Idaho leaders doubt mental health service cuts will reduce costs.
Idaho officials say they cannot say for certain whether recent cuts to mental health services will save the state money over time, even though those cuts were made to deal with a growing budget problem. State leaders ordered spending reductions across government programs after projections showed a major shortfall. Despite those actions, Idaho still faces an estimated $40.3 million gap this fiscal year, according to state figures.
As part of those reductions, changes were made to Medicaid-funded mental health services that support people with serious mental illness. The cuts were carried out by Magellan Healthcare, a private company that manages behavioral health services for the state. In court filings tied to a federal lawsuit brought by patients, Idaho Medicaid Deputy Director Sasha O’Connell said the changes were needed to prevent deeper damage elsewhere in the system.
O’Connell wrote that if a court were to stop the state from moving forward with the service reductions, the Department of Health and Welfare would be forced to consider other actions. Those could include fewer services at state psychiatric hospitals, lower payment rates for private mental health hospitals, closure of crisis centers for adults ad youth, and cuts to mobile crisis teams. She also warned that some private hospitals might stop taking Medicaid patients if payments drop further.
While Idaho officials argues that some form of the services still exists, O’Connell acknowledged that the changes may still lead to negative outcomes. She said there is no clear data showing the cuts will reduce costs in the long run, even though similar programs in other states have helped control spending over time.
These concerns were raised publicly during a meeting of the Legislature’s Medicaid Review Panel in Rexburg earlier this month. Lawmakers met with providers to talk about Idaho’s shift toward managed care, which moves more Medicaid services under private companies. During the meeting, Idaho Sen. Kevin Cook pressed state officials for proof that the mental health cuts would actually save money.
O’Connell told him the department does not have data showing long-term savings from the cuts. Cook responded that without that information, it is hard to justify removing services that may prevent larger costs later, such as jail stays or emergency hospital visits. He questioned how lawmakers could trust cost promises tied to managed care when there is no clear proof behind the current reductions.
When mental health providers later tried to speak about the impact of the cuts, the panel’s chair, Sen. Julie VanOrden, stopped the discussion. She said the meeting was not meant to focus on service reductions. That led to frustration among providers, including Ric Boyce, who runs mental health clinics in eastern Idaho.
Boyce said his office had to call patients just before Thanksgiving to tell them that certain programs, including the Assertive Community Treatment program and peer support services, would no longer be offered in the same way. He described patients becoming upset and fearful, worried they were being abandoned. Staff tried to reassure them, but the sudden changes caused stress and confusion.
State officials and Magellan say individual parts of the programs are still available, even though providers can no longer bill them as one package. Boyce disagrees, saying the programs no longer match proven treatment models. He also said the cuts have already led to staff leaving or reducing hours, making care harder to provide.
Law enforcement leaders have also raised alarms. The Idaho Sheriffs’ Association warned state leaders that cutting community mental health services could lead to more people ending up in jail. Sheriff Samuel Hulse said jails often become the default place for people who cannot get proper mental health care. He added that with the right support, many people can stay stable and out of the justice system.
Magellan officials say they were directed by the state to find ways to cut spending by about four percent. About 200 people in Idaho were enrolled in the Assertive Community Treatment program. Magellan also reduced payment rates for providers, following state reductions.
Looking ahead, Idaho officials say options are limited. VanOrden said there are early talks about restoring some funding, possibly using money from legal settlements tied to tobacco or opioid cases. She said the state’s financial outlook remains worrying, with next year’s deficit expected to grow much larger.
Sources:
Official: Idaho isn’t sure mental health cuts will save money long-term
Idaho’s projected budget deficit estimated at $40 million heading into 2026 legislative session
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