Medicaid expansion may be Montana’s cheapest ‘economic development’ program, economist says
Photo illustration by Getty Images.
People on Montana reservations used to make a twisted joke that they should have medical emergencies before summer — because budgets for health care would run out by then, said Aaron Wernham, Montana Healthcare Foundation CEO.
Things changed after the Montana Legislature chose to adopt Medicaid expansion, he said.
The program made health insurance available to adults with low incomes, or up to 133% of the federal poverty level, and as of June 2024, nearly 230,000 Montanans were covered by Medicaid, including 81,000 in the expansion group, according to a presentation this week.
Wernham said the goals were to expand coverage, improve access to medical care and health outcomes, and save money on care, but the program had other positive ripple effects, such as increasing access to health care on reservations.
Reservations are served by a mix of federal, tribal and private services, he said. In the past, the money for health care from a program through the federal Indian Health Service that paid for care not available on the reservation, such as surgeries, would run out every year.
But Wernham said Medicaid expansion means the Indian Health Service can now stretch that budget, and people can get services for preventative care, rather than seeing the money run out to pay for life-threatening emergencies.
He said it means even some people who aren’t on Medicaid but are on reservations are getting more care. Montana has seven reservations and 12 federally recognized tribes.
“This tremendously changed the experience of trying to get care if you lived on one of Montana’s reservations,” Wernham said. “That has continued.”
On the webinar, an economist said the program could be characterized as one of the cheapest economic development programs the state has in place, and Wernham and a health advisor said it resulted in gains for the health of Montanans.
In Montana, Medicaid expansion is included in Republican Gov. Greg Gianforte’s budget proposal, but isn’t a sure bet going forward. Without action from lawmakers, Medicaid expansion is set to sunset at the end of June 2025.
Additionally, KFF Health News reported a “trigger law” in Montana means the program could end quickly if the incoming Donald Trump administration and Republican Congress cut funding for the Affordable Care Act.
Conservative groups have argued the program costs too much money and covers too many people. For example, this fall, the Foundation for Government Accountability told Montana lawmakers that Medicaid expansion has ballooned and is benefiting the health care industry over patients, among other arguments against renewal.
Thursday, however, the Montana Healthcare Foundation hosted a webinar in advance of the question the 2025 Montana Legislature will take up about whether to renew, and presenters shared positive fiscal and economic benefits from the program and noted its broad reach.
In some counties, for example, more than half of the population is covered by Medicaid, according to the presentation. Those include Glacier County, with part of the Blackfeet Indian Reservation; Roosevelt County, with the Fort Peck Reservation; and Big Horn County, with the Crow Indian Reservation and part of the Northern Cheyenne Indian Reservation.
In the 2023 fiscal year, the cost of Medicaid in Montana was $2.4 billion, and the federal government reimbursed $1.89 billion, or 79%, according to the presentation. It said the cost of expansion to the state’s general fund is about $100 million, a quarter of which is paid by hospitals.
However, even though Montana has covered 80,000 more people with expansion, the state general fund spending has remained even, said Zoe Barnard, a senior health advisor with Manatt Health, a health care and legal strategy firm.
Medicaid accounted for 13% of the general fund in 2015, before expansion was implemented, and it was 13% in 2022 as well, basically because the savings are within the program, said Bryce Ward, an economist and co-founder of ABMJ Consulting.
He said the cost has remained steady for the state because people who would have enrolled in traditional Medicaid have used Medicaid expansion instead, and the state pays just 10% of expansion costs, whereas it pays 35% of the cost of traditional Medicaid.
Generally, state general fund spending on Medicaid has ranged from $270 million to $320 million since expansion, Ward said. According to the presentation, Medicaid provides health care coverage to more than one of every five Montanans, including approximately two of every five children.
Expansion led to a reduction in the number of people without health insurance, dropping the state’s uninsured rate from 16.4% in 2015, before expansion, to 11.4% in 2022, after expansion, according to the presentation
Now, more people with low incomes are getting screened for things like breast cancer, cholesterol and diabetes, the presenters said. For example, the number of people getting screened for breast cancer increased 7% from 2021 to 2022, and those getting screened for diabetes jumped 11% in the same period.
The dollars the federal government provides also create economic activity in Montana, Ward said, including 6,000 to 8,000 jobs, $500 million in personal income, and $775 million in economic activity.
“All of that churns, creates jobs, incomes, opportunities, throughout the economy,” Ward said. “…Generally speaking, each million dollars of new money creates about 10 jobs and $700,000 of income.”
Typically, states spend tens if not hundreds of thousands of dollars per job in economic development incentives or programs, but Medicaid expansion is different, Ward said.
“Medicaid expansion creates jobs at essentially no cost, or very low cost,” Ward said.
Earlier this month, KFF Health News reported that more than 3 million adults in nine states, including Montana, could lose health coverage if the federal government reduces the funding that’s allowed for Medicaid expansion.
People who would fall through the cracks are those who generally make too much money to qualify for traditional Medicaid, but who are below poverty, and therefore ineligible for subsidies in the marketplace, according to the presentation from the Montana Healthcare Foundation this week.
(A presenter said that’s because the Affordable Care Act did not anticipate that states would have the option to expand, so it didn’t plan for it.)
KFF said Montana’s law rolls back expansion if federal funding falls below 90% unless lawmakers find other money. It said the federal match for traditional Medicaid averages 57% by comparison.
Graphics posted with this story are from the Montana Healthcare Foundation presentation uploaded below.