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Committee questions fiscal tradeoffs as lawmakers consider 12-month continuous Medicaid eligibility
Summary
House Bill 386 would extend 12-month continuous Medicaid eligibility for adults; sponsors and proponents argued it reduces churn and downstream costs while officials warned of a federal matching-rate (FMAP) impact and additional state general fund cost estimates.
Helena — Lawmakers and Medicaid officials traded data and policy arguments during a House Appropriations Committee hearing on House Bill 386, which would provide 12-month continuous Medicaid eligibility for adults covered under Montana’s Medicaid programs.
Representative SJ Howell, sponsor of HB 386, told the committee the fiscal-note calculation follows federal assumptions: CMS estimates states adopting continuous eligibility see a 2.6% increase in member months and that states pay the standard federal match for those additional months. Howell described three categories of savings from continuous eligibility: administrative (reduced churn and fewer re-enrollments), lower per-member health costs through more continuous primary care, and broader social benefits tied to greater program stability.
"Continuous coverage brings down those prices that the state is paying for Medicaid health care," Howell said, citing a George Washington University study she offered to share with the committee showing average monthly costs of $326 for continuously enrolled members versus $512 for six-month enrollees and $705 for those with only one- or two-month coverage periods.
Proponents included Colleen Rahn of NAMI Montana, Jackie Simmons of the American Heart Association and Aubrey Godbey of the Montana Budget and Policy Center, who argued continuous eligibility prevents costly lapses in care that lead to emergency room visits and hospitalizations.
Medicaid financial managers testified to fiscal impacts and assumptions. Jean Hermanson, Medicaid chief financial manager for the Department of Public Health and Human Services (DPHHS), explained the principal state cost driver: increased member months that would be reimbursed at the regular federal medical assistance percentage rather than the enhanced expansion FMAP for the expansion population. Hermanson said the fiscal note estimates a roughly $7 million annual general fund impact tied to that adjustment.
Committee members asked operational questions and pressed for specifics. DPHHS staff said Montana’s Medicaid expansion population is about 76,000 and estimated churn at roughly 11% annually (about 7,500 individuals), while the fiscal note projects a reduction in application processing of about 3,727 applications and an administrative staff savings equivalent to roughly 2.5 full-time employees. Committee members sought clarifications about average processing times, retroactive coverage, and whether hospitals and other providers can use presumptive eligibility to reduce coverage gaps.
Representative Gillette and others raised the statutory and fiscal consequences tied to FMAP adjustments and whether continuous eligibility would trigger federal recalculation of the state’s overall match rate. Hermanson confirmed the fiscal-note treatment: the state could face a relative FMAP penalty for the additional member months described in the federal calculation.
No formal vote was taken in the hearing; the committee heard informational and proponent testimony and queried DPHHS staff on assumptions underpinning the fiscal note.
