Idaho Senate to consider $22M in budget cuts to Medicaid disability service

The Idaho Senate is the final stop for a bill that calls for nearly $22 million in budget cuts to Medicaid disability services.

The bill, House Bill 863, would cut provider reimbursement rates for residential habilitation services by $21.8 million next fiscal year. The Medicaid cuts — recommended by Gov. Brad Little — are among several high-profile budget decisions left for the Legislature in the 2026 legislative session. 

The Senate Health and Welfare Committee on Wednesday voted to advance the bill to the full Senate. Two days ago, that bill stalled in the committee after Sen. Brian Lenney, R-Nampa, tried to reject the bill and after providers and patients criticized it.

The bill lacks a clear mechanism for the cuts, which are meant to come by reducing pay raises for providers that the Legislature approved in 2022. Those raises were meant to expand services and use a new budget tool, which didn’t end up happening because of a court order in the KW v. Armstrong lawsuit, the bill’s fiscal note says.

The cuts, combined with the Medicaid rate cuts made last year, would amount to a 10% reimbursement rate reduction for residential habilitation providers. But after the cuts, lawmakers behind the bill say providers would still be left with reimbursement rates that are 33% over where they were four years ago. 

In the Senate committee hearing on Wednesday, three senators opposed the bill: Lenney; Sen. Josh Keyser, R-Meridian; and Sen. Melissa Wintrow, D-Boise.

Wintrow said the cuts risk “folks not having services.” Lenney and Keyser have said they wished the Legislature was directing the cuts toward Medicaid expansion.

Sen. Glenneda Zuiderveld, R-Twin Falls, said any cuts would harm someone.

“I think this is not a fun thing to do, but something that we’re going to have to do … and then down the road we can visit it later, next year,” she said. 

To balance the state’s budget amid lagging revenues after years of tax cuts, the Legislature has pursued deeper, across-the-board cuts to state spending. But the budget committee has exempted Medicaid from those extra cuts. In the governor’s list of Medicaid cut options, he listed several disability services — but not Medicaid expansion. 

Last week, the Idaho House widely passed the Medicaid disability cuts bill without debate. If the bill passes the full Senate, it would head to Little’s desk for final consideration.