How ending premiums could threaten Montana’s Medicaid expansion
Republican Montana state Rep. Ed Buttrey was a key player in expanding the state’s Medicaid program under the Affordable Care Act.
Now, he’s worried a policy change by the Biden administration could, within a few years, mean the end of an expansion that currently provides more than 100,000 low-income Montanans access to health insurance.
“I’m very, very worried about the risk that we’ll lose the program,” Buttrey said.
Buttrey’s concern centers around a letter Montana got from the Centers for Medicare and Medicaid Services late last year saying that by the end of 2022, the state must stop charging monthly premiums to people on Medicaid. Arkansas received a similar letter.
Montana is one of 38 states and Washington, D.C., that allows childless adults making up to 133 percent of the federal poverty level to enroll in Medicaid, the joint state and federal program that provides health insurance to nearly 90 million mostly low-income people nationwide.
As part of that expansion, five states — Montana, Arkansas, Indiana, Iowa and Michigan — received special permission from the Obama administration to charge people on Medicaid monthly fees, something that’s normally banned by federal law.
Conservative lawmakers in those states argued making people pay premiums would help prepare beneficiaries for buying private insurance after they left the program and give them “skin in the game,” the popular-but-disputed idea that if people have to spend more of their own money on health care, they’ll be more savvy consumers.
The Obama administration went along with the idea of premiums, in part to incentivize red states reluctant to expand their Medicaid programs under the president’s landmark health care law. But the Biden administration is changing course thanks to a growing evidence base showing premiums make it harder for people to access coverage.
While many are celebrating the administration’s move to roll back premiums, leaders like Buttrey in conservative states are frustrated.
“It just is amazing to me that the Biden administration would decide that they’re not going to allow premiums at all,” Buttrey said. “That’s always been one of the cornerstones of our Medicaid expansion program in Montana.”
Expanding Medicaid in Montana
Buttrey spent day after day in 2015 meeting with then-Gov. Steve Bullock, a Democrat, trying to hammer out a Medicaid expansion deal that could win the support of skeptical Republicans in the state legislature.
“I left the room a few times and hung up on the governor,” Buttrey said. “It was just a very emotional, passionate process because we all wanted to get something done.”
For Buttrey and his conservative colleagues, premiums had to be part of the equation.
“We wanted there to be personal responsibility and that included having rewards for healthy behavior, having a good path out of poverty. We needed people to be able to pay premiums, to have skin in the game,” Buttrey said.
Bullock vehemently opposed charging Medicaid recipients for coverage, but he eventually agreed. The premium was set at 2 percent of household income. Certain groups — including the sickest, the poorest and those living in areas without many providers — were exempt, and only people with incomes between 100 percent and 138 percent of the federal poverty level could be dropped for nonpayment.
More than 100,000 people — about 10 percent of Montana’s population — are currently enrolled in Medicaid expansion. A 2021 University of Montana report found Medicaid expansion in Montana has helped more people get medical care, created thousands of new jobs, and generated about $650 million in economic activity in the state each year. It also found that 40 percent of the $80 million the state spends on expansion annually is offset by lower health care costs and increased economic activity.
At the same time, state records show at least 7,000 people have been kicked off the Medicaid rolls for failing to pay their premiums — about 200 to 300 people each month.
“That is a pretty significant percentage,” said Heather O'Loughlin, co-director of the nonpartisan Montana Budget and Policy Center.
The road ahead
In its letter telling Montana to phase out its premiums, CMS cited several studies on the impact of Medicaid premiums, including a 2020 study that included Montana and found that premiums likely kept enrollment lower and kept people from staying on the program as long — even people who were exempt from paying.
CMS’ letter also cited research showing that premiums can exacerbate health disparities by disproportionately affecting Black and low-income beneficiaries.
“When you have a dozen studies all pointing in the same direction, it gets much harder to argue that premiums won’t have any effect on enrollment,” said Kate Bradley, a principal researcher at the policy research organization Mathematica who helped lead the 2020 study.
The Trump administration approved three more states — Arizona, Georgia and Wisconsin — to charge premiums, although Arizona and Georgia never implemented them. Arizona removed premiums from its plan in 2020, and the Biden administration withdrew Georgia’s authority at the same time it told Montana and Arkansas to wind down their programs. Wisconsin, which has not expanded Medicaid, briefly charged premiums before pausing due to COVID.
The Biden administration has yet to take action on the other states currently allowed to charge premiums, but a CMS spokesperson said the agency will consider the same research when re-evaluating those state’s premium plans in coming years.
Buttrey said he doesn’t like seeing anyone lose coverage, but overall he feels the program has met his goals of improving health and the state’s economy. And he worries that without the ability to charge premiums, conservatives in Montana could balk at re-upping Medicaid expansion in 2025, when the deal Buttrey helped orchestrate expires.
“I’ve personally had a lot of interactions with people whose lives have been saved because they’ve had access to health care or had access to addiction treatment,” Buttrey said. “It’s going to be hard to look those folks in the face if I don’t support moving the program forward in some fashion, but I don’t know. I’m torn.”
This story comes from the health policy podcast Tradeoffs, a partner of Side Effects Public Media. Dan Gorenstein is Tradeoffs’ executive editor, and Andrea Perdomo is a reporter/producer for the show, which ran a version of this story on March 17.