MTPR

Montana Medicaid Expansion Pays For Itself, UM Economist Says

Mar 8, 2018

The hundreds of millions of federal tax dollars that Medicaid expansion is bringing to Montana have added thousands of jobs here and significantly boosted the state’s economy. It’s enough of a boost to pay for Montana’s share of the jointly-funded health program.

That’s according to a new report by Economist Bryce Ward with the UM’s Bureau of Business and Economic Research. He summarized it for a legislative oversight committee Thursday.

"When you have that much new money circulating in our economy, you get a bunch of economic activity. We estimate that it is roughly 5,000 jobs and roughly $280 million in personal income each year.”

Montana’s Medicaid expansion program, launched in 2016, ends next year unless state lawmakers vote to continue it.

So the costs and benefits of the social welfare program will be front and center in the 2019 legislative session. It’s likely that Republicans will continue to hold a majority in the legislative branch, and that party has been a tough sell on expanding Medicaid. 

The new economic analysis finds that even though Montana’s share of the cost of Medicaid expansion will rise to 10 percent, with the federal government picking up the rest, the program pays for itself.

"I do think that this story that isn’t just a Montana story. This is a story that is possibility a Montana success that other states should be replicating, if it turns out to be real."

A snapshot of the BBER findings on the costs of Medicaid expansion in Montana.

Economist Ward said that, although his is just an initial report with less than an ideal sample size, the data show a positive trend in the expansion’s impact on the state’s workforce.

Since the rollout of Montana’s Medicaid expansion, the people eligible for the program have seen a 6 percent increase in labor force participation.

Montana’s Medicaid expansion bill was crafted to include incentives for recipients to get help finding work from the state Department of Labor. At the time, the federal government would not allow states to require that recipients find work in order to get Medicaid.

The incentives in Montana’s expansion bill,  called HELP-link, won over more conservative members of the state legislature, who passed it as a "hand up, not a hand out."

And Bryce Ward says that appears to be happening.

"We’ve got this pattern. Employment and labor force participation amongst this exact group of people who are eligible for Medicaid expansion and Help-link, goes up. We don’t see this in same populations in other states. It also doesn’t appear to be something that is driving increases in employment in the labor force participation among higher income people. And it starts in 2016. So, it does appear that something happened to employment and labor force participation amongst the Medicaid eligible in Montana, at the time that this started."

Great Falls Republican Senator Ed Buttrey co-wrote Montana’s Medicaid 2015 expansion bill, and worked hard to win his party’s support.

He says the Trump White House will encourage Republicans in Montana to change aspects of the state’s Medicaid program, which could include stiffer workforce participation requirements.

However Buttrey was happy with the progress report released Thursday.

"I like the fact that a lot of our assumptions have been confirmed, that we were going to have an effect on  unemployment of this population, that we were going to have good effects on health. And if we can look at that and see that we are actually paying for the program where it is a net positive for the state -- which we saw today -- then that is really important."

In roughly 10 months, lawmakers reconvene in Helena to determine the future of the Medicaid expansion that gives more 90,000 people in the state health coverage.

The Montana Legislature's Medicaid oversight committee hears a report showing that Medicaid expansion has brought thousands of jobs and millions of dollars to the state, March 8, 2018.
Credit Corin Cates-Carney

Democratic Governor Steve Bullock’s administration is expected to make a hard push to continue the program leading up to 2019.

Bullock’s appointed leader of the state health department, Sheila Hogan read a brief statement to the oversight committee, Thursday.

"The reauthorization of HELP is certainly my top priority and the top priority of the department," Hogan said. "I’m very optimistic that it will happen."

University of Montana economists added Thursday that other national research shows that Medicaid expansion reduces crime by more than 3 percent in areas where it has passed, and that it reduces medical debts and improves credit scores for low-income borrows.

The University of Montana research provided to the Medicaid oversight committee was funded by the Headwaters Health Foundation of Western Montana, and the Montana Healthcare Foundation, which supports health care reporting on Montana Public Radio.