Conservative Idaho group proposes $1.9 billion in state budget cuts – including Medicaid expansion

An influential conservative think tank is urging the Idaho Legislature to cut Medicaid expansion, public school funding and other programs to balance the state budget.

Idaho is projected to face between a $600 million and $1 billion budget deficit in fiscal year 2027, which begins July 1. It is already facing a roughly $58 million deficit in the current fiscal year.

Leaders from the Idaho Freedom Foundation – a nonprofit organization that scores legislators based on their votes and frequently lobbies on bills – said Monday at a news conference at the Capitol building in Boise the state’s problems were “self-inflicted.”

“Idaho does not have a budget problem,” Idaho Freedom Foundation President Ron Nate said. “We have a budgeting problem.”

The organization, known as IFF, called for nearly $1.9 billion in cuts to the state budget next year, including state general funds, dedicated funds and federal money.

Nate emphasized that the problem wasn’t from the several income tax cuts or rebates approved in the last five years, which the Idaho Fiscal Policy Center estimated to have reduced revenue by a total of $4 billion dollars.

The speakers Monday blamed the deficit on increased spending amid the influx of federal pandemic relief funds since 2020. In 2022, the state ended the fiscal year with a record $1.4 billion surplus.

Fred Birnbaum, IFF senior policy fellow, said revenue has continued to grow despite the tax cuts. He said the state could support more cuts if it constrained its spending.

Cutting Medicaid expansion central to IFF’s budget proposal

The biggest cut proposed would be to eliminate Idaho’s Medicaid expansion program. Idaho voters in 2018 approved a ballot initiative to expand Medicaid eligibility to adults who earned too much to qualify for traditional Medicaid but not enough for premium credits to afford private coverage through the state health insurance marketplace.

The Idaho Department of Health and Welfare in fiscal year 2026 had requested around $1.3 billion from all funding sources to fund the program; the services are 90% covered by the federal government and the state covers the remaining 10%.

As of October, which is three months into the fiscal year, the program had spent around $339 million from all funds, which was around 4% less than was budgeted for, according to the agency’s most recent Medicaid budget report.

There have been multiple efforts in the Legislature to repeal the program, which covered about 85,000 Idahoans as of Nov. 14. Those who support its repeal said the program is too expensive. Many of those who opposed repeal have said that uninsured people delaying care and ending up in emergency rooms would result in even higher costs. Previous funds to cover indigent care were eliminated upon approval of Medicaid expansion.

The group also called for an additional $100.5 million in cuts to Idaho Health and Welfare, or a 15% cut from the agency’s prior year budget.