Investments and Shortfalls: Section B, The Department of Health and Human Services (DPHHS)

Jul 01, 2025

By MBPC Staff

by Andria Schafer

In Montana, investing in the health, safety, and dignity of working-class people strengthens communities and creates a more equitable state for all. The Montana Department of Health and Human Services (DPHHS) provides support to individuals who rely on programs like Medicaid and the Supplemental Nutrition Assistance Program (SNAP), including older Montanans, adults and children with disabilities, and parents with children in public schools or who rely on child care while working.

On June 19, the Governor returned HB 2 to the legislature with several line-item vetoes, including some that will impact DPHHS. Here is a snapshot of where DPHHS ended up.

DPHHS has the largest budget of all state departments and employs the most people. Roughly 68.3 percent of DPHHS’ budget is federal funding, including funding for Medicaid health services, SNAP food assistance, and other critical social safety net programs. At the state Legislature, the DPHHS budget is commonly referred to as Section B (of House Bill 2) and is the only ‘section’ that contains a single department. The choices lawmakers make in this section directly impact families across the state, shaping access to basic needs and opportunities to thrive and participate in the workforce and Montana’s economy.

Section B Joint Subcommittee met daily for four-hour sessions over the course of six weeks to hear from division administrators about their programs and budget requests and created the foundation of the budget before it moved through the rest of the legislative process. According to LFD’s HB 2 narrative following Senate action, the final budget for DPHHS was 1.6 percent lower than the 2023 biennium in total funds. Despite this, there were significant investments for the State of Montana and people who depend on services provided by the department.

Behavioral Health

Behavioral health care helps provide inpatient and outpatient mental health care and addiction services in Montana and supports people’s ability to work and be active members of their families and communities. In 2022 Montana had a 28.7 per 100,000 suicide rate, among the highest in the United States, and a drug overdose rate of 19.4 per 100,000 people. These rates pose significant challenges that the Montana behavioral health system struggles to have the capacity to address. Ten of the 22 Behavioral Health System for Future Generations (BHSFG) recommendations designed to address these challenges were partially funded in House Bill 2. House Appropriations also invested $2.5 million to expand the number of crisis beds available for children experiencing acute mental health crises. This investment will increase in-state bed capacity and prevent out-of-state inpatient placements, keeping Montana children closer to family and saving taxpayer dollars. The Subcommittee removed funding that would have created an electronic bed registry to streamline patient placement during a mental health crisis, so while there will be more beds to access, there will still be challenges locating available inpatient placements for those who need them.

Unfortunately, Section B Joint Subcommittee designated four of the BHSFG recommendations as one-time-only expenditures. Montanans need a bigger initial investment to support increased capacity in the behavioral health system and improve access for rural Montanans to critical care and services. This small initial investment, along with marking some of these initiatives as one-time-only, is concerning when looking at the magnitude of the challenges facing providers. Without the continuation of the BHSFG Commission, questions remain about the fate of the unspent funds and what future investments could look like.

Health Care

Continuing Montana’s current Medicaid expansion program was a big topic for the 2025 session, as 74,000 Montanans were at risk of losing their health care coverage. Continued funding for Medicaid expansion remained in the budget due to the passage of House Bill 245. Medicaid expansion serves many working families who struggle to access affordable health care and are not provided health care through their employers. Many small businesses depend on Medicaid expansion to help keep their employees healthy and able to work. Out of the Montana Medicaid population, 76 percent are working or in school, contributing to their communities, or working to get a degree to increase their earning potential. Medicaid expansion promotes economic mobility among working people across the state.

House Appropriations reduced funding to support Medicaid caseloads in the Senior and Long-Term Care Division, despite public comment and a 2023 DPHHS report projecting increased demand as more Montanans age into these services. This decision is concerning given Montana's aging population, and the role Medicaid plays in ensuring seniors can access home and community-based services. Without adequate funding, providers may struggle to meet demand, leaving older adults and their families with limited access to necessary care and resources.

The Subcommittee approved a 3 percent provider rate increase for Medicaid and non-Medicaid health care providers. This increase helps to keep provider rates in line with the costs of providing crucial services to Montanans across the state. In 2022 the state performed a rate study to see if rates were adequate to cover the expenses of providers. The study found that Montana’s reimbursement rates were inadequate, and the Legislature made historic increases in the 2023 legislative session. Continued increases in rates are necessary to keep up with inflationary cost increases associated with providing services that Montana depends on. When the 3 percent rate increase from the 2025 session goes into effect, the prior increase will be four years old, and while this is a step in the right direction, rates will continually need to be reassessed to prevent the loss of capacity in all medical systems across the continuum of care. Additionally, the 3 percent provider rate increase extended to foster care and guardianship services, further helping support the safety and stability of children’s lives.

House Appropriations Committee added a rate increase for air ambulance services; however, the Governor line-item vetoed that specific rate increase.

Child and Family Supports

House Appropriations funded the administrative match costs for Summer EBT, a federal food assistance program for eligible families with school-aged children. This $830,000 investment means the program will continue for the next two years and will bring $19.5 million in federal funds into the state, providing grocery benefits to 75,000 eligible Montana children. The Legislature had also allocated $6 million of unspent federal TANF funds toward four key programs to support children living on lower incomes: afterschool programs, mentorship programs, court advocates for children, and food banks, using unspent federal TANF funds; however, the Governor line-item vetoed these funds. Montana sits on a massive carryover of federal TANF funds – to the tune of nearly $60 million. While Montana has utilized TANF funds for similar programs to support low-income families in the past, the Governor vetoed this investment.

While there were positive investments in Montana families, there were others areas that fell short. For example, the Comprehensive School and Community Treatment (CSCT) was funded at only $1.7 million in comparison to the originally proposed $7.2 million. This program provides in-school therapy that supports students’ ability to succeed in traditional school environments. CSCT supports students who struggle with behavioral health challenges as well as supporting teachers to manage their classrooms and effectively teach all students. The lack of more robust investment in this program is a loss for Montana’s children and education system.

Conclusion

Investing in programs that support the health and stability of Montanans with low incomes strengthens communities, promotes economic mobility, and helps people live with dignity. The budget passed this session made some progress, but sustaining and expanding these gains will require continued advocacy and intentional policymaking.