The Medicaid cuts recently approved by Congress and President Donald Trump could force states into difficult decisions, health policy experts say.
Part of several major changes to Medicaid, the bill caps how much states can tax health care providers, a tool states use to get extra federal funds for Medicaid, a program largely funded by the federal government.
Many Medicaid benefits are optional under the law. For many Idahoans, they’re anything but.
That leaves “a pretty significant hole” in Idaho’s Medicaid budget, said Hillarie Hagen, senior policy associate with Idaho Voices for Children.
“Now it is on our Idaho Legislature to look at how we’re going to pick up the costs from these federal cuts,” she told the Idaho Capital Sun in an interview. “And we’re going to be facing very significant, difficult choices in the coming year on whether to eliminate certain programs, or we’re going to see a lot of people lose access to Medicaid.”
But Idaho’s U.S. Sen. Mike Crapo — a Republican who serves as chairman of the powerful Senate Finance Committee and pushed for several of the bill’s major parts — said “the attack that people are going to be forced off of Medicaid is not correct.”
Crapo said there’s been a lot of inaccurate information about the bill’s Medicaid cuts. Only time will tell the impact, he told the Sun in an interview.
“The only way to prove this is to wait and see what actually happens. But the bottom line is this: no one’s benefits were cut in this legislation — unless you are a person who is not an American citizen and not legally present in America,” Crapo said. “… Or if you are a person who is registered in multiple states and are getting payments in multiple states.”
What Idaho’s U.S. congressional delegation pushed for in the bill
Three of the four members of Idaho’s Republican congressional delegation opposed a proposal, later removed from the bill, to sell off federal public lands.
Idaho U.S. Rep. Russ Fulcher voted against a House amendment that would’ve prevented federal land sales. Fulcher, in a phone interview, said he thinks “public land should remain public, but the control, management should be local stakeholders, not the federal government.”
Idaho U.S. Rep. Mike Simpson voted for the amendment.
U.S. Sen. Jim Risch, R-Idaho, told the Sun in an email that he was proud to “have led the charge against the proposal to sell Idaho’s public lands.”
In June, Risch and Crapo publicly opposed that provision in the bill, which was later removed by Utah’s U.S. Sen. Mike Lee.
“Public lands are an important part of our western way of life and a key driver of our economy,” Risch said. “I will continue demanding greater local, more common-sense management of our public lands to ensure Idaho has a voice on decisions that impact our state.”
In an interview last week, Crapo said he pushed for several major aspects of the bill, including extending 2017 tax cuts, other tax cuts like no taxes on tips and less taxes on Social Security, border security funding and national security funding, including for the military.
Fulcher said the portion of the bill that in many cases eliminates the tax on tips and overtime came from a town hall he had in Sandpoint during the pandemic. He said he first introduced legislation a few years ago and was able to add the provision to the budget bill with the support of the president. These tax cuts will be in effect through December 2028.
Simpson could not be reached for comment.
Tax cut extension avoids harsh restart, and aren’t a cut for the rich, Idaho’s lawmakers say
Like other Republicans, several members of Idaho’s congressional delegation have denied that the bill is a tax cut for the wealthy.
Crapo and Risch say the bill avoids Americans facing a $4 trillion tax hike, by extending 2017 tax cuts. And they say Idaho families will see wide benefits.
“Our bill not only prevented that from happening but delivered the largest tax relief package for working and middle-class Idaho families in U.S. history,” Risch said in an email. “We eliminated taxes on tips and overtime, enhanced the child and childcare tax credits, and are helping Idahoans keep more of their hard-earned income.”
Crapo agreed.
“I know the attack on the bill has been that it’s just a tax cut for billionaires,” Crapo said. “Billionaires are going to pay the same taxes next year as they pay this year. There was no tax cut for billionaires. The reality here is that we stopped a $3.8 trillion tax increase — and added a number of other tax reductions for middle- and lower-income categories in America.”
An average Idaho family of four will see $2,600 in tax savings, Crapo said. That’s among other impacts avoided by extending the tax cuts, he said — like child tax credits and standard deductions halving, many businesses seeing taxes rise by over 20%, and 33,000 job losses.
But Idaho Fiscal Policy Center Policy Analyst May Roberts said the budget bill “delivers massive tax breaks to the wealthiest Americans while offering little relief to low- and middle-income families.”
In Idaho, top income earners will see tax cuts of more than $78,000 on average, while the lowest earners will see only a $20 cut, Roberts told the Sun in an email. That small cut for low income earners “could be quickly erased by tariffs that drive up the cost of groceries, clothing, and other essentials,” she added, citing estimates by the Institute on Taxation and Economic Policy.
“To make matters worse, the tax cuts benefiting the wealthy were made permanent, while those intended to support working families are temporary and set to expire in just a few years,” Roberts said.
Medicaid cuts leave budget hole for Idaho, expert says
Over the next decade, the bill is expected to cut federal funds for Idaho Medicaid by $4.3 billion and reduce Idaho Medicaid’s enrollment by as much as 40,000 people, estimates in early June from the group Manatt show. The analysis assumes work requirements will cut Medicaid enrollment and costs.
The Idaho Department of Health and Welfare is still reviewing the bill’s impacts on Idaho, agency spokesperson AJ McWhorter told the Sun in an email last week.
“Many of the Medicaid provisions in the final bill closely mirror items Idaho has already led on. As the department completes its analysis in the coming months, it will make more information available,” he said.
The bill also includes a mandate for Medicaid work requirements, which also counts community service and education. Cost-sharing, essentially copayments as high as $35, will also be required through the bill for people enrolled in Medicaid expansion, with some exceptions.
“We’re deeply concerned about how the consequences of this bill are going to be felt. Not only by individuals and families, but also the very safety net that is working to support them, like our rural hospitals and providers,” Hagen said.
Idaho to pay $6M more for SNAP. That’s lower than it could’ve been.
The bill will also shift millions of dollars to states in costs for the food assistance program, called the Supplemental Nutrition Assistance Program, or SNAP.
SNAP is a federal program that states run. The federal government pays for benefits. But states already chip in somewhat, by splitting administrative costs with the federal government.
The bill cuts funding for SNAP by about 20% over the next 10 years, or $186 billion, and over 2 million people could lose SNAP benefits under the bill, according to the Center on Budget and Policy Priorities.
Historically, states paid half of the costs to run the program. But the bill will raise states’ share of administrative costs to 75%, with the federal government contributing 25% of costs, according to the Association of State and Territorial Health Officials.
Under that change, Idaho’s SNAP costs each year would rise by $6 million, said McWhorter, the Department of Health and Welfare spokesperson.
But — at least for now — Idaho wouldn’t be required to pay more for other SNAP costs under another part of the bill.
Idaho runs SNAP efficiently, officials say. But Congress might make state pay millions more.
For the first time in the program’s history, the bill will require many states to pay a portion of benefit costs.
Idaho won’t be affected by that part of the bill because the state has the second lowest payment error rate in the nation. Each month, about 126,000 Idahoans receive $172 in benefits, state figures show.
An earlier version of the bill would have placed the benefit cost-sharing requirement on all states, which would have raised Idaho’s annual SNAP costs by at least $18 million, the Sun reported. But the new bill doesn’t require states with some of the lowest payment error rates to pay for benefits.
“We remain well below the rate at which cost sharing would kick in” under the final bill, McWhorter said.
Idaho may still face these increased costs in the future, Idaho Voices for Children Policy Director Kendra Knighten said in an interview.
“To make up these costs, it may mean the Legislature may cut funding from other critical programs that the state currently oversees. Or it may mean that they choose to opt out of the SNAP program altogether,” she said.
The bill’s expanded SNAP work requirements added through the bill are likely to raise states’ payment error rates over time, she said. About 4,000 Idahoans are at risk of losing the food assistance benefits — parents and caregivers with teenage children, and older adults, Knighten said.
The bill removes work requirement protections for veterans, people experiencing homelessness, and former foster youth, according to the Food Research & Action Center.
What’s missing from the bill: Tax credits for health insurance on exchange
The bill does not extend premium tax credits to buy health insurance on exchanges. If Congress doesn’t extend those, insurance premiums are expected to surge — leading to about 35,000 Idahoans losing health insurance coverage, the Sun reported.
Crapo said Congress will address this in future legislation, but he isn’t sure how.
“There is a question about whether that system is actually being used in a way that is abusive … to the federal government in the sense of charging more money or allowing more credits to be claimed that are not truly focused on health care,” Crapo said.
If the premium tax credits aren’t extended, Hagen with Idaho Voices for Children said “we are likely to see about a 25% increase in the number of uninsured people in Idaho, and likely a 52% decrease in marketplace enrollment.”
The bill also ended allowing people enrolled in marketplace plans to automatically re-enroll, which Hagen said 62% of enrollees rely on. That also risks people losing their health insurance coverage, she said.
Rural Idaho hospitals may be negatively impacted
The combination of thousands of Idahoans losing their health care coverage and constraints on the provider taxes limiting how much money is available through Medicaid may be tough for small, rural hospitals to weather, said Toni Lawson, Idaho Hospital Association vice president of advocacy and external relations.
She noted that safety net programs that the state used to have in place, such as the Catastrophic Health Care Program and the county indigent fund, are no longer in place.
“Hospitals will end up trying to absorb those costs, and that’s going to become more and more difficult,” Lawson said. “We don’t know all the exact implications yet, but it’s going to be tough for our rural hospitals.”
She said that just one costly case of a patient not being able to pay for an expensive service, such as surgery, can upend a small hospital’s budget.
“It’s going to negatively impact all Idahoans because if a hospital closes certain service lines or has to close, they don’t just close for Medicaid patients. They close for all patients,” she said. “So we’re going to have some challenges with access to care.”
Bill ends incentives for wind and solar projects and boosts fossil fuel production
The massive bill does more than just extend tax cuts and cut government spending. It also shores up government spending for immigration enforcement, national defense, agriculture and energy.
Idaho Conservation League Executive Director Justin Hayes said he didn’t see anything in the bill that appeared to target Idaho, but that it could affect utility-scale wind and solar projects in the state in the long term. The bill phases out Biden-era tax incentives for large renewable energy projects while lowering royalty rates on gas and oil, Inside Climate News reported.
Hayes noted that since Idaho doesn’t have oil or coal reserves, the state will be “exporting money to buy electricity that is generated from fossil fuels or motor fuel from oil and gas, diesel, as opposed to electric.”
“I think that you’re seeing a wholesale shift in the direction this administration wants to take all of America to,” Hayes said. “That’s going to have huge climate impacts, and I think it’s going to make all of our electricity, whether you’re residential consumers or industrial consumers, more expensive because wind and solar is coming online quickly and is the most affordable option for a lot of these development projects.”
Idaho doesn’t produce energy like it used to. How drought, renewables are changing our landscape.
Risch argued that projects such as the nixed Lava Ridge wind farm project near Twin Falls were unpopular and said he was proud to work with the president to put a stop to it.
“Thanks to the reconciliation bill, Idahoans’ tax dollars will no longer bankroll unwanted projects like Lava Ridge that would not effectively meet our long-term energy needs,” he said.
The senator said the bill prioritized investments in several energy sources critical to Idaho, like hydropower, geothermal and nuclear energy.
The bill also “provides certainty for Idaho farmers and ranchers by modernizing critical Farm Bill safety net programs and improving access to risk management resources,” Risch told the Sun.
Fulcher said he supported changes in the bill to boost timber harvesting and grazing leases on federal lands and streamline the process to obtain mining permits.
“In the West, we have a much more unique system of federal lands in most states, Idaho in particular (is) nearly two-thirds federal, and the president realizes that,” Fulcher said, “and wants to turn some of those resources into, frankly, a profit center instead of a cost center.”
He said the timber harvesting and grazing could help reduce wildfire fuels as well.
Idaho Capital Sun is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Idaho Capital Sun maintains editorial independence. Contact Editor Christina Lords for questions: info@idahocapitalsun.com.