A legislative working group examining health insurance practices in Idaho heard testimony this week that accepting a Pocatello hospital’s reimbursement rate demands would have driven up costs for the roughly 65,000 state employees and family members covered under the state’s health plan.

Working Group’s First Meeting

The Idaho Legislature’s Health Insurers Working Group held its inaugural meeting to examine the practices of health insurers operating in the state. Lawmakers questioned Faith Knowlton, the state official responsible for managing Idaho’s health insurer contract for state employees, about the ongoing dispute between Regence — the state’s health insurer for public employees — and Portneuf Medical Center in Pocatello.

Portneuf, an East Idaho hospital owned by Ardent Health, was dropped from the Regence network after the two parties could not reach an agreement on reimbursement rates. Knowlton told the working group that if Regence had agreed to the hospital’s requested rate increase, it would have pushed up costs across the entire state employee health plan.

“It’s my understanding: had we given them what they were requesting for an increase, it would have increased our entire health plan by 7%,” Knowlton told the group, as reported by the Idaho Capital Sun.

Of the 65,000 members on the plan, only about 3,000 would have remained in-network under the higher-rate scenario — raising significant questions about whether the cost burden on the broader pool of enrollees would be justified.

Compliance Questions and Past Disputes

Sen. Kevin Cook (R-Idaho Falls) pressed Knowlton on whether Regence was meeting its obligations regarding provider availability under state law. Knowlton said she believes Regence is in compliance with state regulations as overseen by the Department of Insurance, but added that she has asked attorneys to evaluate whether the insurer is also meeting its specific contractual commitments with the state.

The Portneuf dispute is not the first time Regence has faced a contract standoff with an Idaho hospital. A similar disagreement with Kootenai Health, a North Idaho hospital system, was resolved after both parties negotiated to a middle-ground agreement. Regence also recently concluded a deal with another major hospital — whose identity was not disclosed publicly — that had not been announced before the working group meeting.

Knowlton, who has spent more than three decades in the health insurance industry, offered a measured assessment of the insurer’s overall track record. “Frankly, I’ve been doing this for … over 30 years. And they’re a really good partner,” she told the Idaho Capital Sun.

What the Working Group Is Doing Next

The working group, co-chaired by Rep. Dustin Manwaring (R-Pocatello) and Sen. Mark Harris (R-Soda Springs), is drafting a set of questions to send to insurers, healthcare providers, and potentially members of the public. Lawmakers aim to finalize that list by August 21.

The group’s next meeting is scheduled for September 15, with three additional meetings planned before the 2027 legislative session convenes. Regence’s Director of Government Relations, Adrean Cavener, is among those expected to engage with the panel as the process continues.

Broader Budget and Policy Context

The working group’s focus on state employee health costs comes as Idaho lawmakers have scrutinized spending across several areas of government. A recent analysis found Idaho’s corrections budget grew by $33 million while the public defender’s office faced cuts — illustrating the trade-offs lawmakers must navigate as state expenditures rise across multiple departments.

With the state health plan covering tens of thousands of workers and their dependents, the outcome of the Regence-Portneuf dispute could have meaningful fiscal consequences for the next budget cycle. The working group’s investigation is expected to shape potential legislation when the Idaho Legislature reconvenes in 2027.