Montana Bill Would Cut Medicaid Expansion Enrollment in Half, Cost Nearly the Same as Full Extension

A restrictive Montana proposal would take coverage away from about 50,000 people, a new fiscal analysis from the state Office of Budget and Program Planning finds, or about half of those enrolled through the state’s Medicaid expansion. And it would cost the state nearly as much as a bill to extend the current expansion, which would provide coverage to nearly 100,000 Montanans.

The restrictive proposal, sponsored by Rep. Ed Buttrey, would take coverage away from people who don’t meet a work requirement, increase premiums on low-income adults, and make eligibility contingent on completing unnecessary paperwork. It would cost the state almost the same amount as simply extending the Medicaid expansion because the federal government largely funds the expansion, and the harmful eligibility restrictions that the bill proposes carry large administrative costs. While the state gets more than 90 percent federal funding for Medicaid expansion enrollees’ benefits, it only gets 50 percent federal funding for more administrative costs, which will substantially increase the state’s share of costs overall.

The Montana budget office relied on George Washington University researchers’ analysis of the bill, which found that up to 50,000 people would lose coverage because they are unable to meet the work requirements, pay their premiums, or navigate the unnecessary red tape associated with the proposal’s reporting requirements, when many of them are likely already working or eligible for an exemption.

The fiscal analysis also shows that the Buttrey bill would cost the state almost as much as the bill that would extend the current Medicaid expansion, which would cover 50,000 more people. That’s in part because of the administrative costs of implementing the work requirement, increasing premiums, and adding other restrictions to the program. The costly and difficult administrative tasks these policies would require include: modifying eligibility systems, creating new systems for beneficiaries to document compliance, evaluating this large volume of documentation each month, informing beneficiaries of the new rules, training and/or hiring additional caseworkers to make determinations about exemptions and other new rules, and hiring additional staff to address appeals of coverage denials. These and other new tasks would cost millions more per year, the state’s analysis finds, and would require hiring 84 new full-time employees. This finding is similar to other states’, which have estimated that implementing restrictive Medicaid waivers will add tens to hundreds of millions of dollars in unnecessary administrative costs.

In contrast, Montana’s successful workforce promotion program, HELP-Link, cost just $888,500 in 2019. Rather than spending administrative resources to add complexity and reduce coverage — purportedly to increase employment among Medicaid beneficiaries — Montana could instead invest more in HELP-Link to allow the program to reach more people and expand work support services.