Day 1 of Health and Wellness Budget Hearing: Medicaid Costs, Child Care, Federal Funds

The Idaho Department of Health and Welfare makes up about one-third of the state’s total budget each year.

That’s because — as director Dave Jeppesen explained in a hearing Tuesday — the department serves a huge segment of Idahoans, through a number of different programs.

Jeppesen and other state health and welfare officials answered questions from the Joint Finance and Appropriations Committee during the premiere of a multi-day budget hearing on Tuesday.

Idaho lawmakers have focused on the large and rising costs of Medicaid health insurance and child care programs, asking questions about how much the state has spent on shelters, prescription drugs and other programs in recent fiscal years.

“First I just want to say that I’m not cold hearted. I love kids,” Senator Kevin Cook, R-Idaho Falls, said in response to a budget request to pay for children who need to be in residential treatment. “But I feel it is our responsibility here to make sure the money is well spent, so the taxpayers can keep them and raise their kids.So with that in mind, I’m not cold hearted but I do have a few questions.

Cook and the rest of the JFAC members had so many questions that the department’s presentation ran out of time and will continue on Wednesday.

Federal funding questions for Idaho Health and Welfare

The 2022 election brought more far-right lawmakers to the Idaho House and Senate, and some of those lawmakers have asked questions that suggest they want to further limit Medicaid spending and reduce federally funded spending.

Most of the department’s spending is a transfer of federal government funds, as opposed to Idaho’s own funds. This is especially true of voter-approved Medicaid expansion, which allowed poor working adults to get health insurance through Medicaid, at a reduced cost to Idaho taxpayers.

“I wonder, (with) our child welfare programs… are we using any federal funds?” Senator Scott Herndon, R-Sagle, asked. “Is it possible to run child welfare programs entirely with state versus federal funds?”

Jill Randolph, a budget and policy analyst for health and wellness, told Herndon she couldn’t tell immediately whether it would be possible to use only state money for child welfare programs. But her presentation to the committee showed that, in recent years, about 63 percent of those programs’ budgets have been based on federal funds.

What does Idaho Health and Welfare plan to do with a $5.5 billion budget?

Among its responsibilities, the Idaho Department of Health and Welfare and its divisions and offices:

  • administer health insurance benefits for more than 434,000 children and adults in Idaho through the Medicaid and Children’s Health Insurance Program, or CHIP
  • manage state child protection and foster care systems
  • inspect health care facilities to make sure they are operating safely and meeting all federal requirements
  • and direct a variety of other programs such as child care payment assistance, residential treatment facilities for children, state mental hospitals, adult behavioral health care, food stamps, temporary cash payments for low-income families, prevention of suicide, public health and more.

The budget covers the personnel costs of running these programs and paying for services within them.

The Medicaid budget request of $4.7 billion is approximately 16% higher than the FY 2023 allocation, which was approximately 6% higher than the FY 2022 allocation.

Rep. Rod Furniss, R-Rigby, has recognized the rising cost of medical care for people enrolled in the Idaho Medicaid program.

Rep. Rod Furniss, R-Rigby, asked state health and welfare officials about medical bills in their fiscal 2024 budget request. (Screenshot via Idaho In Session)

Prescription drugs are the single largest expense for the Medicaid program, the department showed in its presentation. That’s because of expensive “specialty drugs” and cancer treatments, Jeppesen said.

“You may recall that, just a couple of years ago, a cure for hepatitis C was developed. The amazing thing is that it’s a cure: hepatitis C could go away for good,” he said. “That was $300,000 per person for that drug.And so, you get these kinds of specialty drugs that are wonder drugs that come with a really, really high price tag.

Jeppesen described a new drug therapy that “actually cures blindness in some people, so that’s the miracle: You can make the person see again.”

Only a handful of Idaho residents could benefit from that drug, but it costs about $2 million per dose, he said.

“It’s precisely oncology, anticancer drugs and specialty drugs that are driving up costs,” Jeppesen said. “And it remains an open question for us, how to best continue to manage it. We’ve had conversations with our fellow Medicaid programs across the country. They are all facing the same problem.

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