LSO presents Health and Welfare budget review; Medicaid costs, hospital assessment and MMIS highlighted

Alex Williamson, budget and policy analyst with the Legislative Services Office, summarized the Department of Health and Welfare's recent spending trends, midyear supplemental requests and the governor's fiscal 2026 recommendations. "This is the agency budget review for the Department of Health and Welfare," Williamson said at the start of her presentation.

Williamson noted a sharp increase in appropriations from fiscal 2022 to 2023 driven largely by Medicaid population and cost changes and by adjustments tied to the hospital assessment and upper payment limit calculations. "About two thirds of that came from changes to Medicaid," she said, describing a roughly $670 million increase from the prior year as driven primarily by Medicaid adjustments. She explained the hospital assessment and upper payment limit changes permit hospitals to draw more federal dollars and that hospitals provide state-match dollars into a dedicated account to meet federal matching rules.

The presentation identified a list of midyear supplemental requests and ongoing enhancements that would raise the department's 2026 proposed appropriation to roughly $6.0 billion in total funds and about $1.2 billion from the general fund if all recommended items were approved. Major items cited in committee discussion included a hospital assessment fund correction to reflect prior session actions, ongoing population forecast adjustments for Medicaid entitlements, and a multi-year Medicaid Management Information System (MMIS) procurement budgeted in the current phase at about $117 million with a favorable 90/10 federal match for the IT project.

Williamson also described executive-branch priorities and a department reorganization. She said the department plans to rename and reassign divisions: Family and Community Services would be reconstituted into a new Child, Youth and Family Services grouping; Child Welfare would be retitled Youth Safety and Permanency; service integration would become Family and Community Partnerships; developmental disability services would be retitled Early Learning and Development; the Idaho Childcare Program would be elevated as a stand-alone budgeted program under early-learning functions; and several functions (including Medicaid Program Integrity and the Idaho Behavioral Health Plan staff) would move under the Medicaid director. Williamson said the director also planned changes to the executive leadership team, including a chief for legislative and regulatory affairs, a chief financial officer reporting directly to the director, and a program manager for communications and customer experience.

Senator Maryanne Wintrow and other committee members asked clarifying questions about the hospital assessment and how the state's accounting records show the assessment and the federal reimbursement. Williamson explained hospitals deposit a state-match equivalent into a dedicated account and the state must appropriate those funds before federal reimbursement can be drawn and remitted back to providers.

Williamson gave procedural guidance on resources available to the committee, including the legislative budget book and the LSO online budget dashboard, and invited members to follow up with detailed questions. The committee did not take formal action on the budget during this meeting; Williamson said she would stop at that point and stand for questions.

Ending: Committee members thanked Williamson for the briefing and said they would consider the supplemental and enhancement requests during the budget process; no formal committee vote on the department budget occurred at this hearing.