March 10, 2016

BENDING THE COST CURVE: Montana Underestimated Medicaid Expansion “Woodwork Effect.”

Brent Mead, the executive director of the Montana Policy Institute, says the greater-than-expected enrollment numbers will significantly increase the cost of the state’s Medicaid expansion.

“The total number of projected enrollees [was] around 22,700 for expansion and 800 ‘woodwork’ enrollees,” Mead said.

The “woodwork effect” refers to the enrollment of individuals who were previously eligible for Medicaid but signed up after the program’s expansion. Montana must pay for woodwork enrollees at the pre-Medicaid expansion rate, which the Kaiser Family Foundation in 2014 listed as 32 percent for Montana.

“The state badly missed the ball on the woodwork clients,” Mead said. “The latest numbers we have are for November 2015, but applications spiked compared to the year before. The Montana Policy Institute has heard numbers are significantly higher than what the November application data shows, but we will not know for a few more months.”

Mead says the inaccurate estimate of the woodwork effect will soon force Montana to choose between spending more tax dollars on Medicaid or funding non-entitlement programs at the desired levels.

“The state will face a choice in 2017,” Mead said. “This is going to ramp up mandatory spending at the same time that commodity prices like oil, coal, and cattle are low. Something will have to give, but if I were to wager, it would be other state programs like higher education or infrastructure spending that suffer, rather than restraining a new entitlement program.”

Creating new dependents isn’t cheap.

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