(Boise, ID) In Idaho, additional federal funds for Medicaid expansion generated $1.5 billion in economic output this fiscal year, a new analysis finds.
The analysis, by University of Idaho economics professor Steven Peterson, used economic modeling and found the extra federal dollars created $1.5 billion in “net additional gross economic activity,” or sales or economic output in fiscal year 2025, which ends in June.
That supported about $897.6 million in gross state product, such as worker earnings and taxes, including $700 million in compensation for 9,362 jobs, the report found.
Medicaid expansion’s boost in Idaho’s economic activity from the extra federal funds this fiscal year also boosted Idaho’s tax revenues by almost $47 million in additional taxes.
Advocacy group Idaho Supports Medicaid released the report Thursday. The report comes as Idaho lawmakers are considering repealing Medicaid expansion, a law Idaho voters passed through a ballot initiative, over concerns about Idaho Medicaid’s rising budget.
Peterson told the Sun the new report — one of many he’s done on Idaho Medicaid expansion across more than a decade — was sponsored by Idaho Voices for Children and its partners.
If Idaho ended Medicaid expansion, “we would simply lose” the extra federal funds, Peterson told the Idaho Capital Sun in an interview Thursday.
That’s almost $1 billion this fiscal year.
Federal government pays 90% of Medicaid expansion costs, higher than typical Medicaid rate
Under the Affordable Care Act passed in 2010, the federal government incentivized states to expand Medicaid to a broader range of low-income earners by offering to cover Medicaid expansion policies at a higher federal matching rate of 90%.
That’s above the typical federal Medicaid matching rate that has the federal government paying about 70% of program costs.
This fiscal year, the federal government spent about $913 million on Idaho Medicaid expansion. The report says those funds create economic contributions “because they represent new monies and direct economic expenditures to Idaho … that would not occur without these federal dollars coming into the state.”
“Federal dollars represent new monies coming into Idaho’s economy which creates economic activity – supporting new jobs, new spending by individuals and organizations, and new tax revenue,” the report said. “Each dollar in direct federal Medicaid expenditures results in a $1.82 dollar increase in overall gross economic activity [i.e. sales transactions, or output] in Idaho.”
Most of the extra federal funds Idaho receives for Medicaid expansion goes to various health care industries and workers, who generate additional income and economic output through purchases, Peterson told the Sun.
Accounting for traditional Medicaid and expansion, the report found the federal funding for Idaho totalled nearly $3.4 billion this fiscal year, creating $4 billion in total gross economic activity, including $1.8 billion in compensation for more than 25,400 jobs.
Losing federal dollars passes health care costs onto Idahoans, report finds
The report’s findings weren’t a surprise to some health policy advocates, who for years have said Medicaid expansion saves state funds and has ripple effects.
“The data consistently shows that Medicaid plays an important role for Idaho. It saves taxpayer dollars, invests in our local communities, reduces uninsured rates and uncompensated care,” Idaho Voices for Children Senior Policy Associate Hillarie Hagen said in a statement. “Medicaid is a good deal for Idaho.”
Federal dollars taken away from Idaho also have an impact, the report said, as many health care expenses “would be passed on to Idahoans in the form of increases in overall health care costs and private insurance premiums.”
But the report didn’t account for economic impacts communities get by health coverage, Idaho Supports Medicaid said in a news release. Determining that would be its own “very extensive study,” Peterson told the Sun.
Economic growth in rural communities is stifled when injured or sick people run up medical debt when they can’t pay for medical care they need, Dr. Kelly McGrath, a family doctor who practices in Orofino, said in the news release.
“If you are struggling with medical debt, you do not have the resources to invest in a new business, purchase goods or invest in other activities that feed the financial health of rural communities,” McGrath said.
Medicaid expansion covers almost 90,000 Idahoans, and could cost almost $1.4 billion next fiscal year
About 89,300 Idahoans are enrolled in Medicaid expansion, according to December figures from the Idaho Department of Health and Welfare.
In 2023, Idaho’s Medicaid director told lawmakers Idahoans would spend almost $78 million more, by losing federal funding, if Medicaid expansion was repealed, the Sun previously reported.
The Idaho Department of Health and Welfare does not have an update on that estimate, agency spokesperson AJ McWhorter told the Sun in a Jan. 31 email.
Health and Welfare’s 2023 estimate on expansion repeal’s costs was required one-time by Idaho statute, he said.
“We have continued to provide required Medicaid expansion budget projections to the Legislature which are specific to the existing Medicaid program and not inclusive of other state programs or agency funding,” McWhorter said.
Next fiscal year, which starts in June, Health and Welfare estimates Idaho Medicaid expansion will cost $1.36 billion, he said.
Report comes as Idaho lawmakers consider repealing voter-passed Medicaid expansion law
Idaho was one of several holdout states that didn’t expand Medicaid. In 2018, after years of stalled legislative efforts to address the Medicaid gap, nearly 61% of Idaho voters approved a ballot initiative to expand Medicaid. The law took effect in 2020.
This year, Idaho lawmakers have introduced two bills that could repeal Medicaid expansion.
House Bill 138 would require a range of Medicaid policy changes meant to save costs for expansion to remain in place.
The bill is slated for a hearing in the House Health and Welfare Committee — including possible public testimony and a vote to advance to the full House — before another bill that would outright repeal Idaho Medicaid expansion, the Idaho Capital Sun previously reported.
Rep. Jordan Redman, R-Coeur d’Alene, is sponsoring the repeal-or-reform bill. Reacting to the economic analysis, he saw promise in the economic growth but said growth without accountability isn’t sustainable.
“I really like the sideboards because I believe it strengthens expansion by putting accountability in the program,” he told the Sun in a text message Friday. “I think economic growth is incredible but when it’s done without accountability it’s not sustainable. My goal is to put sideboards on expansion in order to keep serving those in need.”
This story first appeared on Idaho Capital Sun.
