher costs: coordinated and enhanced plans (largely elderly and disabled people) make up around 20% of participants but about 57% of expenditures, while the basic population constitutes about 51% of participants but only about 19% of costs.

Department of Health and Welfare Director Alex Adams said he submitted “as close to a maintenance budget as I could submit,” avoiding benefit expansions or provider rate requests, but the budget increased anyway because caseload, cost‑based pricing, utilization and a shift in the federal Medicaid matching rate (FMAP) changed the state share of costs. Adams and Williamson said the FMAP change will shift roughly $45 million from federal funds to Idaho’s general fund in the coming budget cycle.

Committee members pressed for historical context. Williamson noted the Milliman report used for initial forecasts and said other drivers include provider rate increases approved by the Legislature and changes to the methodology for upper payment limits (UPL) that affect hospital reimbursements. Director Adams said forecasting Medicaid is inherently uncertain and pledged to publish ranges on future forecasts (baseline/optimistic/pessimistic) and continue monthly transparency reporting to provide earlier signals on spending trends.

Several legislators urged pursuit of policy levers to control cost growth. Adams reminded members that Medicaid is an entitlement program defined by federal and state law, limiting the department’s authority to change eligibility or mandatory benefits without legislative action. He and other department officials said they have prepared a “menu of cuts” and material for policy committees to consider, but also warned that many options would trade short‑term savings for downstream costs or reductions in coverage.

Looking ahead, Williamson and the department asked the committee to consider five supplemental requests for fiscal 2025 and a set of 2026 enhancements that include population forecast adjustments and funding tied to the Medicaid Management Information System (MMIS) procurement. The department emphasized those requests are intended to meet federal requirements and maintain operations rather than expand coverage.

The committee did not take formal votes during the hearing. Members asked for additional detail on several items, including caseload and postpartum coverage details, and were told staff and department officials would provide follow‑up information.