Medicaid Expansion
1:53 pm
Wed February 5, 2014

Just how much would Medicaid expansion cost the state anyway?

Hear the radio version of this story from "Montana Evening Edition"

Analysis of a new ballot measure seeking to expand Medicaid shows expansion would not cost Montana as much as previously forecast, but the state budget would still take a long-term hit from the so-called “Healthy Montana Initiative.”

The plan ran into a setback last month after Attorney General Tim Fox noted legal problems with its effective date, saying it would have illegally spent state money before the 2015 Legislature had a chance to approve that expense. Backers quickly filed another version with an effective date after the legislative session. A fiscal note from the Governor’s Office of Budget and Program Planning shows a slightly improved financial outlook with the new initiative:

Items in parenthesis indicate a negative fiscal impact.
Credit Governor's Office of Budget and Program Planning

Medicaid expansion’s total cost to the state’s general fund in the first four years would now be $2.17 million dollars, about $230,000 less than the previous version of the initiative. That relatively low state cost is just in the short term, however.

Supporters of Medicaid Expansion tout the federal government will be paying for the total cost of expansion for the first three years.  That’s true, but that clock already started ticking at the beginning of this year. If the Healthy Montana Initiative is enacted, the state would miss half of that higher federal funding period. Montana would end up paying 10 percent of the cost of expansion, or what’s expected to be more than $23 million dollars annually, by 2020.

State Sen. Fred Thomas (R-Stevensville) voted against expansion in 2013 and he is still skeptical of the proposal without serious reforms in the way the state operates Medicaid. He looks at the cost of expansion and says the public also wants to adequately fund other programs like K-12 education and the university system.

“And they want roads and cops taking care of things as well,” Thomas said. “This expansion of Obamacare cuts into all those things because it will grow and the costs will grow and grow.”

The Affordable Care Act says states will not pay any more than 10-percent of the cost of expansion. Opponents argue the federal government could change that in the future. Sen. Thomas points out the state pays more than 30-percent for current Medicaid enrollees.

Governor Steve Bullock’s Budget Director Dan Villa says the $20-some million paid annually by the state will unleash more than $800 million in federal money a year to provide health insurance for more than 80,000 low-income Montanans. The state would have new funding for treating mental illness, chemical dependency, and prison inmates. Providing insurance for this new population could result in fewer unpaid emergency room visits in the future, visits which are currently paid for by hospitals and ultimately, health insurance rate payers. Villa also says the Healthy Montana Initiative contains within it a provision preventing future cost hikes for the state government.

“If the federal government ever changes the match rates, than the state automatically opts out,” Villa said.

That stipulation still does not convince Sen. Thomas.

“Once you trigger this and you’re into this program, it’s my opinion that one way or another, you’re into it,” Thomas said. “You don’t take benefits back, that’s just a reality in life.”

Supporters of the Healthy Montana Initiative will begin gathering signatures within a few weeks if the Attorney General’s office finds the proposal legally sufficient. More than 24,000 Montanans will have to sign the plan in order to place it on the November ballot.