Research & Commentary: Montana Medicaid Expansion

Published January 22, 2013

As states begin implementing provisions of the federal health care law, many, such as Montana, are still debating whether to expand their Medicaid programs in order to receive a larger federal subsidy.

If Montana expands its Medicaid program to individuals at 100 to 138 percent of the federal poverty level, the federal government has agreed to a matching rate of 100 percent federal tax money for 2014–16, 95 percent in 2017, 94 percent in 2018, 93 percent in 2019, and 90 percent in 2020 and beyond in decreasing increments.

Proponents of expansion argue it would be unwise to reject the federal “free money” and expansion will provide insurance coverage for more Montanans.

Opponents note the state will actually inherit even larger costs with expansion and consumers will experience greater difficulty in accessing care. According to federal government statistics from 2010, more than 15 percent of Montana’s population already depends on the health care entitlement program, and the Kaiser Family Foundation has found expansion would increase enrollment by 54.5 percent by 2019.

In 2010 Montana spent roughly $199 million on Medicaid. According to the Bureau of Business and Economic Research of the University of Montana, expansion would cost Montana an additional $52 million just from 2014 to 2021 over and above federal matching money. That would happen because the federal matching rate applies only to newly eligible Medicaid enrollees. Montana residents who are already eligible but have not enrolled will be forced to do so because of the individual mandate in the federal health care law, and the state will have to bear the cost of those additional enrollees.

The Bureau of Business and Economic Research also found that over three years, expansion will increase ambulatory care to 360,000 visits per year and primary care office visits by more than 260,000 per year. As a result, consumers will experience longer waiting times or more physicians will refuse to treat Medicaid patients because of decreasing reimbursement rates, or both.

The impact on both costs and care indicates Montanans are better off rejecting the “free money” and finding alternative ways to expand health care coverage if desired.

The following documents offer additional information about Medicaid expansion.

Montana Medicaid Statistics
The federal government’s Medicaid site offers insight into Montana’s financial contributions to the health care entitlement program.

Increase in Enrollment and Spending—Montana
The Kaiser Family Foundation estimates what Montana will have to spend on expansion up to the year 2019, before larger decreases in the federal matching rate kick in. The report also highlights increased enrollment expected in the Medicaid program.

New Report Examines Montana Health Care and Medicaid Expansion
KBZK-7 in Bozeman, Montana examines how Medicaid expansion may affect the state. “The same studies say expansion would cost Montana about $52 million from 2014 and 2021. [Gregg] Davis [of the Bureau of Business and Economic Research] said that the revenue coming to Montana would be in part from tax dollars from the pockets of Montanans,” the article states.

Research & Commentary: States Should Avoid Medicaid Expansion
Kendall Antekeier of The Heartland Institute explains the Supreme Court ruling on Medicaid expansion. “States should think twice about giving up more control of their Medicaid programs only to further expand a system that is already fiscally unsustainable,” she writes.

Ten Principles of Health Care Policy
This pamphlet in The Heartland Institute’s Legislative Principles series describes the proper role of government in financing and delivering health care and provides reform suggestions to remedy current health care policy problems.

Medicaid: To Expand or Not To Expand
Nicole Kaeding of Americans for Prosperity argues states should avoid expanding their Medicaid programs because doing so would support the flawed and expensive federal health care law, place heavy financial burdens upon the state, and expand an already-broken system.

The End of Federalism: How Obamacare Will Impact States
This brief fact sheet from The Heritage Foundation outlines the consequences of expanding Medicaid programs to match federal requirements.

Mario Loyola: Challenging the Constitutionality of Obamacare’s Medicaid Expansion
In a podcast for Coffee & Markets, Mario Loyola describes why he and many other analysts consider the federal health care law’s Medicaid expansion to be unconstitutional.


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News at, The Heartland Institute’s website at, and PolicyBot, Heartland’s free online research database at

If you have any questions about this issue or the Heartland Web site, contact Heartland Institute Manager of External Relations Kendall Antekeier at [email protected] or 312/377-4000.