MEDICAID EXPANSION A HUGE SUCCESS IN MONTANA: A Health Care Program That Grows the Economy and Pays for Itself.

• Author: Ward, Bryce
• Position: RESEARCH

Medicaid expansion could become a major election issue in the upcoming midterms, as its set to renew in 2019. For policymakers and stakeholders in Montana's health care system, the big questions revolve around its costs and whether the state can afford it. But analysis shows the health care program not only pays for itself, it significantly boosts the states economy

A study funded by the Montana Healthcare Foundation and Headwaters Foundation found Medicaid expansion introduces $350 to $400 million in new spending to the state's economy each year, which will generate thousands of jobs and hundreds of million in personal income over the next two years.

Approximately 75 to 80 percent of Medicaid spending is new money. This means spending on Medicaid expansion rivals some of the larger sectors of the state's economy. It's 33 percent bigger than Montana's beverage manufacturing industry (e.g., craft brewing, distilling, wineries, etc.) and only 10 percent smaller than the total budget for the Montana University System.

Montana approved Medicaid expansion in 2015, which extended coverage to more low-income and disabled Americans. During its first two years, Medicaid expansion provided beneficiaries more than $800 million in health care and infused a significant amount of money into the economy.

Medicaid expansion spending enters our economy in two ways--first, it supports new health care spending. Nearly one in 10 Montanans were enrolled in Medicaid expansion as of March 2018. Most expansion enrollees would have been uninsured in the absence of the expansion. As such, Medicaid expansion provided tens of thousands of uninsured, underinsured and low-income Montanans with health care they would not have otherwise received.

Second, Medicaid expansion spending replaces existing spending. Even without Medicaid expansion, beneficiaries would have received some health care, but Medicaid expansion changed who pays for their care. Without expansion, the state, the federal government, employers, hospitals and providers, and the beneficiaries themselves all contribute to paying for care that is now paid for via Medicaid. With expansion, the federal government pays for nearly all the care provided to beneficiaries.

The effect is similar to when a Montana company wins a government contract--it brings money into the state's economy that would otherwise not be there. Medicaid expansion impacts Montana's economy the same way and this new money stimulates...