Health Reform Will Add Coverage for 125,000 in Montana; State Health Spending to Grow by 3 Percent

FOR RELEASE

Tuesday
April 5, 2011

National health care reform will help 125,000 Montana residents obtain health insurance and increase health care spending by state government by about 3 percent when it is fully implemented in 2016, according to a new RAND Corporation study.

The increase in coverage will be caused by a jump in people enrolling in Medicaid and buying policies through a newly created state insurance exchange. Most of the rise in state spending is the result of increased Medicaid costs, according to researchers.

The estimates are from a study of the impact that the major coverage provisions of the Patient Protection and Affordable Care Act will have on Montana that was conducted by researchers from RAND Health and sponsored by The Council of State Governments, a group that helps state leaders share ideas and insights.

The project examined five states chosen because they represented good geographic distribution and include both large and small states. The other states studied are California, Connecticut, Illinois and Texas.

"As states move forward preparing for the many provisions of health care reform, it's important for them to have an adequate forecast of what is ahead," said Christine Eibner, co-author of the study and an economist at RAND, a nonprofit research organization.

"We believe this information will help all states to be better prepared to respond to the challenges posed by the Patient Protection and Affordable Care Act," said Chris Whatley, Washington director of The Council of State Governments.

Researchers used a microsimulation model developed by RAND to estimate how health reform policies will affect the number of state residents who obtain or change sources of health of insurance, the types of plans they enroll in, and spending in the private and public sectors.

The estimates are intended to help elected officials and policymakers anticipate the choices that will likely be needed by individuals, employers, insurance companies and governments as various provisions of health reform are implemented.

Key findings from the analysis of Montana include:

  • The percentage of Montana residents with health insurance will increase from 82 percent to 97 percent by 2016 under the Patient Protection and Affordable Care Act. The number of uninsured non-elderly in Montana will be one-sixth of what it would be in absence of the law (25,000 people uninsured compared to 150,000 people uninsured).
  • By 2016, about 20 percent of non-elderly Montana residents will obtain their health coverage through an insurance exchange being created as a part of health reform.
  • Enrollment in Medicaid will increase by 51 percent, with an additional 58,000 Montana residents enrolled by 2016.
  • The additional costs to the state would be about $10 million annually by 2016 and $40 million annually in 2020. The cumulative increase from 2011 to 2020 will be about $140 million.
  • The majority of new Medicaid enrollees will be newly eligible, but increased enrollment of those previously eligible will cost the state more because the federal government will heavily subsidizes newly eligible enrollees.
  • Roughly the same percentage of Montana workers will be offered health insurance coverage from an employer once health reform is implemented as is the case today.

The full study can be found at www.rand.org. Other authors of the study are David Auerbach, Sarah Nowak, Jeanne Ringel, Federico Girosi, Elizabeth A. McGlynn and Jeffrey Wasserman.

RAND Health, a division of the RAND Corporation, is the nation's largest independent health policy research program, with a broad research portfolio that focuses on health care costs, quality and public health preparedness, among other topics.

About the RAND Corporation

The RAND Corporation is a research organization that develops solutions to public policy challenges to help make communities throughout the world safer and more secure, healthier and more prosperous.

About The Council of State Governments

The Council of State Governments is the nation's only organization serving all three branches of state government, and is a nonpartisan, region-based forum that fosters the exchange of insights and ideas to help state officials shape public policy.