Idaho’s mental health system is preparing for significant reductions as the private company managing Medicaid behavioral health benefits plans to eliminate essential services.
Magellan of Idaho, the state’s contracted provider, has proposed ending multiple support programs for people living with severe mental illness — a move driven by efforts to prevent a major state budget shortfall.
Mental health experts fear these cuts may worsen community crises and leave thousands without the care they rely on.
Why These Cuts Are Happening
Budget Pressures Push Idaho to Reduce Medicaid Spending
Magellan’s decision follows the Idaho Department of Health and Welfare’s earlier move to trim payment rates for Medicaid providers and managed care organizations by 4%.
In response, Magellan announced its own pay reductions, ranging from 4% to 15%, across various mental health services.
A spokesperson for Magellan explained that the organization has limited legal options for cutting expenses, and the state’s constitutional requirement to balance the budget leaves little flexibility.
Idaho officials have been searching for ways to reduce spending within managed care contracts for months. Despite earlier reductions, Idaho is still projected to close fiscal year 2026 with a $58.3 million deficit, even after lawmakers approved $450 million in tax cuts.
Providers Warn of Dangerous Consequences
Loss of Access Could Increase Crises and Community Incidents
Mental health providers are sounding the alarm.
Laura Scuri, co-owner of Access Behavioral Health Services and a leader in statewide behavioral health advocacy, warns that eliminating support for people unable to stay engaged in treatment may result in more violent or critical incidents.
She explains that individuals who cannot access regular care are the most likely to decline into severe psychosis, creating risks for themselves and their communities.
Key Programs Targeted for Elimination
1. Assertive Community Treatment (ACT)
One of the largest impacts comes from cutting the Assertive Community Treatment (ACT) program, which serves 400–500 Idahoans with persistent, severe mental health conditions.
ACT teams — made up of doctors, nurses, and specialists — visit people at home to ensure they stay on medication and maintain stability.
Without this support, many patients could:
- Lose housing
- End up hospitalized
- Enter the jail system
Clinical director Tom Tueller warns the cuts won’t save money long-term: the cost of psychiatric hospitalization and incarceration far outweighs ACT’s cost-effective, preventive care.
He also notes a past tragedy tied to earlier cuts. In 2010, a Pocatello man with schizophrenia, previously treated under ACT, shot community member Ryan Mitchell after funding reductions disrupted his care. Tueller fears similar incidents could happen again.
2. Peer Support Services
Magellan also plans to cut peer support programs, where people with lived experience of mental illness guide others through treatment.
These services are especially vital in rural areas, where specialists often drive hundreds of miles to reach clients.
Beth Markley, Executive Director of NAMI Idaho, warns that removing peer support is essentially eliminating one of the state’s most cost-effective and impactful components of mental health care.
3. Substance Abuse Rehabilitation Restrictions
Substance abuse treatment providers face additional limits. Under new rules, they will no longer be allowed to offer recovery programs inside the same buildings where sober housing is provided.
Providers say this change, combined with earlier rate cuts, will drive up operational costs and reduce available treatment options statewide.
Jason Coombs of Brick House Recovery says the financial pressure is unlike anything providers have faced before. He fears some facilities may shut down entirely, further reducing access to care.
Idaho’s planned Medicaid mental health cuts represent a major turning point for thousands of residents who depend on consistent, long-term support. Programs like Assertive Community Treatment and peer support services have proven essential in preventing crises, reducing hospitalizations, and keeping vulnerable people stable in their communities.
As budget pressures force these services to shrink or disappear, experts warn that Idaho may face higher long-term costs — both financial and human. The coming months will reveal how these changes reshape the state’s mental health landscape and whether alternative solutions emerge to protect those most at risk.
