Montana’s expanded Medicaid program, which is now covering 94,000 low-income adults, has had a huge economic impact in the state, creating 5,000 jobs and $280 million of additional personal income, a new study says.
Bryce Ward, director of health care research for the University of Montana Bureau of Business and Economic Research, said Thursday those results didn’t surprise him.
“If you take a bunch of money that wouldn’t otherwise be here, inject it mostly into the health-care system, but also into some other areas, you get additional health-care jobs, you get additional jobs, in the economy,” he told the Medicaid Expansion Oversight Committee.
But Ward said he was surprised by evidence showing that Montana’s program may have helped increase “labor force participation” among low-income Montanans, through its job-assistance initiative.
Montana’s Medicaid-expansion program, enacted in 2016, directs those who qualify for coverage to Job Service offices and state Labor Department assistance in looking for work.
Labor-force participation for the demographic eligible for expanded Medicaid coverage – those aged 18-64 and earning up to 138 percent of the federal poverty level – increased six percentage points in the program’s first two years, from 58 percent to 64 percent, the UM study said.
Similar improvements did not happen in other states in the same demographic or among higher-income Montanans during the same period, Ward said.
Expanded Medicaid coverage is available to childless adults earning up to about $16,600 a year, for a single person and $22,400 for a couple. It’s part of the 2010 Affordable Care Act, or “Obamacare.”
The federal government pays about 95 percent of the costs now, but will lower that level to 90 percent by 2020. The state must pay the remaining share.
However, Montana’s program is set to expire in July 2019 unless the 2019 Montana Legislature votes to extend it.
Ward said at 94,000 participants, Medicaid expansion will spend an estimated $564 million a year on health care. About half of that amount is “new money,” meaning it wouldn’t have been spent without the expansion, Ward said.
The other half probably would be spent anyway, he said, by private insurance, the federal government, or by people paying for medical care out of their own pocket.
About 2,000 of the new jobs created by Medicaid expansion are in the health-care industry, the study said, but it also has created jobs in retail, construction and the hospitality industry.
Ward also estimated that state government’s share of the costs will be about $100 million in 2019 and 2020 – but said savings and gains elsewhere will more than offset that amount, creating a net gain for state government of $55 million.
“It appears that once we get to 2020, when the full cost is there, we should have enough of a positive impact from economic activity and savings so that, from the larger perspective of the state government, it pays for itself,” he said.