Despite Medicaid Expansion Defeat, Montana Governor Includes It in 2020–21 Budget

Published January 11, 2019

A sunset provision for the state’s Medicaid expansion program is set for mid-2019. In late November 2018, Montana Gov. Steve Bullock released a biennial budget proposal for 2020–21 calling for the continuation of the Montana Health and Economic Livelihood Partnerships Act, which expanded Medicaid in the state in January 2016.

The expansion extended Medicaid eligibility to those earning less than 138 percent of the Federal Poverty Level, which amounts to $16,643 for a single person and $33,948 for a family of four. Ballot initiative 185 would have preserved the program via tax hikes on tobacco and related products, including an additional $2 per pack tax on cigarettes, a tax on other tobacco products, and a tax on e-cigarettes, which have thus far only been subjected to regular sales taxes in Montana.

The proposal was defeated in the November midterms.

Learning from Others’ Mistakes

David Herbst, Montana state director of Americans for Prosperity, spent the months leading up to the November midterms warning voters of the problems with Medicaid expansion and pointing out the deleterious effects the program has had on other states’ budgets.

“Medicaid expansion would be a huge drain on the state’s treasury,” Herbst said. “It simply costs too much. It would ultimately cost Montana nearly $60 million a year, much of that coming from [the state’s] taxpayers, since the federal share of the costs will drop to 90 percent by 2020. Proponents of expansion like to tout how many people are covered under the program, but we have research showing a large number of the adults in the expansion program are working-age adults, and over half have no dependents. Able-bodied adults are crowding out the truly needy the program is supposed to cover.”

“Additionally, we have examples from other states that have borne the costs of Medicaid,” Herbst said. “New Mexico expanded the program in 2013 and wound up with a $417 million Medicaid shortfall. By mid-2019, nearly half the state’s population is expected to be covered, and that makes Medicaid the second-largest item in the state’s general fund, leaving lawmakers with little option but to raise taxes to pay for it. Montana shouldn’t repeat the mistakes of her neighbors.”

‘The Opposite of Free’

Matthew Glans, a senior policy analyst for The Heartland Institute, which publishes Health Care News, says Montana should not make the mistake many other states are making by assuming federal Medicaid funding that comes with expanding the program is “free” money.

“Expanding Medicaid always leads to a dramatically increased costs and new restrictions,” Glans said. “A report from the U.S. Department of Health and Human Services found the average cost of a Medicaid expansion enrollee was almost 50 percent higher in fiscal year 2015 than what HHS had previously projected.”

“Medicaid expansion is the opposite of free,” Glans said. “It’s costly, burdensome, and takes resources away from those who need it in favor of those who can and should be embracing the new health care alternatives offered to them through short-term and association health plans.”

Expansion Politics

Herbst said the move to include Medicaid expansion in the budget is little more than a political ploy the governor has attempted in the past only to be defeated by the state’s Republican majority legislature—and now directly by the state’s voters.

“The midterm results voting the expansion down should really be seen as a referendum on Medicaid expansion in the State of Montana,” Herbst said. “The legislature may take up the issue again if it can strike a deal between moderate Republicans and Democrats and if expansion continues to contain a sunset clause, as it has in the past. But whatever gets passed will not be what the governor is proposing.”