Idaho House Approves $22M in Medicaid Disability Budget Cuts

Bill aims to reduce pay raises for residential habilitation providers despite concerns about potential service disruptions.

Mar. 13, 2026 at 3:12am

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The Idaho House has passed a bill that calls for nearly $22 million in budget cuts to Medicaid disability services. The bill, sponsored by Republican Rep. John Vander Woude, would reduce pay raises for residential habilitation providers that were approved in 2022. While the bill's sponsor claims providers would still see a 33% increase over four years, there are concerns the cuts could force some businesses to close.

Why it matters

These Medicaid budget cuts could significantly impact access to critical disability services in Idaho, potentially forcing some providers to scale back operations or shut down entirely. This raises concerns about the state's commitment to supporting its most vulnerable residents.

The details

House Bill 863 calls for $21.8 million in cuts to pay rates for residential habilitation providers. The bill is the Legislature's response to Gov. Brad Little's call for $22 million in Medicaid cuts. The bill lacks a clear mechanism for the cuts, which are meant to come by reducing pay raises that the Legislature approved in 2022. Those raises were meant to expand services, but a court order prevented that from happening. The bill would also require the Department of Health and Welfare to audit providers at a cost of $850,000 from the state's general fund.

  • On March 12, 2026, the Idaho House passed the bill on a 60-8 vote.
  • In 2022, the Idaho Legislature approved pay raises for residential habilitation providers that are now being reduced.

The players

John Vander Woude

A Republican member of the Idaho House of Representatives and the sponsor of House Bill 863.

Brad Little

The Governor of Idaho who called for $22 million in Medicaid cuts that led to the introduction of House Bill 863.

Idaho Department of Health and Welfare

The state agency that will be required to audit Medicaid disability service providers under the new legislation.

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What they’re saying

“I think they're gonna have to probably tighten their belt some, as any business would if the income drops a little bit. I don't see where they would have to shut down.”

— John Vander Woude, Bill Sponsor

What’s next

The bill now heads to the Idaho Senate, where it must pass before going to the governor for signature to become law.

The takeaway

These Medicaid budget cuts raise concerns about the state's commitment to supporting its most vulnerable residents, as they could force some disability service providers to scale back operations or even shut down entirely, potentially disrupting critical services for Idahoans with disabilities.