Idaho Senate passes $22M in Medicaid disability budget cuts, sending bill to governor

BOISE (Idaho Capital Sun) — The Idaho Senate on Monday narrowly passed a bill that calls for nearly $22 million in budget cuts to Medicaid disability services, sending the legislation to the governor.

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, which is apparently nearing its final days. 

The Senate passed the bill on a 19-15 vote, with nine Republicans joining the Senate’s six Democrats in opposing the bill. 

Bill cosponsor Sen. Julie VanOrden, R-Pingree, used a common phrase in the Statehouse this year, as lawmakers enacted deep, across-the-board spending cuts across several areas of government. 

“The money follows from the state to the providers to the caregivers. Somewhere along there, maybe somebody needs to tighten the belt somewhere,” she said. “And I believe that it could happen. These facilities could still stay open. … That might mean, as a provider, I don’t take as much money, but I still pay the people that are doing the work the amount that they need.”

But Sen. Melissa Wintrow, D-Boise, said the cuts could “destabilize that whole system, where the most vulnerable people who need this assistance … would not have care.”

Weeks ago, Sen. Kevin Cook, R-Idaho Falls, proposed cutting the pay rates by half of what the bill calls for. On the Senate floor Monday, he said the cut proposed in the bill could push some providers to close.

“Some of these people that are going to go to hospitals. … The state’s going to pay a heck of a lot more money for them,” Cook said. 

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 Legislature’s budget committee last week voted to create a bill that officially includes the $22 million in disability service cuts. 

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. 

Once the bill is transmitted to Gov. Brad Little, he has five days to decide on it. He has three options: Sign the bill into law, allow it to become law without his signature, or veto it.