Repealing the Medicaid Expansion: Implications for Montana

By Deborah Bachrach, Partner | Patricia Boozang, Senior Managing Director | Anne Karl, Partner | Kier Wallis, Senior Manager

Editor’s Note: Congress is currently debating whether and how to repeal and replace the Affordable Care Act (ACA). In a new report for the Montana Healthcare Foundation, summarized below, Manatt Health analyzes the potential impact on the State of Montana of a possible repeal of one key portion of the Affordable Care Act (ACA)—the Medicaid expansion and the enhanced federal match to cover that expanded care. The report contemplates the ramifications of repealing Medicaid expansion on access to coverage and care, the state budget and the broader economy.

Click here to download the full report.

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Federal decisions regarding Medicaid expansion would affect access to healthcare for more than 71,000 Montanans covered under Montana’s bipartisan Health and Economic Livelihood Partnership (HELP) Act. In Montana and the 30 other states that expanded Medicaid, more than 11 million people have gained coverage since 2014. All are at risk of losing that coverage should Congress decide to repeal the ACA’s Medicaid expansion.

Medicaid Expansion in Montana

In January 2016, Montana extended Medicaid coverage to adults with incomes up to 138% of the Federal Poverty Level through the bipartisan HELP Act. The State implemented its expansion through a Section 1115 Demonstration waiver, designed to tailor the features of expansion to the HELP Act’s policy objectives, including:

• Increasing the availability of high-quality healthcare to Montanans;
• Providing greater value for the tax dollars spent on the Montana Medicaid program;
• Reducing healthcare costs;
• Providing incentives that encourage Montanans to take greater responsibility for their personal health;
• Boosting Montana’s economy; and
• Reducing the costs of uncompensated care and the resulting shift to patients with health insurance.

Impact on Access to Care

Medicaid expansion has increased access to care for many Montanans, enabling them to stay healthy, regain health, or manage their chronic conditions. During the first year of coverage, new enrollees gained improved access to healthcare and other critical services, through:

• Preventive services. In the first full year of the HELP program, more than 33,600 newly-eligible adults accessed preventive services, such as dental preventive services (the most commonly utilized), cholesterol screenings and diabetes screenings.
• Treatment of substance use disorders (SUDs). Medicaid expansion provided Montana with a powerful tool for combating the twin challenges of alcohol and drug abuse. Expanded coverage has allowed the State to begin taking on long-standing challenges in the State’s SUD system that have historically impeded SUD service and quality, such as a reliance on inpatient and residential treatment settings and capacity limitations.
• Inpatient and outpatient care. Comparing the 12-month period ending in September 2015 (prior to expansion) to the 12-month period ending in September 2016 (the first nine months of expansion), inpatient utilization increased by 2.99%, hospital outpatient visits increased by 5.99% and emergency department utilization increased by 2.53%.

In addition, in the first three quarters of 2016, bad debt and charity care declined by approximately 25% as compared to the first three quarters of 2015 before expansion took effect.

State Budget Impact

Medicaid expansion has had a significant positive impact on Montana’s State budget, bringing in nearly $284 million in federal funding in 2016 for coverage of the newly-eligible adults. The ACA provides for enhanced federal funding for the Medicaid expansion, paying 100% of the costs of coverage in 2016 and phasing down to 90% in 2020 and beyond. Even with Montana bearing a portion of the cost of expansion in 2017, the savings to the State budget to date have outweighed the costs of expansion. The State realized over $22 million in savings by accessing enhanced federal matching funds in state fiscal year 2017 and additional savings from replacing general funds with Medicaid funds for inpatient care of inmates and SUD and mental health services.

Community and Economic Impact

In addition to the positive fiscal impact on the State budget and enhanced access to healthcare services, Medicaid expansion has contributed to growth in the healthcare industry and the overall economy in Montana. Because of expansion, Montana received over $284 million in federal dollars to cover healthcare services for the newly eligible population in 2016 alone. Those federal dollars are circulating throughout the Montana economy, not only benefiting patients and providers, but also creating jobs, increasing labor income, and spurring economic activity. According to the Economic Policy Institute, Montana could lose over 10,000 jobs if Medicaid expansion were eliminated.

Conclusion

The consequences of a potential repeal of Medicaid expansion would be far-reaching in Montana. Medicaid expansion will save the state over $22 million in state fiscal year 2017, and free up millions of additional dollars in state and federal funding for SUD and mental health services. In addition to the State budget ramifications, hospitals and health systems across Montana would see reimbursements decline and uncompensated care costs increase. Finally, thousands of Montanans could lose access to affordable, preventive medical care.