Idaho leaders suspect that cutting mental health services will reduce costs.
Idaho officials say they can’t say for sure whether recent cuts to mental health services will save the state money over time, even though the cuts were made to address a growing budget problem. State leaders ordered spending cuts in government programs after the estimate. Despite these measures, Idaho still has an estimated $40.3 million gap this fiscal year.
As part of those cuts, changes were made to Medicaid-funded mental health services that help people with severe mental illness. The cut was made by Magellan Healthcare, a private company that manages behavioral health services for the state. In a court filing linked to a federal lawsuit brought by patients, Idaho Medicaid Deputy Director Sasha O’Connell said the changes are needed to prevent deeper damage elsewhere in the system.
O’Connell wrote that if a court were to block the state from moving forward with service cuts, the Department of Health and Welfare would be forced to consider other measures. These may include fewer services in state psychiatric hospitals, lower reimbursement rates for private mental health hospitals, the closure of crisis centers for adults ad youth, and reductions in mobile crisis teams. He also warned that some private hospitals would stop accepting Medicaid patients if payments were to fall further.
Although Idaho officials argue that some form of service still exists, O’Connell acknowledged that the changes could still have negative consequences. He said there is no clear data showing the cuts will reduce costs in the long run, although similar programs in other states have helped control costs over time.
Those concerns were raised publicly earlier this month during a meeting of the Legislature’s Medicaid Review Panel in Rexburg. Lawmakers met with providers to discuss Idaho’s shift to managed care, which moves more Medicaid services under private companies. During the meeting, Idaho Sen. Kevin Cook pressed state officials for evidence that the mental health cuts would actually save money.
O’Connell told him the department didn’t have data showing long-term savings from the cuts. Cook responded that without that information, it’s hard to justify eliminating services that could prevent major costs later, such as jail stays or emergency hospital visits. He questioned how lawmakers can trust the administration’s promises of care-related costs when there is no clear evidence behind the current shortfall.
When mental health providers later tried to discuss the impact of the cuts, the panel’s chair, Sen. Julie Vanverden, blocked the discussion. He said that the purpose of this meeting was not to focus on service reduction. That led to frustration among providers, including Rick Boyce, who runs a mental health clinic in eastern Idaho.
Boyce said her office has to call patients just before Thanksgiving to let them know that some programs, including community treatment programs and peer support services, will no longer be offered in the same way. Patients are reported to be distressed and scared, worried that they are being abandoned, he said. The staff tried to reassure them, but the sudden changes caused tension and confusion.
Individual parts of the programs are still available, though providers can no longer bill them as a package, state officials and Magellan say. Boyce disagrees, saying the programs no longer match proven treatment models. He also said the cuts have resulted in staff leaving or reduced hours, making it harder to provide care.
Law enforcement leaders have also raised the alarm. The Idaho Sheriffs Association warned state leaders that cutting community mental health services could lead to more people being jailed. Sheriff Samuel Hollis said jails often become the default destination for people who can’t afford adequate mental health care. With the right support, many people can stay stable and out of the justice system, he added.
Magellan officials say they were directed by the state to find ways to cut costs by about four percent. About 200 people were enrolled in community treatment programs in Idaho. Magellan also lowered payment rates for providers, following state cuts.
Looking ahead, Idaho officials say options are limited. VanVerden said there is early talk about restoring some of the funds, possibly using money from legal settlements related to tobacco or opioid cases. He said the state’s fiscal outlook is bleak, with next year’s deficit expected to be huge.
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It’s official: Idaho doesn’t believe mental health cuts will save money long-term
Idaho’s projected budget deficit is estimated at $40 million for the 2026 legislative session.
