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Montana Set to Continue Medicaid Expansion, But With Changes That Will Likely End Coverage for Many

Montana’s state legislature has adopted legislation that would extend the state’s Medicaid expansion until 2025 but also impose new work-related restrictions and higher premiums on expansion enrollees — policies that will likely take Medicaid coverage away from thousands of Montanans, including some who are working or should qualify for exemptions. Montana enacted the Medicaid expansion under the Affordable Care Act in 2015, providing access to coverage for nearly 100,000 Montanans. However, legislators included a termination date that sunsets the current program on June 30, 2019. Leaders of the nearly two-thirds majority Republican legislature had threatened to let the expansion expire if the legislation to extend it did not also include a work requirement. The actions this past week will ensure that Medicaid expansion will continue in Montana, but thousands are likely to lose coverage as a result of new requirements. The legislation will:

  • Take coverage away from people who don’t meet a work requirement. The bill requires Medicaid expansion enrollees to work or participate in job-related activities for 80 hours per month or have their coverage suspended until they meet other requirements. Those who don’t report compliance with the requirement or eligibility for an exemption will be locked out of coverage for six months, unless they then meet the requirement for 30 days or are found eligible for an exemption.
  • Substantially increase premiums. Montana already charges premiums equal to 2 percent of income for many adults above 50 percent of the federal poverty level ($6,370 per year for a single person). The bill would increase premiums for individuals who aren’t eligible for exemptions from the work requirement and have been enrolled in the Medicaid expansion for more than two years, up to a maximum of 4 percent of income — the highest in the country for beneficiaries below the poverty line and nearly twice the share of income that near-poor adults pay for Affordable Care Act marketplace coverage. While only people above the poverty level will lose coverage if they don’t pay their premiums, others can have their annual income tax assessed for the unpaid amount.
  • Create red tape that will result in eligible people experiencing delayed coverage or not enrolling at all. The bill instructs state officials to create a process that would require expansion applicants to verify that they are state residents. Many people with low incomes have difficulty verifying residency, especially vulnerable groups including those who are homeless. The legislation also stops individuals from getting Medicaid coverage temporarily while the state determines whether they satisfy all eligibility factors despite federal law requiring that some individuals gain access to Medicaid temporarily while they collect evidence that they meet certain eligibility factors, such as a newborn awaiting issuance of a birth certificate that proves his or her citizenship.

The legislation significantly improves on a previous proposal by providing broader exemptions from work requirements and making it less difficult for people who lose coverage to eventually regain it. But it will still cause many Montanans to lose coverage.

The state estimates that it can use administrative data matching to identify and exempt most people eligible for an exemption from the new work-related reporting requirement. Thousands of people will still be required, however, to report their working hours or eligibility for an exemption and will risk losing coverage if they don’t meet the requirement or can’t navigate the reporting requirement. In Arkansas, the first state with a Medicaid work requirement, almost 1 in 4 of those subject to the requirement have lost coverage despite the state’s efforts to exempt administratively most of the people subject to it who could qualify for an exemption.

People with disabilities, caregivers, and American Indians are at particular risk because they will likely face special challenges complying with the new paperwork and reporting requirements. Perversely, some low-wage workers are also at risk, since they often have fluctuating work hours and spells between jobs that make it difficult or impossible to meet a work requirement.

The state estimates that about 4,000 people will lose coverage as a result of the bill’s work requirement. That figure appears optimistic in several respects. It assumes that the state will always exempt as many people as possible using data matching, without requiring documentation from enrollees. It’s also based on an estimate that roughly 88,000 people (out of about 96,000 expansion enrollees) either are meeting or will be exempt from the work requirement, and that half of the remaining 8,000 will fail to report their hours or eligibility. That’s considerably different, however, from the actual experience in Arkansas, where the vast majority of those required to report did not do so, for various reasons. Finally, Montana’s estimate doesn’t take into account additional coverage losses resulting from the increased premiums or the new eligibility verification requirements.

The bill includes a trigger intended to prevent even larger coverage losses, which will be pulled if more than 4,800 people lose coverage. Even then, however, it would halt coverage losses only if an audit finds that at least 10 percent of those losing coverage should have remained eligible. Such an audit would likely miss many wrongful terminations, since people who couldn’t document their work hours or work-limiting disabilities in the first place generally wouldn’t find it any easier to do so for an audit months later.

The new work requirement policy contrasts sharply with Montana’s promising workforce promotion program, HELP-Link, which currently provides the state’s Medicaid expansion beneficiaries with employment and training services. Since its start in 2016, some 25,000 expansion enrollees have enrolled in workforce training through Montana’s Department of Labor and Industry, and 70 percent have found jobs within a year, according to the state. The pending legislation, which the governor is expected to sign, increases funding for HELP-Link, creating a new grant program for employers that hire or train Medicaid beneficiaries. Unfortunately, implementing the legislation’s coverage restrictions will entail significant administrative costs and will consume resources the state could have used instead to further expand job training and workforce services.

The legislation will likely face similar legal challenges to those that the work requirements in Kentucky and Arkansas have encountered. A federal district court judge has blocked work requirement policies similar to the new requirement in Montana from taking effect or remaining in effect in those states.