Idaho governor signs bill to privatize management, add work requirements to Medicaid program

Idaho Gov. Brad Little gives a press conference after delivering his annual State of the State address on Jan. 6, 2025, in the Lincoln Auditorium in the Idaho Capitol. (Pat Sutphin for the Idaho Capital Sun)

Idaho Gov. Brad Little signed into law a bill that proposes sweeping policy changes to control Medicaid’s costs.

House Bill 345 calls for the state to seek work requirements for able-bodied Idahoans on Medicaid, and to give Idahoans eligible for Medicaid expansion access to tax credits to buy insurance on the state’s health care exchange.

The bill takes effect immediately — through an emergency clause.

In both chambers of the Idaho Legislature, the bill passed on party-line votes, with all 90 Republican state lawmakers supporting it and all 15 Democratic state lawmakers opposing it. The governor’s office announced in a news release that Little signed the bill Wednesday with bill sponsors. Journalists were not invited to the bill signing.

“We want Idahoans to become as self-sufficient as possible. House Bill 345 reinforces that goal while reasonably reeling in Medicaid spending so taxpayers are not overly burdened by this program in the outyears,” Little said in a written statement.

About a month ago, the Medicaid cost bill was first introduced in an Idaho House committee.

The bill calls for Idaho to plan to shift management of all Medicaid benefits to private companies, which is called managed care and is used by most states’ Medicaid programs. 

The new bill came after Senate Health and Welfare Committee Chairwoman Julie VanOrden, R-Pingree, halted another bill that would’ve likely repealed Medicaid expansion.

An Idaho ‘reform’ bill would likely repeal voter-approved Medicaid expansion. Here’s why.

In his statement, the governor said the Medicaid cost bill “is a huge improvement over a previous version that would have reversed voter-approved Medicaid Expansion in 2018.”

“The voters spoke loudly in 2018 with their votes, and as elected leaders we must continue to respect that. I am pleased House Bill 345 improves the Medicaid program without rejecting the will of the voters on Medicaid Expansion,” Little said. 

VanOrden cosponsored the approved Medicaid cost bill, along with Rep. Jordan Redman, R-Coeur d’Alene; House Health and Welfare Committee Chairman John Vander Woude, R-Nampa; and Sen. Carl Bjerke, R-Coeur d’Alene. 

“This bill truly does offer immediate savings for the taxpayers, as well as substantial long-term savings and stability to the Medicaid budget. And it deals with the entire budget itself,” Redman told a Senate committee in a hearing on the bill. 

Idaho Democratic Party Chair Lauren Necochea sharply criticized the bill.

“Governor Little and every Republican legislator just ripped health coverage away from thousands of Idahoans,” she said in a written statement. “Voter-enacted Medicaid expansion largely covers working Idahoans, but it’s also a lifeline for those who lose jobs, have hours cut, or need to care for a sick family member. These so-called ‘work requirements’ do nothing to help find jobs, but they will take away insulin, cancer treatment, and mental health services.”

Beyond Medicaid expansion, the bill proposes broader policy changes for the entire Medicaid program — a health care assistance program that covers about 262,000 Idahoans, including low-income earners, people with disabilities, pregnant women, and some older people. 

Almost 89,400 Idahoans are enrolled in Medicaid expansion, a voter-approved policy that raised the income eligibility cap to cover a population commonly called “the working poor,” who were in a health care assistance gap. 

The Idaho Department of Health and Welfare plans to stand up temporary rules if the bill passes, a top Idaho health official recently said, since the bill will repeal agency administrative rules for Medicaid.

The Medicaid cost bill could save Idaho $15.9 million in fiscal year 2026 and even more in the future, the bill’s fiscal note estimates. But the timing depends on federal approval, the fiscal note says.

Idaho Republican lawmakers have criticized the Idaho Medicaid budget for what many say is unsustainable growth.

The mostly federally funded program’s total budget has grown from less than $3 billion in fiscal year 2020 to $5.2 billion next fiscal year, if approved. But next fiscal year, Idaho would only pay $1.8 billion of the program’s total budget, under the governor’s budget request. 

It isn’t immediately clear how the Medicaid cost bill’s passage will affect next year’s Medicaid budget. 

But a recent fiscal analysis found Idaho Medicaid’s costs grew slower than other Idaho state government programs. And extra federal funds Idaho gets for Medicaid expansion generates $1.5 billion in economic impact and more than 9,300 jobs, another analysis found. 

The bill calls for Idaho to seek federal approval for patient “cost-sharing,” which would require Medicaid enrollees to essentially pay copayments for services they receive. 

The bill also calls for Idaho to seek federal approval to no longer let state health officials automatically renew Medicaid for people based on publicly available information, or to use pre-populated forms. And the bill calls for Idaho to implement twice-yearly Medicaid expansion eligibility checks, up from the once-a-year eligibility checks Idaho Medicaid currently does. 

Other states’ experiences and a federal watchdog report suggest costs for Medicaid work requirements are high, the Idaho Capital Sun previously reported. 

Some advocates say Medicaid work requirements are costly and are effectively just administrative barriers to access the program — since almost half of Idahoans on Medicaid are already working. And many other Idahoans on Medicaid, advocates say, would be exempt from work requirements under exceptions the bill spells out, such as for parents of children age 6 and under, people with disabilities, college students, volunteers and caretakers. 

The bill’s proposed work requirements are nearly identical to Arkansas’s work requirements, which saw one in four people lose coverage even though 95% of them met work requirements or were exempt, Idaho Voices for Children Senior Policy Associate Hillarie Hagen testified in Senate committee on the bill. 

“This bill does nothing to improve efficiency or reduce costs in a meaningful way. Instead, it adds red tape that will strip eligible individuals of their coverage,” American Cancer Society Cancer Action Network Idaho Government Relations Director Randy Johnson wrote in a statement after the bill passed the Senate. “We’ve seen firsthand how bureaucratic hurdles cause people to lose coverage — not because they are ineligible, but due to unnecessary administrative obstacles.”

Under the Trump administration, the federal Centers for Medicare and Medicaid Services approved work requirements in 13 states — for the first time in Medicaid’s history, according to KFF. The Biden administration rescinded the approvals. Several courts struck down states’ work requirement policies, according to the Center for Budget and Policy Priorities.

Many of the bill’s proposals require federal approval, and will likely take years to implement. 

In 2019, Idaho failed to receive federal approval — then by the Trump administration — for Medicaid work requirements and an exchange tax credit option, which are similar to the new bill’s provisions. 

If the federal government cuts down on covering 90% of Medicaid expansion costs while the Idaho Legislature isn’t in session, the new Medicaid cost bill would give the Idaho Department of Health and Welfare director broad power to enact cuts to the program — until the Legislature reconvenes. 

Congressional House Republicans recently approved a budget plan that calls for steep spending cuts that policy experts anticipate will require deep cuts to Medicaid.