Montana’s Medicaid Expansion Conundrum

HELENA, Mont. — Despite concerns about what Congress and the Trump administration might have planned for Medicaid, Montana’s Republican-led legislature and GOP governor appear ready to keep the state’s Medicaid expansion program in place beyond its scheduled end date this summer.

State lawmakers don’t have the luxury of waiting until the federal picture sharpens. They must decide before the session ends in early May whether to lift a June 30 sunset date for the expansion program, which covers about 76,000 adults.

However, the likelihood that significant changes lie ahead for the joint federal-state Medicaid program has spurred discussion of whether legislators should — or can — prepare for what may be coming. That’s the challenge for lawmakers this session, said Republican state Rep. Jane Gillette during a recent meeting of the budget subcommittee she chairs that works on the Medicaid budget.

“What are the different options we have for bracing ourselves for that?” Gillette said.

The U.S. House is working on a budget bill to reflect President Donald Trump’s priorities, including allocating up to $4.5 trillion to extend tax cuts that would otherwise expire.

A plan passed by the House Budget Committee on Feb. 13 calls for $880 billion in cuts over the next 10 years for the committee that oversees, among other things, Medicaid spending. Ideas reportedly under discussion include federal work requirements for some Medicaid enrollees and a decrease in the share of costs the federal government pays for people covered by the expansion program.

Some of the proposals would shift significant costs to the states, noted Robin Rudowitz, a vice president and the director of the Program on Medicaid and the Uninsured at KFF, a health information nonprofit that includes KFF Health News. If that happens, states will need to raise revenue or cut spending elsewhere to continue the same level of Medicaid coverage, she said.

There are “no easy answers or options for states in these scenarios,” she said.

Some states are debating how to prepare for possible federal changes. The South Dakota Legislature is considering a bill that would ask voters whether to continue Medicaid expansion if the federal share drops. A bill to repeal Idaho’s expansion program outright has been introduced but not heard, while another making it contingent on federal approval of several limitations passed the state House on Feb. 19. Montana and eight other states have trigger laws that could end their expansion programs if the federal contribution rate drops.

The GOP-controlled Montana House of Representatives easily passed a bill to make the Medicaid expansion program permanent on Feb. 10 by a 63-37 vote. Then on Feb. 20, House Bill 245 passed the first of two votes required for Senate approval. Gov. Greg Gianforte has not publicly said whether he would sign the bill, but he previously said he believes the expansion program should continue if strong work requirements are in place.

In late January, the budget subcommittee that Gillette chairs was reviewing Medicaid expansion’s financial implications when talk quickly turned to the possible federal changes, particularly a drop in the federal matching rate.

Republican state Sen. Carl Glimm noted that observers have called a lower federal matching rate “pretty low-hanging fruit.” The change would require congressional action, though, and members noted that could take time.

The federal government pays 90% of the health care costs of expansion enrollees. That group is made up of adults ages 19 to 64 without disabilities and who have annual incomes at or below 138% of the federal poverty level, or $21,597 for an individual.

Until the federal Affordable Care Act allowed states to extend Medicaid to this group, the program was generally limited to low-income children, pregnant women, and adults who are blind, disabled, or at least 65. The federal match for those groups in Montana will be about 62% in the next state fiscal year, which begins in July.

The state spent nearly $1 billion on Medicaid expansion in 2024, with its share of the costs totaling just under $100 million. Budget committee staff said a 10% reduction in the federal share would add roughly $100 million in state costs. If the state’s share goes from 10% to the regular state match of 38%, the state would pay about $280 million more a year for expansion.

Subcommittee member Russ Tempel, a Republican senator, noted that the federal share changed in the past due to unexpected events, such as covid-19.

“Something’s going to happen that’s unpredictable,” he said. “It’s happened before, and it’s going to happen again, so we’re kind of a little bit shooting in the dark.”

But Republican Sen. Jeremy Trebas focused on the likely federal changes when urging senators to support his bill to tighten the work requirements in current law and, if federal approval were denied, eventually end the program.

“We should match up our state policy to coming federal policy so that we’re not caught off guard and expectations aren’t radically altered by what the federal government does,” he said during a committee hearing on Senate Bill 199.

The bill died last week on the Senate floor when all Democrats voted against it, along with a block of nine Republicans who have broken with their party on other issues this session. Roughly the same coalition also killed a bill by Glimm that would have phased out the expansion.

Trebas said recently he expects HB 245 to pass but also believes that federal Medicaid changes could happen more quickly than some think possible, forcing a special Montana legislative session to adjust to those changes.

Gillette, who voted against HB 245, said in a recent interview that the legislature should provide the Gianforte administration with a range of options to allow it to “course correct” without further legislative involvement if Medicaid expansion continues and federal changes come down before the legislature meets again in 2027.

State Senate President Matt Regier introduced a bill Feb. 15 to limit the expansion population to people below 100% of the federal poverty level and to give the state health agency the ability to limit spending or improve program integrity.

Regier’s bill also would make the expansion program contingent on the federal government approving a “community engagement” waiver, which includes work requirements, and it calls for lawmakers to vote on whether to hold a special session if the federal Medicaid matching rate drops more than three months before the next regular session.

But HB 245 sponsor Rep. Ed Buttrey, another Republican, said in a recent interview that existing law takes care of any future decrease in federal support by requiring either the state to increase premiums for the program or the legislature to appropriate additional funds if the program is to continue.

Buttrey also said the legislature can’t make decisions now based on what federal law might be in the future. He said it’s unlikely that federal Medicaid policy would change quickly, but that if it did, the program affects such a large percentage of the state’s population that a special session would be warranted.

“I can’t think of one that’s more important than that,” he said.