Montana expands Medicaid eligibility and uncompensated care plummets

Medicaid on paper and a stethoscope

Until recently Montana was against the expansion of Medicaid eligibility under the Affordable Care Act, but the about-face on the issue has led to a financial win for its hospitals.

Montana's lawmakers narrowly agreed to expansion of Medicaid eligibility last year. So far, about 50,000 residents have enrolled in the program since it took effect in 2016, Montana Public Radio reported.

Charity care costs among hospitals in the Big Sky State dropped 45 percent during the first half of this year. It was $71 million during the first half of 2015; it was only $39 million during the first half of this year, according to data from the Montana Hospital Association (MHA).

“Medicaid expansion is positively impacting our communities,” said MHA President and CEO Dick Brown in a statement. “Previously uninsured patients are now enrolled in Medicaid and are demonstrating improved access to healthcare services. We expect the uptick in utilization by Medicaid beneficiaries to level out over time as providers begin to improve the health of the newly insured population by addressing their unmet medical needs and conditions.”

Montana's experience appears to reflect trends nationally, particularly in states that have expanded Medicaid eligibility. A study published in Health Affairs concluded that Medicaid expansion is a good predictor of reducing levels of uncompensated care. Another study has suggested that Medicaid expansion has cut uncompensated care by as much as $7.4 billion a year, although expansion states have enjoyed much of that benefit.

However, not all is rosy for the state's hospitals. Their average profit margin, at 8 percent in the first half of 2015, is half of that this year. Brown told Montana Public Radio that was due in part to hospitals having to invest in infrastructure to treat the new stream of patients, but that private insurers have also gotten more hard-nosed in negotiations. That has run counter to some research released earlier this year by the Center for Children and Families and Georgetown University’s Health Policy Institute, although their data has focused primarily on the benefits to safety-net hospitals.