In the first two years after Montana expanded Medicaid, the savings to the state have eclipsed the costs. Though that could flip by 2020, increased activity in Montana’s economy because of the expansion will more than make up the difference.
That's according to a report commissioned by the Montana Healthcare Foundation and Headwaters Foundation.
The full report will be released broadly later this week. A preliminary version was discussed at a state legislative interim hearing earlier this year. It was produced by the University of Montana’s Bureau of Business and Economic Research.
The report also found that in the time Montana has expanded Medicaid, workforce participation has increased among low-income earners. When Montana choose to expand Medicaid, it also added a program called Help-Link that connects those covered under expansion with employment assistance.
In 2015, the state Legislature voted to expand Medicaid in Montana to those earning up to 138 percent of the federal poverty level. That’s about $15,418 for an individual, or $26,347 for a family of three. By March 2018, about 93,950 were enrolled.
Medicaid expansion in Montana is set to sunset in 2019 unless the state Legislature that convenes at the start of that year chooses to extend it. Many Republicans, who dominate the Legislature, have been vocal about their opposition to expansion, saying it’s cost the state more than projected because more people than anticipated enrolled.
Some Republicans also argue expansion goes beyond the traditional Medicaid population of the poor, elderly, disabled and pregnant women to include able-bodied adults who could get insurance otherwise. They also point out the federally mandated amount paid by states for the costs of expansion will increase from the present 5 percent to 10 percent by 2020.
Democrats and the administration of Gov. Steve Bullock argue the state still comes out better economically under expansion, and the health improvements to state residents can’t be ignored. Bullock said Tuesday the report shows expansion is improving things for Montana.
"This report proves Medicaid works for Montana. We worked with Republicans and Democrats to create an innovative plan, unique to Montana, that not only improves the health of our families, friends and neighbors, but also the health of our economy. It is critical it continues."
The report out this week parses data and projects going forward to determine how much expansion will cost and how much the state will save because of it. It also attempts to account for how much the state economy has grown because of expansion, looking at added jobs, increased personal income and subsequent spending.
Medicaid expansion will bring about $350 million to $400 million in new spending to the state’s economy and add 5,000 jobs in health care and other industries that pay $270 million by 2020, according to the report.
In its first year, 2016, the state saved spent $5.3 million on benefits and claims and to administer Medicaid expansion. That same year, savings were $18 million. The third part of the picture, which advocates are calling attention to, is increased revenues to the state in the form of more taxes paid on income from more jobs, higher spending on health care and industry grown, for example. That revenue was $22.2 million in 2016.
The revenue becomes more critical by 2020, because in that year the report expects the state will spend more on running expansion than it will save in other expenses. But accounting for the increased revenue, the report predicts the state budget would still come out $19.1 million ahead of where it would without expansion.
Aaron Wernham, CEO of the Montana Healthcare Foundation, said understanding the basic economic picture of expansion is important as the state prepares to debate continuing expansion in 2019 Legislative session.
“Our entire goal is to give Montana stakeholders, especially the general public as well as policy makers, an understanding of whether this program is achieving its objectives or not,” Wernham said.
Brenda Solorzano, chief executive officer of the Headwaters Foundation, said it can be a challenge to get people to look at all facets of what expansion means for Montana, but the report pointing out the importance of revenue increases is a critical part of that.
“There isn’t any indication this is going to be cost-prohibitive to the state moving forward,” Solorzano said. “Even if it does require Montanans to put up some money at the state level, the outcome you’re having as a result of this investment makes total sense.”
The report also found after Medicaid expansion, Montana saw a substantial increase in low-income labor force participation, rising from 58 percent to 64 percent. Similar increases in labor for participation were not observed among higher-income Montanans or low-income residents in other states. The report says while those results do not prove expansion increased employment, they suggest it might.
That came as a surprise to Bryce Ward, the health care director and associate director of the Bureau of Business and Economic Research who helped produce the report.
Ward said while it can’t be proved Help-Link is the reason for the increase, it’s an improvement that happened when expansion passed and has not occurred in other income groups in Montana or other low-income populations around the country.
"When you make things easier for people to figure out how to do better, some share of them figure out how to do better," Ward said of providing employment help. "It's suggestive, but I wouldn't claim we've proven it. It's worthy of further exploration."
State Rep. Nancy Ballance, a Republican from Hamilton, on Tuesday called into question some elements of the report.
Ballance said she wants to see more information about what types of jobs the report says were created.
“When we talk about the number of jobs that were created, are they actually new jobs being created or are they jobs that were actually being done differently previously? I just don’t know,” Ballance said.
Ballance also pointed to higher-than-expected costs for the bill after double the original number of people expected enrolled.
“There are some I would count as financial victories, but overall it doesn't seem possible we are saving money on Medicaid expansion,” Ballance said. "I'm trying to dig into the report and see what the details actually show and trying to understand the full cost going forward. I know a citizens initiative is figuring they'll pay for it in a different way but it still ends up being costs to the taxpayers of Montana whether it's federal taxes or state taxes or proposed tobacco taxes (in the initiative). It still affects the people of Montana and we need to really look at it."