Underwhelming results from Montana Medicaid expansion

In November, Montana’s voters rejected renewal of the Medicaid-expansion welfare program (hereinafter “MedEx”), consigning its fate to the Legislature in the 2019 session. Even though the subject may sound boring, taxpayers should pay close attention these next few months, since big money is at stake and the program dis-incentivizes work and self-sufficiency.


Medicaid itself (hereinafter “Medicaid Classic”) is a medical insurance program that’s existed since 1965. It’s part of our “social safety net,” with eligibility limited to children in low-income families (and the parents, in some cases), pregnant women, the disabled, and some of the elderly.


At Governor Bullock’s urging and amidst substantial opposition, the 2015 legislature passed MedEx. Starting January 1, 2016, this extended Medicaid eligibility in Montana to working-age, able-bodied, childless adults who earn less than 138 percent of the federal poverty level, or about $16,750 per year for a single person.

All states participate in Medicaid Classic, while 36 states offer versions of MedEx, as enabled by the 2010 Affordable Care Act [“Obamacare”]. For both Medicaid Classic and MedEx, the federal government shares the burden with the states. (MedEx and Medicaid Classic are distinct from Medicare, the federal health-insurance program primarily for people older than 65.)


So now that Montana’s MedEx has been in force for three full years, how’s it working? Well, those who favored this expansion projected that about 45,000 would enroll. But by July 2018 there were — expensively — more than 96,000 participants.


Has the health of recipients improved? We’re unaware of any research concerning this essential question. However, a group of scientists headed by faculty at Harvard and MIT examined the results of a 2008 precursor to MedEx in Oregon and reported in 2013 that their “randomized, controlled study showed that Medicaid coverage generated no significant improvements in measured physical health outcomes in the first two years, but it did increase use of health care services, raise rates of diabetes detection and management, lower rates of depression, and reduce financial strain.” Notably, they didn’t find a reduction in frequency of emergency-room visits by those newly-enrolled in Oregon’s Medicaid Classic. There’s no apparent reason to expect different outcomes for Montana’s MedEx experience.

What about burdens on taxpayers? Currently, MedEx costs about $900 million per year, i.e. an average of about $9,300 per year for each participant. If our legislature renews MedEx, by 2020 Montana taxpayers will be directly paying 10% of its cost, roughly $90 million per year, with the other 90% covered by “federal” money.

Of course, “federal” money also comes from taxpayers. Since Montana “imports” approximately two “federal” dollars for every dollar it sends to Washington, DC, the full tab to Montana taxpayers for MedEx in 2020 will be above $500 million, or $1,100 per household if spread evenly across Montana households.

Are we getting our money’s worth with MedEx and Medicaid Classic? In addition to the — best — marginal health improvements seen in Oregon’s experience, other signs aren’t good. There are the matters of fraud by enrollees and abuse by service providers. Montana’s auditors found 20 discrepancies in the enrollments of 100 randomly chosen beneficiaries, concluding that the programs are vulnerable to fraud, especially under-reporting of income by applicants. And federal auditors say over-payments to providers run 10 percent nationwide.

Caseworkers in Montana’s Office of Public Assistance have told us of their frustration over welfare benefits going to individuals who are gaming the system. One caseworker, testifying before the legislature in 2015, even said, “I have co-workers that have literally cried over applications they’ve had to authorize for individuals who did not need the benefit.”

Montana’s MedEx program requires that beneficiaries pay monthly premiums, but those cover only 1 percent of program costs, leaving participants with little “skin in the game.” The program was sold to the Legislature on grounds that it would lead people to work, but the results have been underwhelming. MedEx isn’t reducing “the dependence of Montanans on public assistance programs,” an aspiration of the enabling legislation.


Could taxpayers be doing something better with $900 million per year? Or should the Legislature, unlike the voters, renew MedEx? If so, changes are necessary, including work requirements, an asset test and stricter income verification. Let’s restore work as the path to independence and self-respect.

By: Representative Tom Burnett & Paul Nachman