With the 2026 Idaho Legislative session having convened on January 12, this year’s agenda has been shaped by budget and tax policy decisions, with Medicaid costs remaining a central pressure point as lawmakers weigh competing priorities, including proposed Medicaid reductions and oversight of major federal health funding initiatives.
HCA Healthcare is providing this mid-session update to keep colleagues informed on key legislative developments that may affect care and access in the communities we serve.
Budget
Governor Brad Little opened the 2026 session with his proposed “Enduring Idaho” budget plan focused on fiscal responsibility and long-term stability. The proposal recommends maintenance-only agency budgets and includes a 3% reduction in ongoing General Fund expenditures for FY 27 across agencies. The governor’s proposal includes $5.63 billion in General Fund spending, about 0.1% higher than FY26.
The budget proposal sets the ceiling for Medicaid and health services funding. Key highlights include:
- Rural Health Transformation Program: $925 million in federal funding over five years to strengthen healthcare delivery, affordability, and support across rural Idaho.
- Graduate Medical Residency: Nearly $1 million to support existing programs that address physician shortages and support Idaho’s growing healthcare workforce.
- Medicaid Reforms: Continued implementation of 2025’s HB 345, including managed care procurement and Medicaid work requirements.
- Savings: $45 million General Fund through a 4% provider rate adjustment and service reductions.
Budget deliberations continue to be shaped by a projected $40 million general fund deficit in FY 2026, tied to revenue performance and prior tax changes.
The Joint Finance-Appropriations Committee (JFAC) approved an additional 1% cut to most FY26 budgets, totaling $192.7 million, with K-12, Medicaid, the Department of Correction, and Idaho State Police exempt. For FY27, JFAC also approved a 2% ongoing reduction for non-exempt agencies on top of the governor’s 3% recommendation, raising concerns from Governor Little about deeper legislative cuts.
Tax Conformity
HB 559 updates Idaho’s tax rules with federal changes under the One Big Beautiful Bill Act (OBBBA). Not every federal tax change was adopted, which affects state revenue and contributes to broader budget decisions, including funding pressures on programs like Medicaid and other health and human services.
Lawmakers moved quickly because the changes apply retroactively and Idaho needed to act before the April tax filing deadline. The bill was signed into law by Governor Little on February 10.
Medicaid
HB 592 would require every hospital that accepts Medicaid to include a question on admission or registration forms asking patients or their representatives to self-report immigration status, along with a disclaimer that the response will not affect patient care or be reported to immigration authorities. Hospitals would also be required to submit quarterly aggregate reports to the Idaho Department of Health and Welfare (IDHW) within 30 days after each quarter, covering admissions and emergency department visits by status. By March 1 each year, IDHW would be required to submit an annual statewide report to the Governor and legislative leadership summarizing totals and describing uncompensated care costs and hospital impacts, effective July 1, 2026.
This bill was introduced on February 4 and is currently pending in the House Health and Welfare Committee.
Rural Health Transformation Program
SB 1264 would establish legislative oversight of Idaho’s Rural Health Transformation Program (RHTP). The bill would create the Rural Health Transformation Fund in the state treasury to manage approximately $186 million in federal RHTP funding for the first year, plus any legislative appropriations. It would also create a new seven-member Rural Health Transformation Committee composed of three senators, three representatives, and a nonvoting gubernatorial appointee, to set eligibility and application requirements and oversee how funds are awarded. The bill would also direct the Department of Health and Welfare to use an expedited review process for subawards and require annual public reporting.
The oversight structure and requirements could influence which projects qualify and the compliance and reporting expectations for participating providers and partners.
The bill is positioned for Senate floor action, but was retained on the calendar on February 23.
Workforce Verification Requirements
Multiple bills focus on expanding E-Verify requirements, including one that would apply to all businesses statewide and another that targets state and local government and certain large state contractors. If enacted, they would increase employment verification and contracting compliance obligations for large employers and their vendor networks.
HB 704 would require all business entities and employers in Idaho to enroll in E-Verify and verify new hires, effective July 1, 2026. The bill would add enforcement mechanisms involving the Attorney General, including potential actions affecting business licenses and permits for violations, and contract or grant eligibility tied to E-Verify enrollment. It also includes provisions allowing residents to petition the Attorney General to bring enforcement actions, with guardrails against race and ethnicity-based petitions.
This bill awaits action on the House floor after advancing out of the House Business Committee on February 23.
SB 1247 would require covered employers to enroll in and use E-Verify for new hires starting January 1, 2027. “Covered employers” would include all public agencies, as well as certain private businesses that employed more than 150 employees for at least 26 weeks in the prior 24 months and hold qualifying public contracts.
The bill passed the Senate on February 19 and is awaiting action in the House Business Committee as of February 20.
