Most economists acknowledge that government regulation is often designed to squeeze out competition to benefit those promoting it. It typically brings onerous requirements that must be implemented at a high cost to those who can least afford them. In this way, proponents of regulation intend to eliminate their competition outside of market forces. Unfortunately, healthcare is a prime sector for crony regulation.
In 2018, Proposition 2 passed a ballot initiative expanding Idaho’s Medicaid program to include able-bodied adults at 133 percent of the federal poverty level. The Affordable Care Act exchanges were designed to serve this demographic. Individuals between 100 and 400 percent of the Federal poverty level can get individual or family healthcare plans that are heavily or entirely subsidized on the healthcare exchange. In the worst-case scenario, the exchange connected individuals with Medicaid plans.
Projections for Medicaid Expansion initially came in at about 32 million dollars to Idaho state taxpayers in 2018. Those costs have snowballed to $110 million in 2026, with 90% Federal matching funds, which creates an additional billion dollars in Federal debt. Idaho is projected to spend $1.4 billion on Medicaid Expansion next year. The greatest fallacy in all of this, is that Federal matching funds are created with the wave of a magic wand, and Idaho taxpayers remain unaffected. The Federal government runs a two trillion dollar annual deficit, and Idaho taxpayers are not immune from the yearly interest payment.
With costs to Idaho taxpayers tripling since its inception in 2020, it makes sense that Idaho legislators would begin to assume some responsibility in placing parameters around its use. Those of us who pay monthly premiums for conventional health insurance understand that it exists mainly for catastrophe, with implements for annual preventive care. In this regard, the Federal government hamstrings states in how Medicaid plans are designed, and the result is that most Medicaid plans are Cadillac plans by comparison.
The Idaho legislature recently heard two bills to place parameters around Medicaid Expansion. Representative Jordan Redman of Coeur d’Alene brought both bills. House Bill 138 sought to place eleven parameters around expansion that would trigger the end of the program, should the program fail to stay within fiscal bounds. Additional requirements such as lifetime caps and work requirements would ensure the program remained a stop-gap measure, not just premium insurance on the public dime. It narrowly passed in the House and was tabled by Senator Julie VanOrden of Blackfoot in the Senate Health and Welfare Committee.
When HB 138 was tabled, HB 345 was brought forth, also by Representative Jordan Redman. HB 345 dropped the program termination stipulations of HB 138 and adopted some of the cost sharing amendments like copays, and tacked them onto a complete Medicaid overhaul bill that will turn Idaho Medicaid over to a private Managed Care Organization or MCO. An MCO is actually just one of five major insurance providers, such as United Healthcare or Aetna, who are handed a lump sum of money per member, per month, and then tasked with keeping expenditures and utilization within their allotted amount. In this way, politicians who are not versed in the intricacies of American healthcare, can wash their hands of its delivery.
Historically, healthcare providers like your doctors office don’t like working with Managed Care Organizations. The primary function of the MCO is to reduce costs by finding ways to either not pay or pay less to your healthcare provider for services rendered. To facilitate this they employ strategies like capitated rates, where providers are paid flat monthly rates per member instead of payment for services rendered, and prior authorization, where your doctor or provider must get on the phone and argue with non-medical bureaucrats over the medical necessity of your prescribed treatment.
The problem with Managed Care is that this places all of the financial risk on your doctor. If they accept these government healthcare plans, their reimbursement is directly tied to providing patients with the least care possible while keeping them out of the hospital. With an expanded and growing government patient base, many cannot afford to not accept these government plans.
When this bill hit the docket, it immediately caught my attention because I saw the bait and switch deployed. It went from a bill about reining in Medicaid Expansion, to a bill about Medicaid overhaul and Managed Care. Because my spouse is a healthcare provider, I am always wary of government interventions in healthcare markets.
As the Vice Chair of the Bannock County Republican Party, I submitted a Resolution to the Idaho Republican Party that was passed by the Bannock County GOP, Legislative District 29, as well as the Greater Idaho GOP State Central Committee in January 2025. Resolution 2025-10 essentially states that government induced consolidation of healthcare is killing Idaho’s private and community healthcare clinics, that they are essential to the general welfare of Idaho, and the Idaho Republican Party should take steps to ensure their viability. Since 2012, sixty percent of private practice has either been shuttered or bought up by hospitals and corporations.
House Bill 345 greatly undermines the intent of this resolution, and in the short timeframe that I had to discuss the merits of this bill, I expressed this to anyone who would listen. I spoke with District 29 Representative Tanya Burgoyne and District 28 Representative Dan Garner. I spoke with the bill’s sponsor, Representative Jordan Redman. I spoke with Senators Zuiderveld and Shippy. I messaged Senator Lenney and Keyser. With little debate, the responses I largely received were “I can’t stop this bill.”
I spoke with Fred Birnbaum, Nikolas Kleinworth, and Ron Nate at the Idaho Freedom Foundation. Their response was that politicians are unwilling to narrow down the Medicaid patient base and unwilling to place stipulations around its utilization. The only place left to reduce costs is to go after providers reimbursement.
Managed Care is an undesirable form of insurance delivery for any provider to absorb, but its particularly insidious when the rules don’t apply across the board, and a subset of the healthcare sector is responsible for incurring its impacts. Carved out within HB 345 are exceptions for several government preferred healthcare providers in categories such as Critical Access Hospitals, Federally Qualified Health Centers and designated Rural Idaho Hospitals and Clinics. Providers who hold these designations have some defined and some undefined exceptions from the financial risk associated with the MCOs.
These Federally and State recognized designations exist with the intent of keeping rural hospitals and clinics with an over-reliance on Medicare and Medicaid viable. Unfortunately, Idaho is an extremely rural state, and these designations are generously dispersed throughout. All told, 27 out of 56 Idaho hospitals are designated Critical Access Hospitals, according to Google 88 of Idaho’s 192 healthcare clinics are designated as Federally Qualified Healthcare Centers, and according to the Idaho Department of Health and Welfare 51 of 192 clinics hold a Rural Health Clinic designation.
All told, at least half of Idaho’s hospital and clinic healthcare providers are excepted from the financial risk of moving Idaho Medicaid to a Managed Care Organization. The worst part, is that these are the highest cost and utilization drivers of these services. The result is that the other fifty percent of clinics and hospitals are then strapped with getting costs and utilization down, and when they can’t, the excepted providers move in to acquire their competition with their government financial windfall. This is the exact concern that I expressed in Idaho GOP Resolution 2025-10.
It cannot be ignored that the politicians and providers who placed their finger on the scales in favor of HB 345, such as Blackfoot Senator Julie VanOrden, also represent districts that disproportionately thrive on special government exceptions like Critical Access status. The Senate Health and Welfare Committee heard testimony from Valley Family Healthcare’s CEO, who holds a Federally Qualified Healthcare Center status. Under no circumstance is it appropriate for healthcare providers to rewrite policy for the largest sector of the economy, and then exempt themselves from the repercussions. This is precisely what has happened. We must demand better.
Photo by Maël BALLAND on Unsplash
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