Buckle up. The fight over Medicaid expansion is far from over.

Analysis by Melissa Davlin, Idaho Reports

On Tuesday, Idaho voters sent a message to the Idaho Legislature by passing Medicaid expansion, with 60 percent of voters favoring Proposition 2.

But the fight isn’t over. Opponents of Medicaid expansion still have a big say in how — or if — the program will be implemented. 

On Wednesday morning, Wayne Hoffman, president of Idaho Freedom Foundation, released a statement suggesting the group will pursue a legal challenge, calling Proposition 2 “poorly worded and likely unconstitutional.”

“We will soon announce our next steps to protect Idaho taxpayers and future generations of Americans by preventing Proposition 2 from taking effect,” Hoffman wrote. Idaho Freedom Foundation communication director Dustin Hurst declined further comment.

Regardless of the IFF’s next moves, lawmakers will also get their say. Starting in January, the Idaho Legislature will tackle how to fund the expansion, and whether to tack on sideboards such as an able-bodied work requirement for recipients.

In the lead-up to the general election, much of the conversation focused on whether the Legislature would try to repeal Medicaid expansion if voters passed it. That almost certainly won’t happen — not only has governor-elect Brad Little said he would uphold the will of the voters, but even lawmakers who adamantly opposed Proposition 2 said a repeal wouldn’t be likely.

The question, rather, will come down to funding. In an Oct. 19th Idaho Reports panel discussion, Rep. Tom Dayley said Medicaid expansion might mean the state wouldn’t be able to fund the fifth year of the career ladder, a plan for teacher pay raises. Other lawmakers, including Rep. Wendy Horman, who helps craft the public schools budget on the Joint Finance-Appropriations Committee, opposed expansion because of education funding concerns.

But in an Oct. 31 press conference, Sen. Fred Martin, vice chair of the Senate Appropriations Committee, flatly rejected the notion that education funding would suffer under expansion. Rep. Patrick McDonald, vice chairman of the House Education Committee, echoed those sentiments — though both McDonald and education committee chairman Julie Van Orden lost their re-election bids.

Education isn’t the only potential budgetary casualty of Medicaid expansion. A grocery tax exemption — a popular proposal among both lawmakers and constituents in recent years — would cost the state an estimated $26 million in general fund revenues. Though momentum for repealing the tax on food has been building in recent years, concerns over cash flow might stymie that for the 2019 session.

There are other potential revenue sources. House Assistant Majority Leader Brent Crane suggested lawmakers might go after tax exemptions given to hospitals.

In Idaho, not-for-profit hospitals are exempt from paying property and sales taxes. Those exemptions were created so the hospitals could provide charity care for people who couldn’t afford their medical treatments.

“We gave (hospitals) a mechanism to go and do it yourself, and that mechanism was tax breaks,” Crane told Idaho Reports in October. If hospitals are pushing for Medicaid expansion, Crane argued, the exemptions should be repealed.

Property taxes generally go to local taxing districts, bonds, and levies — not the state general fund, which would pay for part of Medicaid expansion.

That sales tax exemption was valued at an estimated $33 million this year. However, a tax exemption’s value doesn’t necessarily reflect the actual savings the state would see from eliminating it, tax officials pointed out in a 2019 revenue report.

In October, Brian Whitlock, president and CEO of the Idaho Hospital Association, said getting rid of the hospital tax exemptions would result in an “increased tax on Idaho patients.”

“Why would someone suggest a tax increase when the funds to pay for Medicaid expansion already exist in the state’s budget?” Whitlock said in a statement to Idaho Reports. “The latest data shows that Idaho hospitals provided more than $272 million in uncompensated care — either through charity care or bad debt. Medicaid expansion is not a windfall to hospitals; it will only reduce the amount of uncompensated care and the corresponding cost shift within the system.”

Funding isn’t the only issue. House Health and Welfare Committee Chairman Fred Wood, R-Burley, said he expects to see proposed restrictions on who would qualify for Medicaid under the expanded program.

Wood, who campaigned for expansion, told Idaho Reports in October he would consider an “appropriately crafted” work requirement for able-bodied people, with considerations for what might happen under a recession. Wood’s colleagues, however, may have different ideas for what “appropriately crafted” might mean.

In short, buckle up. The next few months are going to be critical.

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