New report touts Medicaid expansion’s economic boost as legislative debate set to begin

For the last year or so, groups and agencies that support Medicaid expansion and want to see it continue in its current form have been laying the groundwork through arguments like the report released Monday. Other studies have looked at the benefits of Medicaid expansion to rural hospitals, the performance of the attached voluntary workforce program and the number of businesses that have employees covered under expansion.

The report also projects if expansion continues, it will support 6,000 jobs and $350 million in personal income in 2020.

The report uses an economic model to represent the state’s economy with and without Medicaid expansion, using numbers from the state Department of Public Health and Human Services and standard economic models. It also estimates the effects of expansion on the health care sector, using an analysis to compare what happened in states that expanded Medicaid versus states that didn’t.

Montana Gov. Steve Bullock and fellow Democrats in the Legislature want to see expansion continue in its current form, and Rep. Mary Caferro, D-Helena, has introduced a bill to lift the program’s expiration date of this summer.

Republicans have said they don’t want to see nearly one in 10 Montanans lose their health insurance coverage but want some form of a work requirement for those covered, potentially along with asset and means testing and possibly drug testing. Rep. Ed Buttrey, R-Great Falls, is drafting a bill to continue the program, though a draft is not yet available. Democrats counter that approach will kick people off coverage.

The Legislature first passed Medicaid expansion in 2015 and built in a sunset of summer 2019, meant to give lawmakers a chance to review the program this session and decide its future. Expansion covers people who make up to 138 percent of the federal poverty level, or $15,418 a year for an individual or $26,347 for a family of three.

An effort to continue expansion and pay for the state’s share by increasing the tax on tobacco products failed on the ballot last November. Some Republicans say that November vote was a message from Montanans about what to do with the program, while Democrats point out tobacco companies spent more to defeat it than than any previous ballot measure in Montana history.

During the first two and a half years of expansion, those covered have received nearly $1.4 billion in health care, according to the report. The federal government pays for that at a higher share, about 90 percent, than those covered under traditional Medicare, where the feds pick up about 65 percent of the cost of care. The report says about 85 percent of Medicaid spending represents new money in Montana that would not be here otherwise.

Medicaid expansion spending comes into the state’s economy in two ways — through new health care spending and by replacing existing spending that would be paid for by the state, employers or the people covered.

The report also found the state has saved $50 million during the first two and a half years of expansion by switching people from traditional Medicaid to expansion because of the higher match. The state also saved $3 million a year by covering inmates under expansion and another $3 million in reduced spending on mental health and substance use disorder treatment.

The report emphasizes that much of the money that pays for expansion comes from outside of the state, saying the program’s effect is “similar to a new factor or a new government contract” and that the money “ripples through the state’s economy creating jobs and income.”