First day of Health and Welfare budget hearing: Medicaid costs, child welfare, 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 an enormous segment of Idahoans, through a range of different programs.

Jeppesen and other state Health and Welfare officials fielded questions from the Joint Finance-Appropriations Committee on Tuesday, during the first of a multi-day budget hearing.

Idaho legislators focused on the large and growing costs of Medicaid health insurance and child welfare programs, asking questions about how much the state spent on hospitalizations, prescription drugs and other programs in recent fiscal years.

“I first want to just say that I do not have a cold heart. I love children,” said Sen. Kevin Cook, R-Idaho Falls, reacting to a budget request to pay for children who need to be in residential treatment. “But I feel like it’s our responsibility here to make sure money is spent well, so that the taxpayers can keep that money and raise their children. So with that in mind, I don’t have a cold heart but I do have some questions.”

Cook and the rest of JFAC’s members had so many questions that the department’s presentation ran up against its time limit and will be continued Wednesday.

Questions about federal funding for Idaho Health and Welfare

The 2022 election brought more far-right legislators into the Idaho House and Senate, and a few of those legislators asked questions that suggest they want to further limit Medicaid spending and pull back on federally funded expenditures.

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

“I’m wondering, (with) our child welfare programs … are we using all federal funds?” Sen. Scott Herndon, R-Sagle, asked. “Is it possible to operate child welfare programs entirely from state funds versus federal?”

Jill Randolph, budget and policy analyst for Health and Welfare told Herndon she couldn’t immediately say whether it would be possible to use only state money for child welfare programs. But her presentation to the committee showed that, in the past few years, about 63% of those programs’ budget has relied 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 bureaus:

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

The budget covers the staffing costs to run those programs and to pay for the services within them.

The Medicaid budget request of $4.7 billion is about 16% higher than the fiscal year 2023 appropriation, which was about 6% higher than the fiscal year 2022 appropriation.

Rep. Rod Furniss, R-Rigby, homed in on the rising cost of medical care to people enrolled in the Idaho Medicaid program.

Prescription drugs are the single largest expense for the Medicaid program, the department showed in its presentation. That is due to high priced “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 it’s a cure — hepatitis C could go away permanently,” he said. “That was $300,000 a person for that drug. And so, you get these kinds of specialty drugs that are miracle drugs that are just really, really high priced.”

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

Just a handful of Idahoans could benefit from that drug — but it cost about $2 million per dose, he said.

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