The Idaho Senate has passed a rewritten health and human services budget that includes deeper cuts to Medicaid services than the version lawmakers rejected earlier this month, raising concerns among disability advocates and some legislators about the impact on the state’s most vulnerable residents.
Senate Bill 1435, the new fiscal year 2027 maintenance of operations budget for the Idaho Department of Health and Welfare and the State Independent Living Council, cleared the Idaho Senate following a contentious debate that echoed arguments made when the original version failed on March 12. The new budget reduces the general fund portion of the state budget by $68.4 million, or 5.6 percent, and cuts all funding by $351.7 million, representing a 5.8 percent reduction for fiscal year 2027.
New Budget Incorporates Deeper Medicaid Cuts
The rewritten budget differs from its predecessor in two significant ways. Most notably, it incorporates changes from House Bill 863, which cuts provider rates for residential habilitation programs. That move results in $21 million in additional new state budget cuts to Medicaid disability services. The consequence of those cuts, however, extends well beyond the state-level figures — Idaho will forgo an additional $44 million in federal matching funds as a result, bringing the total combined fiscal impact to nearly $65 million.
The new budget also includes a one-time removal of $14 million in federal funding, compounding the overall reduction to health and welfare services across Idaho.
Residential habilitation programs provide critical support services to Idahoans with developmental and intellectual disabilities, helping them live with greater independence and receive care in community-based settings. Cuts to provider reimbursement rates in these programs can affect the availability of care, as providers may reduce staff or limit capacity when rates fall below the cost of delivering services.
For Nez Perce County residents and families across northern Idaho who depend on Medicaid-funded disability services, the changes represent a real-world reduction in the state’s financial commitment to programs that support some of the region’s most medically and socially vulnerable individuals. Service providers operating in rural communities like Lewiston often operate on tighter margins than their urban counterparts, making rate reductions particularly consequential in areas with fewer alternative providers.
Dissenting Senator Says Cuts Punish Idaho’s Most Vulnerable
Sen. Jim Guthrie, R-McCammon, who had delivered an impassioned floor speech against the original budget when it was killed on March 12, voted against the replacement bill as well. Guthrie had challenged fellow legislators to “do better” when the first version came to the floor, calling the across-the-board cuts applied to most state agencies “a defining moment” for the Legislature.
His assessment of the rewritten bill was equally pointed.
“I felt we could have done better than what was contained in Senate Bill 1375, but what we have done before us is a replacement bill that cuts an additional $64,963,200, and it feels to me like punishment for not conforming to Senate Bill 1375,” Guthrie said during floor debate. “I don’t know how else to look at it. If we had the money for Senate Bill 1375 two weeks ago, where did that money go today? The problem is we’re not really punishing ourselves. We’re punishing Idaho’s most vulnerable.”
Guthrie’s remarks captured a concern shared by disability service advocates statewide — that the deeper cuts in the replacement bill were structured as a response to legislative resistance rather than as a product of genuine fiscal analysis. The loss of $44 million in federal matching funds represents money that would have flowed into Idaho’s economy and directly funded services for residents with disabilities, without requiring additional state expenditure beyond what was originally budgeted.
Idaho’s approach to health and welfare spending this session has drawn scrutiny from service providers, advocacy organizations, and some members of both chambers. The decision to cut provider rates for residential habilitation programs affects not only individuals receiving services but also the workforce of caregivers and support staff employed in those programs across the state, including in communities throughout the Lewis-Clark Valley.
What Comes Next
Senate Bill 1435 now moves through the remaining steps of the Idaho legislative process before it can be sent to the governor. The budget will need to reconcile with any corresponding measures in the Idaho House before a final version is ready for the governor’s signature. Advocates for Medicaid recipients and disability service providers are expected to continue pressing legislators to reconsider the rate cuts tied to House Bill 863 before the session concludes.
Statewide coverage of Idaho’s legislative session and budget deliberations is available at Idaho News. Additional reporting from across the Idaho News Network can be found at IdahoNewsNetwork.com.