From Promise to Peril: How Medicaid Expansion Is Breaking Montana
Key Findings
- Medicaid expansion opened the floodgates: In 2016, Montana expanded Medicaid to a new class of able-bodied adults, despite warnings. Instead of protecting Montana’s budget, the state doubled down by reauthorizing the disastrous program in 2019.
- Expansion enrollment run wild: Enrollment spiraled out of control, with able-bodied adults now making up nearly 41 percent of all Medicaid enrollees in 2023—far exceeding projections and pushing the system beyond its limits.
- Out-of-control spending: As enrollment surged, so did the costs. Medicaid expansion has drained Montana’s resources, squeezing out essential programs like education, infrastructure, and public safety.
- A broken promise to hospitals: Expansion advocates claimed it would save Montana hospitals, but it did the opposite. Hospitals have been left worse off, with lower reimbursements and a shift away from private insurance, forcing them to bear the brunt of expansion’s failures.
- Better solutions exist: Montanans have real health care options—without the devastating costs of Medicaid expansion. Dozens of rural and community-based clinics already provide care to underserved populations, proving that Medicaid expansion is not the only answer.
Medicaid expansion opened the floodgates
In 2014, states were given the option to expand their Medicaid programs to an entirely new class of able-bodied adults through the Affordable Care Act—more commonly known as ObamaCare.1 As a result, roughly two dozen states immediately opted into the program while the rest of the country remained more cautious.2 Unfortunately, this caution was short-lived in Montana, as the state ultimately took the bait and expanded in 2016.3
However, lawmakers were still not entirely sold on the proposal. Montana’s initial expansion was only approved for a three-year period and was operating on a trial basis.4 As the expansion deadline loomed, voters rejected an initiative that would have made Medicaid expansion permanent in the state.5 In 2019—despite voters’ clear rejection of the program—then-Governor Steve Bullock reauthorized expansion for another six years.6
As that six-year reauthorization is ending, Medicaid expansion’s impact on the state has been disastrous. Enrollment has shattered projections, spending has soared to new heights, and other state priorities have fallen to the wayside.7 But while the damage done is catastrophic, it need not become permanent.
Expansion enrollment ran wild
During the debate following Montana’s initial expansion proposal, ObamaCare proponents claimed enrollment would be slow and controlled—estimating that only 25,000 able-bodied adults would enroll during the first year after expansion was implemented.8
Unsurprisingly, these estimates were inaccurate and greatly missed the mark—just as they have in every expansion state.9
After just 12 months, expansion enrollment had already reached 59,000 able-bodied adults—an enrollment overrun 136 percent higher than initial projections.10 Even worse, just one year into the expansion experiment, the state had already surpassed the “maximum enrollment” estimates from the so-called experts.11
As time passed and able-bodied adults continued to enroll in the program in droves, state taxpayers have been left with more questions than answers. By 2023—five years after voters rejected a proposal to make expansion permanent—there were more than 125,000 able-bodied adults enrolled in the Montana Medicaid program, shattering projections along the way.12
These able-bodied adults made up 41 percent of all Medicaid enrollees in 2023—more than four out of every 10 enrollees—more than low-income children and other truly needy adults. Even more shocking, able-bodied adults enrolled through expansion represented 11 percent of the entire population of Montana.
Sadly, while these figures are staggering, this trend exists around the country. Nationwide, expansion states have enrolled more than four times the number of able-bodied adults they ever thought possible.15 Meanwhile, seven years into the experiment, expansion enrollment in Montana was roughly 112 percent higher than the “maximum” projections—which has led to taxpayers holding the bag for unprecedented levels of spending.16
Out-of-control spending
As tens of thousands of able-bodied adults flooded the state Medicaid program, spending surged. Montana originally estimated that expansion would cost $1 billion in the first four years, with projections ending in 2019.17 Actual spending during this period was nearly $2.3 billion—more than double original estimates.18 By using the state’s methodology, the Foundation for Government Accountability estimates that projected expansion spending would have been roughly $430 million in 2023.19 However, as enrollment ballooned beyond projections, actual spending was much higher.
In 2023 alone, actual Medicaid expansion spending in Montana surpassed $1 billion—more than doubling estimates.20 Meanwhile, the state’s proposed Medicaid budget for 2023 was $2.4 billion—expansion spending would have consumed roughly 42 percent of this budget.21 This level of spending is not only unsustainable, but it crowds out other budgetary priorities in the process.
In 2000, Medicaid spending represented only 15.9 percent of all budgetary spending in Montana.22 And by 2015—the year before expansion went live—Medicaid’s share of the budget had grown less than two percent.23 But in the years that followed expansion’s implementation, Medicaid’s share of the budget skyrocketed. In 2023—seven years later—Medicaid’s share of the budget had grown to 22.8 percent—an increase of nearly 44 percent and accounting for nearly one in every four dollars spent.24
Meanwhile, spending on education has been steadily decreasing. Since expansion took effect, spending on both elementary and secondary education and higher education as a percentage of total state spending has decreased by 14 percent.25-26 Additionally, this has been accompanied by a dramatic decline in test scores, as student achievement in Montana has taken a major hit.27 In 2022 alone, 71 percent of eighth grade students scored below proficient in both reading and math tests—that is, seven out of 10 students failed to meet proficiency standards statewide.28
As Medicaid continues to consume more of the state budget, education spending has not been the only casualty accompanying this growth. State funding of vitally important transportation infrastructure has also suffered a blow. Since 2015, transportation’s share of total expenditures has decreased by nearly eight percent.29-30 Even worse, expansion has jeopardized taxpayer safety as some jurisdictions lack the capacity to fully fund public safety. For instance, the city of Belgrade was forced to cut services for the local police department.31 In Great Falls, public safety funding has been stretched so thin that the city has proposed redirecting funds from the public library.32
Montanans deserve better than declining educational standards and failing infrastructure, but it has become increasingly obvious that funding Medicaid expansion is the top priority for state officials—even at the expense of taxpayers.
A broken promise to hospitals
Expansion advocates often rely on broken promises to push their ObamaCare agenda. A common myth perpetuated by proponents is that expansion can help states address the problem of uninsured residents and burden of uncompensated care costs on hospitals.33 However, these results have failed to materialize in Montana. Prior to expansion’s implementation, the uninsured rate in Montana was already on the decline.34 In fact, the uninsured rate experienced sharper declines in the three years before expansion than the three years following.35 But by 2022, the uninsured rate in the state once again began to climb.36
After the implementation of expansion, Medicaid enrollment surged dramatically. But rather than filling the program with uninsured Montanans, expansion instead shifted people from private insurance onto welfare—leaving taxpayers with the bill.37 Medicaid reimburses providers at a much lower rate than private insurance and in many cases below the cost of care itself.38 As more able-bodied adults began to enroll, Montana hospitals saw their reimbursements free-fall as profit margins shrank by 40 percent after the first full year of expansion.39 The head of the Montana Hospital Association cited “cost shifting” as the primary driver of these losses.40
The Montana Hospital Association’s data confirms this, showing that there were massive shifts in the payer mix from private insurance to Medicaid.41 During expansion’s first full year, Medicaid’s share of total patient charges grew by 20 percent, while total “self-pay” patient charges were decimated by nearly 30 percent.42
Better solutions exist
Proponents of expansion have long touted expansion as the most effective way to tackle a state’s uninsured problem—implying that able-bodied adults have limited to no other health care options. Thankfully, there are several health care options available throughout Montana—none of which come with the devastating side effects of Medicaid expansion.
For example, there are 14 Federally Qualified Health Centers (FQHC) spread across the state, with more than 50 service delivery sites.43 These community-based clinics provide a host of services—such as primary care, dental care, mental health services, and substance abuse treatment—to areas that are traditionally underserved.44 These clinics are federally funded and provide low-cost care to state residents—regardless of their ability to pay.45 In 2022 alone, more than 117,000 Montanans received care from community health centers like these.46
Additionally, Montana’s rural health access program was designed to increase access to health care in the state’s rural and frontier communities.47 This program exists to help hospitals, clinics, and other health care providers in these communities remain financially viable and improve access to residents.48 This program supports roughly 63 rural health clinics (RHCs) in areas where health care access is limited, 49 critical access hospitals (CAHs) that are strategically located statewide, and even telemedicine programs.49-50
Montanans also utilize the services provided by the Indian Health Service (IHS)—an agency within the U.S. Department of Human Services that provides federal health services to American Indians and Alaska Native people.51 There are 12 IHS facilities located statewide that provide low-to-no-cost care for those that qualify.52 In Billings alone, IHS provides services to more than 70,000 individuals around the area.53
Lastly, there were at least 30,000 open jobs statewide in July 2024.54 However, there are more open jobs than Montanans looking for work—with nearly two open jobs per jobseeker.55 Many of these jobs would provide employees with the opportunity to gain health insurance, and as the nationwide economy continues to lag, the need for able-bodied adults to return to the workforce is paramount.
The Bottom Line: Montana lawmakers must take decisive action and end Medicaid expansion.
After nearly a decade of runaway costs, broken promises, and destructive impacts on the state’s budget and hospitals, it’s clear this failed program is doing more harm than good. Montana’s future depends on reclaiming control over spending and prioritizing the needs of hardworking taxpayers—not funding a bloated welfare system for able-bodied adults. The time to end Medicaid expansion is now.
Since 2016, Medicaid expansion has wreaked havoc throughout Montana. Enrollment has surged, spending has skyrocketed, and other budgetary priorities have been squeezed out. The damage caused by expansion cannot be undone, but fortunately lawmakers can reverse course.
Much like in 2019, lawmakers are positioned to end the Medicaid mayhem and make a change. To rectify the situation and mend the destruction caused, lawmakers must refuse to reauthorize Medicaid expansion.
REFERENCES
1 Centers for Medicare and Medicaid Services, “Program history,” U.S. Department of Health and Human Services (2024), https://www.medicaid.gov/about-us/program-history/index.html.
2 Kaiser Family Foundation, “Status of state Medicaid expansions: Interactive map,” Kaiser Family Foundation (2024), https://www.kff.org/affordable-care-act/issue-brief/status-of-state-medicaid-expansion-decisions-interactive-map.
3 Hayden Dublois, “Medicaid expansion has been a disaster for Montana,” Foundation for Government Accountability (2020), https://thefga.org/research/montana-medicaid-expansion.
4 Ibid.
5 Louise Norris, “Medicaid eligibility and enrollment in Montana,” Healthinsurance.org (2024), https://www.healthinsurance.org/medicaid/montana.
6 Hayden Dublois, “Medicaid expansion has been a disaster for Montana,” Foundation for Government Accountability (2020), https://thefga.org/research/montana-medicaid-expansion.
7 Jonathan Bain, “Medicaid expansion has been a disaster for Montana, but lawmakers can reverse course,” Foundation for Government Accountability (2023), https://thefga.org/research/medicaid-expansion-disaster-for-montana.
8 Hayden Dublois, “Medicaid expansion has been a disaster for Montana,” Foundation for Government Accountability (2020), https://thefga.org/research/montana-medicaid-expansion.
9 Jonathan Bain, “Busted budgets and skyrocketing enrollment: Why states should reject the false promises of Medicaid expansion,” Foundation for Government Accountability (2023), https://thefga.org/research/states-should-reject-false-promises-of-medicaid-expansion.
10 Jonathan Bain, “Medicaid expansion has been a disaster for Montana, but lawmakers can reverse course,” Foundation for Government Accountability (2023), https://thefga.org/research/medicaid-expansion-disaster-for-montana.
11 Ibid.
12 Montana Department of Public Health and Human Services, “Montana Medicaid enrollment dashboard,” Montana Department of Public Health and Human Services (2024), https://dphhs.mt.gov/InteractiveDashboards/medicaidenrollmentdashboard.
13 Ibid.
14 Jonathan Bain, “Medicaid expansion has been a disaster for Montana, but lawmakers can reverse course,” Foundation for Government Accountability (2023), https://thefga.org/research/medicaid-expansion-disaster-for-montana.
15 Author’s calculations based on state-level Medicaid expansion enrollment estimates and 2023 new adult group enrollment reported by the Medicaid Budget and Expenditure System provided by the Centers for Medicare and Medicaid Services.
16 Author’s calculations based on a maximum enrollment projection of 59,000 and an actual enrollment of 125,035 in May 2023.
17 Office of Budget and Program Planning, “Fiscal note for SB0405,” Office of the Governor (2015), https://docs.legmt.gov/download-ticket?ticketId=180e066a-0f03-473f-a4f7-b4b03a9403eb.
18 Centers for Medicare and Medicaid Services, “Expenditure reports from MBES/CBES,” U.S. Department of Health and Human Services (2023), https://www.medicaid.gov/medicaid/financial-management/state-expenditure-reporting-for-medicaid-chip/expenditure-reports-mbescbes/index.html.
19 Author’s calculations based on state projections that Medicaid expansion would cost $1 billion in the first four years. These projected costs were extended to 2023 by applying the state’s projected 2017-2019 growth factors for enrollment and per capita expenditures.
20 Centers for Medicare and Medicaid Services, “Expenditure reports from MBES/CBES,” U.S. Department of Health and Human Services (2023), https://www.medicaid.gov/medicaid/financial-management/state-expenditure-reporting-for-medicaid-chip/expenditure-reports-mbescbes/index.html.
21 Montana Healthcare Foundation, “2024 Medicaid in Montana,” Montana Healthcare Foundation (2024), https://mthf.org/wp-content/uploads/2024-Medicaid-in-Montana-Annual-Report_FINAL-2.pdf.
22 Nick Samuels et al., “2000 state expenditure report,” National Association of State Budget Officers (2001), https://mthf.org/wp-content/uploads/2024-Medicaid-in-Montana-Annual-Report_FINAL-2.pdf.
23 Brian Sigritz et al., “2015 state expenditure report,” National Association of State Budget Officers (2016), https://higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-0fca152d64c2/UploadedImages/SER%20Archive/State%20Expenditure%20Report%20(Fiscal%202014-2016)%20-%20S.pdf.
24 Brian Sigritz et al., “2023 state expenditure report,” National Association of State Budget Officers (2023), https://higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-0fca152d64c2/UploadedImages/SER%20Archive/2023_State_Expenditure_Report-S.pdf.
25 Brian Sigritz et al., “2015 state expenditure report,” National Association of State Budget Officers (2016), https://higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-0fca152d64c2/UploadedImages/SER%20Archive/State%20Expenditure%20Report%20(Fiscal%202014-2016)%20-%20S.pdf.
26 Brian Sigritz et al., “2023 state expenditure report,” National Association of State Budget Officers (2023), https://higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-0fca152d64c2/UploadedImages/SER%20Archive/2023_State_Expenditure_Report-S.pdf.
27 Benjamin Lindquist and Cody Bendix, “Declining 8th grade NAEP scores spell trouble for Montana,” Frontier Institute (2023), https://frontierinstitute.org/reports/declining-8th-grade-naep-scores-spell-trouble-for-montana/#:~:text=to%2036%20percent.-,From%202017%20to%202022%2C%20the%20percent%20of%20students%20scoring%20at,they%20did%20not%20demonstrate%20proficiency.
28 Ibid.
29 Brian Sigritz et al., “2015 state expenditure report,” National Association of State Budget Officers (2016), https://higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-0fca152d64c2/UploadedImages/SER%20Archive/State%20Expenditure%20Report%20(Fiscal%202014-2016)%20-%20S.pdf.
30 Brian Sigritz et al., “2023 state expenditure report,” National Association of State Budget Officers (2023), https://higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-0fca152d64c2/UploadedImages/SER%20Archive/2023_State_Expenditure_Report-S.pdf.
31 Alex McCollum, “Belgrade police cut services due to budget shortfall,” NonStop Local (2024), https://www.montanarightnow.com/bozeman/belgrade-police-cut-services-due-to-budget-shortfall/article_ee8d1d90-6ad9-11ef-8aea-7f129bcb06ee.html
32 Joee Taylor, “City of Great Falls considers redirecting library funds for public safety needs, library rejects city’s proposal,” NonStop Local (2024), https://www.montanarightnow.com/great-falls/city-of-great-falls-considers-redirecting-library-funds-for-public-safety-needs-library-rejects-city/article_56bb4404-6a45-11ef-8120-57a7be8ed30a.html.
33 Hayden Dublois, “Medicaid expansion has been a disaster for Montana,” Foundation for Government Accountability (2020), https://thefga.org/research/montana-medicaid-expansion.
34 Ibid.
35 Ibid.
36 Montana Healthcare Foundation, “2024 Medicaid in Montana,” Montana Healthcare Foundation (2024), https://mthf.org/wp-content/uploads/2024-Medicaid-in-Montana-Annual-Report_FINAL-2.pdf.
37 Jonathan Bain, “Medicaid expansion has been a disaster for Montana, but lawmakers can reverse course,” Foundation for Government Accountability (2023), https://thefga.org/research/medicaid-expansion-disaster-for-montana.
38 Ibid.
39 Ibid.
40 Ibid.
41 Ibid.
42 Ibid.
43 Health Resources and Services Administration, “FQHCs and LALs by state,” U.S. Department of Health and Human Services (2024), https://data.hrsa.gov/data/reports/datagrid?gridName=FQHCs.
44 Centers for Medicare and Medicaid Services, “Federally Qualified Health Center (FQHC),” U.S. Department of Health and Human Services (2024), https://www.healthcare.gov/glossary/federally-qualified-health-center-fqhc.
45 Health Resources and Services Administration, “Montana health center program uniform data system (UDS) data,” U.S. Department of Health and Human Services (2023), https://data.hrsa.gov/tools/data-reporting/program-data/state/MT.
46 Kaiser Family Foundation, “Community health center patients by payer source,” Kaiser Family Foundation (2022), https://www.kff.org/other/state-indicator/chc-patients-by-payer-source/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D.
47 Office of Inspector General, “Montana’s rural health plan 2021,” Montana Department of Public Health and Human Services (2021), https://dphhs.mt.gov/assets/oig/FlexGrantStateRuralHealthPlan.pdf.
48 Ibid.
49 National Association of Rural Health Clinics, “State rural health organizations,” National Association of Rural Health Clinics (2024), https://www.narhc.org/narhc/State_Rural_Health_Organizations.asp#m-organizations.
50 Rich Rasmussen, “25th anniversary of critical hospital designation: Helping keep rural hospitals open,” American hospital Association (2022), https://www.aha.org/news/blog/2022-11-11-25th-anniversary-critical-hospital-designation-helping-keep-rural-hospitals-open#:~:text=The%20CAH%20designation%20has%20supported,during%20the%201980s%20and%201990s.
51 Indian Health Service, “About IHS,” U.S. Department of Health and Human Services (2024), https://www.ihs.gov/aboutihs.
52 Indian Health Service, “Locations,” U.S. Department of Health and Human Services (2024), https://www.ihs.gov/locations/#.
53 Indian Health Service, “Billings area,” U.S. Department of Health and Human Services (2024), https://www.ihs.gov/billings.
54 Bureau of Labor Statistics, “State job openings and labor turnover – June 2024,” U.S. Department of Labor (2024), https://www.bls.gov/news.release/archives/jltst_08162024.pdf.
55 Bureau of Labor Statistics, “Montana economy at a glance,” U.S. Department of Labor (2024), https://www.bls.gov/eag/eag.mt.htm.
