Lessons from across the state line: What Wyoming could learn from Montana's Medicaid expansion

Apr 13, 2022

Casper Star Tribune

Ed Buttrey, a Republican lawmaker from Great Falls, Montana, describes himself as a “business and economic development guy.”

That background helped him and other legislators when it came to Medicaid expansion — a topic that few enjoy.

“I thought, well, isn’t there a way that we can use this one-size-fits-all, horrible federal law to come up with an economic program that recognizes that your workforce has to be healthy to be successful?” he said.

In Montana, the answer appears to be yes. Uncompensated care plummeted after expansion. Employment rates went up. Expansion generated $2.1 billion in new economic activity over the first two years, one report found. Thousands of Montanans accessed primary care services — some for the first time in their lives.

“It worked,” Buttrey said. “It was incredibly successful.”

Meanwhile, thousands of Wyomingites remain without health coverage, and hospitals are still writing off millions of dollars treating people who can’t afford health care.

Montana could offer a way forward for Wyoming, whose leaders have for more than a decade rebuffed every attempt to enact expansion. During that time, opponents have stressed the need for a Wyoming-centered alternative. But those proposals have sputtered out or been rejected altogether.

The two states are similar in a lot of ways, and Montana expanded Medicaid before Wyoming’s other neighbors. That means it has more data and analysis that Wyoming can draw on to see what’s worked and what hasn’t.

“For 10 years, other states have been amassing great revenues, states are doing very well,” said Jan Cartwright, deputy director of Healthy Wyoming, a coalition focused on expanding Medicaid. “There are so many constituent groups that would be so much better off if they had health insurance.”

The roots of Wyoming’s debate over expansion go back to 1965, when Medicaid came into existence. The jointly funded federal-state program provides health insurance coverage for some low-income and medically needy individuals. Every U.S. state and territory has some version of it. Wyoming’s Medicaid program limits eligibility to low-income people who also fall under certain age or physical health categories — low-income children, very low-income family caretakers and those on supplemental security income, for example.

Then came former President Barack Obama’s Affordable Care Act — also known as Obamacare — in 2010.

Part of the law required states to expand their Medicaid programs to cover more people. People earning below 138% of the Federal Poverty Level could qualify for Medicaid under expansion. For a family of four, that is less than about $38,000 annually. Right now, only people who make under 100% of that level can get Medicaid.

In theory, some who made too much money to be covered under expansion could qualify for a federal subsidy and use that financial assistance to buy private insurance. But the Supreme Court deemed mandatory expansion unconstitutional in 2012, so it became optional. That created a coverage gap for people who made too much to qualify for Medicaid, but too little to qualify for federal subsidies.

Most states expanded Medicaid anyway. Wyoming is one of 12 states that has not.

That’s left thousands of Wyomingites uninsured. The Wyoming Department of Health estimates that out of 19,000 anticipated enrollees under potential expansion, over 10,000 of them won’t have had insurance.

This year was the eighth time in the last decade the topic has been up for consideration in the Legislature. The bill didn’t pass introduction.

“It’s been a topic forever,” said Sue Wilson, a Laramie County Republican who chairs the House Labor, Health and Social Services Committee.

The first expansion bill didn’t make it through Montana’s legislature when it came up for consideration in 2013. But in 2015, lawmakers were able to come up with a plan — the Health and Economic Livelihood Partnership (HELP) Act — that checked enough boxes for people on both sides of the debate.

Like Wyoming, Montana was having trouble maintaining a strong workforce. Rural hospitals struggled to stay afloat. And over 70,000 Montanans didn’t have health insurance. The HELP Act took a dual approach to expansion and focused on addressing both economic and health needs.

“That seemed to appeal well enough with the members of my caucus that I thought we could get something done,” Buttrey said.

They did get something done. The bill passed.

In 2016, one of the major economic components of the HELP Act — its workforce program HELP-Link — began to offer services for Medicaid enrollees.

Those services range from help with writing cover letters and practicing for interviews to yearslong intensive training. Thousands of Medicaid enrollees have taken advantage of it. A 2019 Montana Department of Labor & Industry report found that between 2016 and 2018 there were about 32,000 Medicaid-enrolled participants. And 2,500 of those participants had intensive one-on-one employment training.

Outcomes for program participants look pretty good.

The 2019 Montana Labor Department report found that 83% of employed participants in the first quarter of 2018 had wage increases in the year following their participation. Labor market outcomes for Medicaid-eligible Montanans improved compared to other populations, a 2019 report from the University of Montana’s Bureau of Business and Economic Research states. The HELP Act oversight committee also estimated a 9% workforce participation increase in non-disabled adults and 6% increase in disabled adults between 2015 and 2016.

“The program is definitely unique,” said Heather O’Loughlin, Montana Budget & Policy Center co-director of research and development. “A lot of folks across the country have touted this as a really targeted way to provide employment services to those who need it.”

HELP-Link also acts as an employment pipeline to short-staffed industries. Participants commonly pursue occupations in health care, for example. (Wyoming could really use more health care workers right now).

And linking people up with good employment opportunities means they probably won’t stay on Medicaid for long.

Registered nursing, one of the occupations that program participants commonly pursue, for instance, earns a median wage of over $60,000 in Montana. That’s enough to lift a family of seven above the Medicaid expansion eligibility threshold.

In fact, a 2021 report found that the majority of Medicaid expansion enrollees in Montana are only on the program for an average of two years.

“Medicaid expansion is a hand up, not a handout,” said Kristin Page-Nei, American Cancer Society government relations director for Idaho and Montana. The American Cancer Society supports Medicaid expansion. “People aren’t expecting to be on it forever.”

And that’s important to some lawmakers.

Anyone who’s familiar with debates on Medicaid expansion has probably heard one phrase repeated over and over: “skin in the game.”

Some Republican lawmakers worry about giving handouts to people who might be taking advantage of the system, so they want to make sure that those with Medicaid actually need it by attaching some responsibilities.

Montana lawmakers designed the HELP Act to ensure some “skin in the game.” Some people had to pay premiums and copays. Recipients were disenrolled if they didn’t pay or broke other rules. But those probably aren’t realistic options for Wyoming going forward. Montana can’t disenroll people until the federal public health emergency is over. It no longer charges co-payments. And the Biden administration said Montana has to phase out premiums by the end of the year. Disenrollment is attached to charging premiums, so that will go out the window, too.

A work requirement is another mechanism that legislators have proposed. Montana added a work requirement of 80 hours a month to its Medicaid expansion program when it passed the The Medical Reform and Integrity (MARIA) Act in 2019.

But while some consider a work requirement essential to expansion, others — like Vicki Swenson, a Wyoming Independent Living board member and retired Wyoming Education Association president — are against it. That requirement, she said, shuts out people who are physically or mentally unable to work.

Montana’s HELP Act oversight committee found in its 2018 report that more than a third of unemployed Medicaid expansion recipients were ill or disabled.

“I think sometimes we fail, not only as lawmakers, but as a society, to recognize how difficult life is for people,” Swenson said. “That’s the kind of thing that we who have insurance and are healthy don’t always realize.”

Montana’s work requirement is unlikely to be approved under the Biden administration anyway.

But looking at the bigger picture, the benefits of HELP-Link and expansion in general seem to ripple across a wide sphere. And in that context, a work requirement — or lack of one — seems negligible.

Expansion generated over $2 billion in additional economic activity in Montana between the 2016 and 2018 fiscal years, a 2019 report states. That resulted in about $1.2 billion in increased domestic product in the same timeframe. It also created and supported approximately 9,715 new jobs along with about $793 million in associated wages.

All that increased economic activity really helped one group: hospitals.

The Montana Hospital Association endorsed expansion. The association’s president Rich Rasmussen said in a 2021 letter to Eric Boley, president of the Wyoming Hospital Association, that every hospital board in the state also passed resolutions in support of the program.

Boley said that uncompensated care is a “huge factor” in his worry over the financial stability of hospitals in the Equality State. Hospitals absorb between about $110 to $125 million in annual costs for giving care to uninsured and underinsured patients, he said. (Underinsured individuals have some form of insurance but still have to pay costs that are high relative to their income).

Expansion has helped tackle that issue in Montana hospitals. The HELP Act oversight committee states in its 2018 report that hospitals there experienced a roughly 49% decrease in uncompensated care following expansion. Community health centers also saw over $11 million in Medicaid revenue.

And when hospitals don’t have to absorb costs for people who can’t afford care, that means they don’t pass along those costs to other patients.

“Once these people seek care in a hospital setting, we all pay for that care, those costs are passed to all of us,” said Cartwright. “Medicaid expansion is a great equalizer in terms of having hospitals not pass along the cost of uncompensated care.”

But on the flip side, some say hospitals are benefiting too much. Having more people with insurance could take away incentives to make health care costs competitive.

Orthopedic surgeon and Montana Sen. Albert Olszewski, R-Kalispell, voted against Medicaid expansion for that reason.

“If there is competition for care, and people have skin in the game, then costs go down,” he said. “I like to tell people that what we want is freedom in health care, not free health care.”

It’s true that health care costs in Wyoming are high. But there isn’t a clear reason why. Some people blame hospitals. Others say hospitals are suffering financially, and that high costs come from somewhere else — maybe from insurers, pharmaceuticals or medical equipment. But in any case, some lawmakers say Wyoming must deal with the cost of health care, maybe as a separate issue from Medicaid expansion.

“Whether or not people have insurance, the ability of people to pay for hospital care is a really big problem in this state,” said Wilson, the Laramie County lawmaker.

Medicaid expansion would just paper over those underlying problems, some say.

One of expansion’s biggest critics in Wyoming is Sen. Charles Scott, a Natrona County Republican who formerly chaired the Senate Labor, Health and Social Services Committee. In a 2014 Star-Tribune op-ed, Scott wrote that Medicaid “is based on a mistaken understanding of what is wrong with our health care system.”

“It defines the problem as too many uninsured,” he wrote. “That is a symptom of the problem. The real problem is our health care system costs too much.”

Then there’s the problem of working with a partner that some lawmakers don’t trust: the federal government.

The feds promised Wyoming a 90/10 deal, meaning the federal government will pay 90% of the cost of Medicaid expansion, while Wyoming will pick up the rest of the tab, the remaining 10%. On top of that, Biden offered Wyoming a $54 million incentive to expand Medicaid.

The Wyoming Department of Health recommends setting aside $22 million for expansion’s first year. That would be paired with a $177 million federal contribution. So based on the health department’s estimates, that means Wyoming would actually have a surplus of $32 million after the first year if the state were to implement a plain version of expansion. That could cover the state’s share of expansion costs for a second year.

Sounds like a pretty good deal. But some are worried about what will happen after the first two years are up and Wyoming no longer has federal incentive money. Wyoming has a pretty volatile economy — paying for that 10% could be hard during lean times.

“The question then, for the last several years, is whether or not we want to spend this much money if it means we cut services to disabled people, foster children, mental health services,” Wilson said. “People didn’t want to do this.”

Plus the health department’s estimates are based on a “vanilla” version of expansion. Additions like HELP-Link would probably require extra state spending.

Many of those who are hesitant about expansion point to these uncertainties — Gov. Mark Gordon included.

“My biggest concern with Medicaid expansion at this point is the eventual cost and what that will mean for Wyoming,” Gordon said. “Medicaid expansion is sort of a band aid, and I worry that eventually, you end up having to pick up a bigger and bigger and bigger piece of it. And if you’re not prepared for that, as a state, it can be a shock.”

Some lawmakers are worried that the feds will scale back their contribution to the 50/50 split that they pay for traditional Medicaid, or even pull funding for Medicaid expansion entirely.

That’s pretty unlikely to happen since the majority of states have already committed to Medicaid expansion and are counting on the promised federal match. It would probably be hard for Congress to get enough votes to repeal the Affordable Care Act or reduce the federal government’s contribution because of that. But, it’s not impossible.

There are ways to prepare for this uncertainty, and for that Wyoming can again turn to Montana’s example.

You might have noticed that Montana didn’t pass Medicaid expansion only once, but twice — the first time with the HELP Act in 2015, and the second time with the MARIA Act in 2019. In other words, Medicaid expansion in the state isn’t permanent (the 2019 bill expires in 2025). Those sunset dates keep lawmakers on their feet, which pushes them to gather data and ask themselves: Is this thing working?

Impermanence also makes it easier for legislators to reverse expansion. If they don’t like it anymore, they can let it expire rather than introducing new legislation to get rid of it.

As another line of defense, Montana legislators built triggers into the expansion bills that would be pulled if federal contributions dipped below a certain amount. A trigger in the HELP Act, for example, would give the state a variety of options to continue expansion if the federal government decreased its 90% match. If the state doesn’t pursue any of those options, then the part of the bill that provides health care coverage would be void.

But making it easier to end expansion has a consequence — namely, that it’s easier to end expansion. Subjecting people to that potential roller coaster ride isn’t exactly desirable.

“What’s important, I think, is that you not sort of launch and then have to pull back,” Gordon said. “I think it’s important that we have a steady progress so that people come to be able to enjoy over time the services that they get.”

And it might not be so easy to take away something once it’s already granted, even with the sunset dates and triggers.

But all this isn’t to say that Wyoming hasn’t tried to get creative. It has considered and rejected multiple options for providing health care to more Wyomingites. The Legislature flirted with Healthy Frontiers, a state-run health care pilot program, in the early 2010s, but then didn’t renew it. Support for Medicaid Fit — a middle ground between private insurance and the traditional program — was lukewarm. The 2014 Strategy for Health, Access, Responsibility and Employment (SHARE) Plan for expanding Medicaid included premiums, copayments and employment service components like Montana’s expansion. But legislators shot it down in 2015. Legislators this year tried to get something like expansion into law through various amendments after the main Medicaid expansion bill failed to clear the hurdle of introduction.

Nothing has worked out. Meanwhile, the Legislature has pulled farther to the right, with more lawmakers who ideologically oppose government involvement in health insurance.

Is it just that the right plan hasn’t come along yet, or is there no right plan?

Who knows.

“Frankly, there’s no silver bullet,” Wilson said.

Wyoming at least has the benefit of watching what happens to other states — like Montana — that have taken the leap. It remains to be seen whether Wyoming will take a cue from its neighbor.

Montana Budget & Policy Center

Shaping policy for a stronger Montana.

MBPC is a nonprofit organization focused on providing credible and timely research and analysis on budget, tax, and economic issues that impact low- and moderate-income Montana families.