Medicaid expansion: Can Montana afford it, going forward?

HELENA- Expanded Medicaid will bring an estimated $2 billion of federal funds into Montana during its first 42 months, to pay medical costs for more than 85,000 low-income Montanans – but even some of its supporters say they’re not sure it should be renewed in 2019.

State Rep. Rob Cook, a Conrad Republican and lead co-sponsor of the 2015 bill authorizing the expansion, says he’s still waiting to see whether the avalanche of federal cash paying medical bills for the previously uninsured will affect the private health-insurance market.

“We need to see the cost of health insurance (in Montana) be reduced by this expansion, or, quite honestly, it’s not worth the continuation,” he told MTN News in a recent interview.

Opponents of the expansion also note the costs, and question whether Montana can afford its share of the huge new program, going forward.

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“I don’t think we can tax our way out of this,” says Rep. Greg Hertz, R-Polson, who voted against the 2015 expansion bill. “I mean, we’d have to raise taxes significantly to be able to keep up with this growth in Medicaid expansion, and our other budgetary pressures.”

Hertz estimates that Medicaid expansion will cost the state $200 million for the 2020-2021 budget period, at its current size – which is twice as big as initially predicted by the Bullock administration.

Comments like these have Gov. Steve Bullock’s administration and other Medicaid-expansion supporters already gearing up for a big legislative battle in 2019, when the Montana Legislature must decide whether to extend the program that it authorized in 2015.

“We had quite a team when it was first passed, and we’re going to have quite a team at the next (legislative) session to talk about the value of Medicaid expansion, not only to the 86,000 Montanans (covered by it) but to the Montana economy, to health-care providers,” says Sheila Hogan, director of the state Department of Public Health and Human Services. “It’s a solid, economic driver in Montana.”

Medicaid expansion, part of the Affordable Care Act (“Obamacare”), provides mostly free coverage to childless adults who earn up to 138 percent of the federal poverty level, or $16,600 per year for a single person.

But states can choose whether to have the coverage and pay their small share of the costs. So far, 31 states and the District of Columbia have accepted the expansion, including Montana, whose Legislature approved it in 2015.

The federal government paid 100 percent of the cost through 2016, but its share gradually decreases to 90 percent by 2020.

Cook, the lead sponsor of the Medicaid-expansion bill in the House in 2015, says a big benefit of the expansion has been a huge reduction in “charity care” at hospitals, which eat the cost of health care provided to those who can’t pay for it.

Bob Olsen, vice president of MHA, the main lobby for hospitals in the state, told MTN News that charity care and bad debt at hospitals dropped $133 million statewide in 2016, the first full year of Medicaid expansion – almost 35 percent.

“My expectation is that it will come in even lower in 2017,” he added.

Yet Cook says as hospitals and other providers get paid for the cost of care they once wrote off as uncollectible, they should be reducing the prices charged to other payers – and that those savings should show up in lower health-insurance premiums.

“At the very least, you should see premiums increase at a decreasing rate,” Cook says.

Olsen says hospitals, which have received at least 40 percent of the Medicaid-expansion expenditures so far, never promised that charges or insurance costs would be directly affected any time soon.

“We figured that if people became insured (with expanded Medicaid), they’d access care in a more appropriate setting, which is less expensive,” he says. “And they’d get care when they needed it, rather than deferring to when they got sicker. …

“We always cautioned lawmakers that it would take a while (for costs to level off).”

At Billings Clinic, the largest hospital in the state, revenue from Medicaid-covered patients has more than doubled since the expansion, from $28 million in fiscal 2015 to $58 million in fiscal 2017.

Yet because Medicaid reimbursement is below the cost of care, the hospital says its net income on those patients only went from negative $6 million a positive $2 million.

Connie Prewitt, chief financial officer for Billings Clinic, also notes that while the hospital’s annual charity care fell from $13 million to $6.5 million, the loss on charity care still cancels out the net gain from increased Medicaid revenue.

“Definitely, Medicaid (expansion) has added additional dollars that have not had to be covered by financial assistance,” she told MTN News in a recent interview. “But in total, we still have a loss on those two categories of patients.”

Medicaid expansion funds also are being spent all across the health-care spectrum in Montana, from prescription drugs to dental care to mental-health and substance-abuse treatment.

When asked whether it’s a good deal for Montana to keep paying its share of Medicaid expansion, health-care providers invariably say yes – and assert that if the money isn’t spent on basic care, costs from delayed care or lost work productivity would show up elsewhere.

“I think we end up paying for it otherwise,” says Michelle Nail-Noftsinger, a nurse practitioner at the Flathead Community Health Clinic in Kalispell. “People end up in higher-cost facilities like hospitals and emergency rooms. People end up disabled, not able to work, not be able to contribute to their family’s financial well-being.”

For policymakers, however, that argument may not cut the mustard.

“I have to see improvements in the cost of medical delivery,” says Cook. “I have to see a net gain, other than the soft description that we have a healthier population – because, who in the world knows what that really means?”

Still, those on the front lines of managing and providing health care insist the program is worth it – and will be lobbying against ending it or cutting it back.

“People who have it now, understand what it means to have health care,” says Anna Whiting Sorrell, director of operations, policy and planning for Tribal Health on the Flathead Indian Reservation, where more than 1,000 Native Americans have signed up for new Medicaid coverage. “I don’t know how you take it away, from someone who has had it maybe for the first time in their lives.

“I don’t know how, in a country that is this great, that you can say some people shouldn’t get health care.”

Watch more:

Part 1: Medicaid expansion: The big impact of a big part of Obamacare that’s still going strong

Part 2: Native Americans, low-income clinics are big beneficiaries of Medicaid expansion

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