Gov. Little recommends a $22 million cut in Medicaid expenditures for the next fiscal year
In order for Idaho to manage expected budget deficits, Medicaid, a federally and state funded low-cost health coverage program for people in need across the nation, is at risk of facing $22 million in cuts from state funding.
According to the Idaho Capital Sun, Idaho will end Fiscal Year 2026 with a deficit around $40.3 million, following an already significant 3% budget cut to state agencies and departments of over $450 million in August 2025. The state budget deficit is following five years of tax cuts approved by the Idaho Legislature, which reduced Idaho’s revenue by an estimated $4 billion.
Gov. Brad Little proposed that a $22 million cut in Medicaid funding, on top of a potential $23 million cut to doctor pay rates, would help to balance the state budget.
A controversial suggestion amongst lawmakers and Idaho residents alike, the suggested budget cuts were discussed by the Joint Finance-Appropriations Committee on the Division of Medicaid, on Thursday, Jan. 22.
Alex Williamson, senior analyst of the budget and policy analysis division, led the presentation with a slideshow illustrating which funds distributed to the division of Medicaid the governor suggests slashing. In the outline, hospital rates and residential habilitation rates could face reductions, while 12 other areas, including physical, occupational and speech therapy, could be removed altogether.
“In addition to the savings from the provider rate reduction, the governor recommends an ongoing reduction of $22,000,000 from the general fund and $45,000,000 from federal funds to balance the FY 2027 budget,” the presentation said.
As of May 2025, nearly 355,000 Idahoans rely on Medicaid for health coverage, according to data from the Kaiser Family Foundation. According to 2024 census data, Idaho has just over 2 million residents, which means that around 18% of Idahoans utilize Medicaid.
Due to this, many residents have expressed disdain over the potential budget cuts, as confirmed by several senators. In the meeting held on Jan. 22, many reported they had received an outpouring of public input via email and phone calls.
Sen. Carl Bjerke is one of the senate members who attested to receiving messages from the public. For him, it sparked the conversation around the necessity of prioritization.
“I’ve said since I’ve been in the legislature, when it comes to Medicaid and when it comes to what our service is here – to our constituents – that I desire to do the most for the most,” Bjerke said in the meeting. “But when it comes to Medicaid, I want the money to be driven and given to the people that are most vulnerable.”
Bjerke then went on to reference an example of prioritization in the healthcare system, and how he would rather use resources to assist a single mother of an autistic child than support adult dental care, though he recognized both are important.
Sen. Melissa Wintrow expressed concern in using prioritization in the healthcare system.
“We’re really picking winners and losers here, and it doesn’t feel good,” Wintrow said.
She emphasized how much progress has been made in recent years towards developing better wellness programs for Idaho, especially in regard to mental health resources, and how these recommended budget cuts will interrupt the process.
“It’s just pulling out the rug from everything we’ve created,” Wintrow continued. “What a waste of resources – creativity, energy and staffing – that we’ve built up to help our citizens and now we’re cutting it back.”
In 2025, approximately $4.9 billion was spent on Medicaid funding in Idaho, according to the charts presented by Williamson. Of that total, 1.5% was spent on personnel and operating costs, while the other 98.5% was spent directly on Medicaid services.
Though Idaho is going into a deficit this upcoming year, it’s still uncertain how and where the funds will be made up. Beginning on Monday, Jan. 26, the legislature will separate into work groups where they will begin making the final budgeting decisions.
Paige Wilton can be reached at [email protected].