We can't be afraid to talk about the major Medicaid budget problem

If you followed the news coverage of recent Medicaid reform proposals in Idaho, you might think the state legislature is debating whether people should live or die. Headlines warned of “absolutely ferocious” cuts and quoted critics saying “people are going to die.”

That kind of rhetoric grabs attention. It generates clicks. But it does little to address the real policy question facing Idaho: Is the current growth of Medicaid sustainable over the long term?

When lawmakers step back from the headlines and look at the numbers, the answer is increasingly difficult to ignore.

Medicaid has become one of the largest and fastest-growing programs in Idaho government.

According to the state’s FY2026 Medicaid budget, total program spending will reach about $5.25 billion. That represents a $539 million increase in a single year—roughly 11.5 percent growth compared with the previous budget.

The funding for the program comes from a combination of federal and state sources:

• Federal funds: about $4.25 billion

• Idaho state funds: about $994 million

Supporters of the current system often emphasize that the federal government pays the majority of the cost. That is true. But it misses a key point: the state share still approaches $1 billion annually, and it grows as the program expands.

Even the most recent increase illustrates the dynamic. Of the $539 million budget increase, about $74 million comes from Idaho taxpayers, while the rest is federal matching funds.

Those federal dollars may come from Washington, but they are still funded by taxpayers—and they still expand the overall size of the program.

To fully grasp the scale of Medicaid, it helps to compare it with the rest of Idaho’s budget.

The state’s General Fund budget is about $5.6 billion. Meanwhile, total Medicaid spending is about $5.25 billion when federal and state funds are combined.

While these figures represent different types of funding streams, the comparison highlights something important: the Medicaid program alone now approaches the size of the entire tax-supported state budget.

That reality inevitably drives political debate. Programs of that scale affect every other spending priority in state government.

When Medicaid was created in 1965, it was designed as a targeted safety-net program. Its primary beneficiaries were intended to be:

• Low-income children

• Seniors

• Individuals with disabilities

• Certain pregnant women

  
  

In other words, Medicaid was not designed as a general health insurance system for the broader working-age population.

Over time, however, federal policy changes significantly expanded eligibility. The Affordable Care Act allowed states to extend coverage to able-bodied adults earning up to 138 percent of the federal poverty level.

That expansion dramatically increased enrollment nationwide and in Idaho.

Supporters argue that expansion has provided coverage to tens of thousands of residents who previously lacked health insurance. Critics argue that expanding Medicaid to large numbers of able-bodied adults has stretched the program far beyond its original intent.

Regardless of where one stands in that debate, the fiscal impact of expansion is undeniable: Medicaid enrollment and spending have grown substantially in recent years.

The growth of Medicaid isn’t limited to spending alone. The program’s administrative structure is expanding as well.

According to the FY2026 budget, staffing in the Medicaid division will increase from 237.5 full-time positions to 305.5.

That represents a 28.6 percent increase in staffing.

Administrative growth often follows program expansion. Larger programs require additional oversight, compliance monitoring, eligibility verification, and program management.

But it also reflects how large and complex Medicaid has become.

For many policymakers, the real concern isn’t this year’s budget alone. It’s the long-term trajectory.

Programs that grow rapidly year after year can eventually crowd out other state priorities. As Medicaid spending increases, lawmakers must also fund public education, infrastructure, public safety, water and environmental projects and even tax relief.

If entitlement programs grow faster than revenue, something else eventually has to give.

That’s why even states with strong economies and balanced budgets must periodically evaluate whether large programs are on a sustainable path.

Another issue that complicates the debate is federal funding.

Today, the federal government covers a large share of Medicaid costs. But those funding formulas are determined by Congress and can change over time.

If federal matching rates were reduced or program rules altered, states could suddenly face significantly higher obligations.

That possibility is one reason many fiscal analysts warn against allowing programs to grow unchecked simply because federal funding is currently generous.

None of this means Medicaid should disappear or that vulnerable populations should lose access to care. But it does mean that policymakers have a responsibility to examine whether the program’s growth is sustainable.

Unfortunately, public debate often replaces that conversation with emotional rhetoric.

Headlines declaring that reform will cause people to die may be effective at generating outrage. But they do not answer critical questions about the program’s structure, growth, or long-term fiscal impact.

Serious policy decisions require more than slogans.

They require data, analysis, and a willingness to confront uncomfortable realities.

Medicaid now represents billions of dollars in annual spending and affects hundreds of thousands of Idaho residents.

It is one of the most consequential policy areas in state government.

That’s exactly why the debate deserves more than sensational headlines.

The real question isn’t whether reform is politically uncomfortable. It is whether Idaho is willing to confront the fiscal realities of a program that now costs more than $5 billion per year and continues to grow rapidly.

Ignoring those realities may be politically convenient today. But responsible governance requires thinking about the long term.

And on that front, Medicaid’s trajectory is a conversation Idaho can’t afford to avoid.