Back in March 2014, we warned that expanding Medicaid in Montana to able-bodied, working age adults without children would be disastrous, for multiple reasons. Chief among these reasons were the facts that Montana lawmakers had no reliable cost estimates to make an informed decision, and that the state’s Medicaid spending was already growing rapidly. In 2012, Montana’s annual costs for Medicaid were $1.1 billion, double what they were a decade earlier, and they were expected to double again to $2.2 billion by 2022.
Montana’s legislature rejected Medicaid expansion twice, but unfortunately this past April, several Republican legislators colluded with the Democrats to change the legislative rules and push forward a bill authorizing Medicaid expansion. Gov. Steve Bullock (D-MT) signed the bill into law and Montana began seeking bids from private companies to manage their Medicaid expansion enrollments and administration.
We at the FGA really wish being right and saying “We told you so!” were more fun, and that being right also didn’t mean taxpayers and patients would be harmed – because once again our predictions about unreliable costs are coming to fruition in Montana.
The Bullock administration originally estimated that it would cost about $6 million to hire a private company to manage Medicaid expansion at the expected levels of enrollment.
Unfortunately for them – and for the Montana taxpayers who will have to foot the bill – the four companies that submitted bids all proposed charging several million dollars more than that $6 million estimate. The costs would be even higher if enrollment exceeds the 25,000 new enrollees currently expected to sign up for coverage, a problem we’ve seen before in many states that previously authorized Medicaid expansion.
According to a report by KRTV-Great Falls, the four companies that submitted bids, based on a projected 25,000 new enrollees, were as follows:
- Blue Cross and Blue Shield of Montana — $7.8 million for the first year. The per-member amount could drop the next year, if more than 25,000 are on the program. Blue Cross also may ask for reimbursement of up to $3.6 million in one-time technology costs.
- PacificSource – $12.3 million for the first year. The per-member cost would decline the next year if enrollment increases.
- Stanford Health Plan — $13.2 million for the first year, with no decline the next year.
- Allegiance Benefit Plan Management – Did not provide a cost estimate for the program’s first six months. For the next six months, $4.5 million. For 2017, $9 million.
Each one of these bids was calculated using a “per member per month” fee, according to KRTV. While some of the bids provided for lower individual per-member charges at higher enrollment figures, the fact remains that any enrollment above 25,000 will cost the state more, and even the cheapest of these bids was nearly $2 million more than the Bullock administration’s original estimate if the 25,000 proves accurate.
And again, recent history teaches us that there is a very strong chance that more than 25,000 Montanans will sign up for Medicaid expansion. Research we published in April found that 17 states were over their projected 2014 enrollment, and 16 states had already enrolled more than they projected for the lifetime of expansion.
For example, Kentucky had almost 311,000 new Medicaid enrollees in fiscal year 2014. That figure is than double what they had projected for 2014, and even exceeds how many they had expected all the way through 2021. California’s Medicaid expansion enrolled 2.3 million new people, almost three times the original estimates, Oregon’s enrollments were 73 percent higher, and Washington’s more than doubled.
In state after state after state, Medicaid expansion has been an avoidable yet costly disaster – creating overwhelming burdens on state budgets and bureaucratic headaches, both for the doctors who are treating Medicaid patients and for the patients themselves.