A New Era in the Fight Over Medicaid Premiums

March 17, 2022

The impact of charging people to use Medicaid and how phasing out premiums could threaten one state’s Medicaid expansion.

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Dan Gorenstein: In Montana and Arkansas next year Medicaid is going to look different in one key way: no more premiums. 

Federal health officials gave both states the authority to charge low-income adults monthly fees when they expanded their Medicaid programs–  Arkansas in 2013, Montana in 2015

Now new research has convinced the federal government it needs to take that authority back. 

Today, we travel through time – and across state lines – to see how premiums have affected people on Medicaid, and what phasing these premiums out could mean for the future of Montana’s program. 

From the studio at the Leonard Davis Institute at the University of Pennsylvania, I’m Dan Gorenstein, this is Tradeoffs.


DG: Kate Bradley fell in love more than 20 years ago.

It started back in Idaho, when she was working on Medicaid policy. 

Kate Bradley: Medicaid is so complicated, you can never get bored and you can never know all there is to know, and I think for me personally…it’s just been kind of a mission and obsession ever since then. 

DG: Kate went on to work with the state’s Medicaid program as a lobbyist. 

And that job taught her a few things. 

One – that politics typically privileges people who already have power…and the people with the most at stake – the folks actually enrolled in Medicaid – lacked much of that.

And two – Kate wanted to be the kind of person who used data…not raw political power…to offer lawmakers more objective information. 

KB: When you’re using politics to influence Medicaid, the people with the power sometimes base their decisions on ideology and not what’s necessarily good for people…but the evidence is the evidence, no matter what your ideology is. 

DG: Kate’s devoted herself to that mission since 2014, trying to help lawmakers make better decisions through evidence. 

That passion led her to become a principal researcher for Mathematica

And when federal health officials hired the policy research firm to compare five states that charged people on Medicaid premiums to ten states that didn’t – it was hard for Kate to measure her level of joy. 

KB:  This contract felt like Christmas.

DG: States are normally forbidden from charging anyone premiums with incomes under 150% of federal poverty – that’s about 20-thousand for one person.

That’s because premiums are considered a barrier to care…arguably defeating the whole point of Medicaid – insurance for low-income people.

But the Centers for Medicare and Medicaid Services had granted Arkansas, Indiana, Iowa, Michigan and Montana special waivers to pilot the controversial concept.

Conservative lawmakers in those states had argued making people pay premiums would help prepare them for buying private insurance – after they left the program. 

The Obama Administration approved the move to incentivize  red states reluctant to expand their Medicaid programs under Obamacare. 

Part of that deal, says Kate, was to evaluate what had happened.  

And that is where Mathematica came in.

KB: The question they wanted answered was how do premiums affect enrollment patterns

DG: A chance to inform decisions based on evidence. 

KB: This was an opportunity to look at very politically complex and interesting Medicaid demonstrations that affect millions of lives so that we could generate some evidence to help CMS decide – and states – whether future states should have the same authority, or whether the states with the current authority should continue to have that authority.

DG: Kate and her team focused on enrollment patterns from 2014 through 2017.

And there was a ton of variation. 

States exempted different groups from paying.

Premiums ranged from $1 to more than $100.

Fees applied across the income spectrum…someone who literally earned zero dollars could face a monthly bill…so could the head of a six-person family earning 40-something thousand dollars a year.   

KB:  The amounts differed, the timing differed. Lots of details of their premiums,  policies differed, but they all had asked people to pay premiums with incomes under one hundred and thirty three percent of poverty.   

DG: As part of their work for CMS, Kate and the team reviewed the literature on Medicaid premiums. 

More than a dozen studies of adults and kids in Medicaid showed when you ask  people to pay, enrollment goes down.. 

Mathematica had two key findings.

Looking across the five states, premiums probably kept enrollment lower and kept people from staying in the program as long. 

KB: I would have to say that we weren’t surprised that we found results consistent with this large body of literature that premiums probably keep people from enrolling in Medicaid. 

DG: A few details jump out. 

Surveys conducted by the states showed most people on Medicaid thought the premium price was fair. 

But still…the policy had a chilling effect… overall enrollment was lower – even among people exempt from paying. 

Plus, the premiums of $30 or more seemed to keep the most folks away. 

Finally – the people who dropped out, dropped out fast…usually within the first year or so of having to pay. 

After that, people tended to stick with the program.

KB: If you get past the first year …the difference tends to wash out which suggests that if you’re hanging on that long, the coverage is valuable to you, whether or not you have a premium. 

DG: The team did not consider whether the policy chased healthier people away…. But that is what one paper studying the Michigan program found.  

Kate is the first to say her study falls short of proving definitively that premiums cause people to leave Medicaid.

Maybe some state could pursue the policy and not hurt enrollment…but she says at this point that’s unlikely. 

KB: It’s possible to poke holes in any individual study, any study. But when you have a dozen studies all pointing in the same direction, it gets much harder to argue that premiums won’t have any effect on enrollment. 

DG: Last December, CMS wrote Arkansas and Montana that expanding Medicaid under Obamacare had worked…more people now were getting medical care. 

But – citing Mathematica’s report –  CMS noted…

Voice Over:  The evidence suggests that premiums can reduce access to coverage and care.

DG: The letter went on to add that premiums can exacerbate health care disparities. 

Voice Over: Research from several states shows that premium policies led to decreased enrollment and led to shorter enrollment spells for Black beneficiaries compared to their White counterparts.

DG: CMS concluded there’s no reason to believe charging people premiums…

Voice Over: are likely to directly or indirectly promote coverage.

DG: And promoting coverage is the whole point of Medicaid.

That’s why the agency has asked both states to phase premiums out by the end of the year…and may soon ask Indiana, Michigan and Wisconsin to do the same. 

Arkansas has already extended its Medicaid expansion program through a new waiver. 

But one lawmaker in Montana says CMS’s decision could have fallout in his state.  

Ed Buttrey: This is a huge mistake from the feds.   I’m very, very worried about the risk that we’ll lose the program. 

DG: When we come back, what phasing out premiums may mean for Medicaid expansion in Montana.


DG: Welcome back. 

In Montana, Medicaid expansion was far from a sure thing. 

Back in 2013, most Republicans vehemently opposed the idea. 

Democrats, including the governor, thought the state should do it.  

State Representative Ed Buttrey was in the senate then.  He was one of the few Republicans that supported expansion. 

He said the debate got quite heated. 

EB:  It was quite dramatic. It was quite emotional on the Senate floor. And again, realizing you had one side saying no, just do it as written, the other side saying no way. It was a real battle. There were threats that were made. I had my car damaged. You know, it was just an awful time and we couldn’t get it done.

DG: The measure failed by one vote…. But Ed was just getting started.  

He knew people in Montana were suffering from physical and mental health problems. He knew people were struggling with substance use. 

And he knew businesses were struggling to find reliable employees. 

EB: And I thought, Boy, isn’t there something that we can do to address these problems? To me, how can you expect your workforce to be successful if they’re not healthy both mentally and physically and if they have other problems that we weren’t dealing with?

DG: By the start of the  2015 legislative session, Ed had created a fragile coalition across party lines that wanted Montana to expand Medicaid. 

Public support was also increasing. 

Heather O’Loughlin works with the non profit, non partisan Montana Budget and Policy Center

The organization gathered data and was one of several groups that worked to push this campaign forward.

Heather O’Loughlin: There was a lot of conversation over those two years about the impact of not expanding Medicaid. What that meant for rural health providers. What it meant for families who were struggling to access health care coverage. 

EB: There was a lot of public attention towards a solution that was Montana centric. And I think at that point is when the public really started to say, ‘Hey, even though we have a Republican Legislature and a Democrat governor,  is there something that maybe we can all get behind?’

DG: That momentum was building, in part, because Montana Republicans were watching CMS.

The agency was approving waivers in red states like Indiana and Arkansas, allowing them to charge people premiums. 

Ed thought that this was a great chance to salt in a bunch of long held conservative policy ideas. 

EB:  So we wanted there to be personal responsibility. And that included having rewards for healthy behavior, having a good path out of poverty. We needed people to be able to pay premiums, have skin in the game.

DG: Ed built a bill that drew on his twin goals of improving health and strengthening the economy. 

The bill came to be known as the Health and Economic Livelihood Partnership, or HELP ACT – and charging low-income people premiums was the measure’s cornerstone. 

Dozens of Montanans testified at the statehouse. 

Montage:  And I’m here to ask you to support Senate Bill 405…We would like to see a bill passed that expands coverage for everyone in the Medicaid gap…I thank you for your consideration of the needs of Montana’s working poor…We think our clientele would save about $10 million if this bill’s passed…Doing nothing is not an option. So I’d encourage a do pass…and I urge you passing the Montana Health Act…I hope that you will pass this bill…This would help us all a lot, so please pass it.

DG: One person Heather remembers is a guy named Max Naethe. 

Heather said his story captured the stakes if Montana expanded Medicaid. 

Max told the lawmakers he was supporting himself and his two daughters as a pizza delivery man. 

With money tight he was rationing his insulin…and he desperately needed a heart transplant. 

Max Naethe: I can’t even get on a transplant list without insurance.  I make about $13,000 a year…which is too much for me to get Medicaid and not enough to buy insurance. I can’t take on another job, I have too many health issues right now. Doctors have told me that I should be on total disability, but to do that, you’ve got to be off work for a year. And who’s going to pay my rent? Who’s going to pay my gas,  and my utilities? It’s a big, vicious circle.

DG: Max said they were living dollar to dollar…and as much as he hated the idea of getting help…he told the Senators that’s what he was doing.  

MN: Without expansion, things look pretty bleak for me. And  all I have left is seeing my girls get on their feet. I want to be here to see them graduate. So please help me so I can get health care that I need, so I can be here for that. Please pass Senate Bill, four or five. 

HO:  You know, I think. He was. In in the minds of, I think, many policymakers doing everything right, you know, attempting to hold down a job but facing serious health issues that put him at risk of losing that job…

DG: Heather O’Loughlin says the hearings – and Max’s testimony in particular – put a spotlight on what would happen if the state pressed on.

HO: I think it was a perfect example of the the underlying goal of providing affordable health care coverage and the impact that can make on someone’s ability to to thrive and take care of their family.

DG: For Democrats – it was a chance to get people like Max essential care. 

For Republicans – it was a chance to beef up the state’s workforce and the economy. 

Everyone in the coalition was committed to expanding Medicaid. 

Now they just had to agree on what it would look like. 

Ed staked out his position. 

He wanted to – reduce reliance on social services, help people find work and make sure enrollees had personal responsibility.

That’s why premiums were non negotiable. 

EB:  Now, the governor didn’t like that at all, but to his credit, this was Governor Bullock at the time. I remember daily meetings screaming and yelling and staff crying and running out of the room, and I left the room a few times and hung up on the governor. And it was just a very emotional, passionate process because we all wanted to get something done.

DG: They had 90 days to pull this off. 

 Long days turned into late nights. 

They yelled. They cried. They gave it another go. 

But in the end, they got it done. 

The bill passed and CMS granted Montana the authority to expand Medicaid and charge people premiums. 

Democrats had negotiated a list of people who would be exempt. 

Like the medically frail, people living in areas without many providers and folks with very low-incomes. 

As the program got underway, 200 to 300 people a month  were getting kicked off for not paying premiums

In Montana, only people with incomes between 100-138% of the Federal Poverty Line can be dropped for nonpayment. 

That’s an individual who earns between $14,000 and $19,000 a year.

About three years of state records show – 7,000 people have been kicked out for failing to pay. 

HO: that is a pretty significant percentage of those who were subject to them, roughly a third of the folks who would be subject to premiums. The reality is, there’s something happening there.

DG: Ed doesn’t like seeing anyone lose coverage…but overall he feels the program has met his goals of improving health and the state’s economy.

EB: There are people that aren’t on the program because of it, but there’s not a lot of them. I think people have found a way and found enough benefit within the program that is worth to them and their families to pay the premium, and they do pay it.

DG: 106,000 people are enrolled in Medicaid expansion today – that’s 10% of the state’s population. 

A University of Montana report from last year found expansion has helped more people get medical care, created thousands of new jobs, and has brought in about $650-$700 million into the state every year. 

While the program costs Montana about $80 million a year… the report finds 40% of that is offset by lower health care costs and increased economic activity. 

But now – with CMS ordering the state to phase out premiums – Ed wonders if this all may go away.

EB: It just is amazing to me that the Biden administration would decide that they’re not going to allow premiums at all. That’s always been one of the cornerstones of our Medicaid expansion program in Montana.

DG: In a sign of how difficult the decision is…there’s a good chance the Legislature will wait until 2025 – when Medicaid expansion in Montana sunsets – to even take the issue up. 

It’s impossible to know the makeup of the Legislature and which party will hold the governor’s office…but if Republicans control both branches…he can imagine the state walking away.

EB: I think it comes back to the argument as to whether health care is a right or not. I think there’s a lot of those folks saying people have the right to to get the medical service that they need, shouldn’t have to pay for it. You know, my party does not believe that’s the case. We believe that it’s not a right, it’s a privilege and that there has to be some skin in the game.

DG: Ed feels stuck. 

What’s more important – making people who earn around $20k a year pay something in order to access medical care, or continue to ensure a healthier workforce that brings in millions of taxable dollars to Montana every year. 

What would he tell the governor if he asked for Ed’s advice?

EB: Yeah, I’ve run that through in my mind more times than you can imagine.  i think I would lean towards the benefits of the program, how much it’s good it’s done for folks. I’ve personally had a lot of interactions with people whose lives have been saved because they’ve had access to health care or had access to addiction treatment. It’s going to be hard to look those folks in the face if I don’t support moving the program forward in some fashion, but I don’t know. I’m torn. 

DG: Ed expects the debate over premiums to go on…he may or may not be a state lawmaker the next time the Legislature votes. 

But the possibility that political philosophy prevails, he says, weighs heavy on his mind. 

I’m Dan Gorenstein and this is Tradeoffs. 

Tradeoffs’ coverage of health care costs is supported, in part, by Arnold Ventures and West Health.

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Episode Resources

Additional Research and Reporting on Medicaid Premiums:

Biden Administration Says No to Premiums in Medicaid (Joan Alker, Georgetown University Health Policy Institute 1/13/22) 

Skirmish Between Biden and Red States Over Medicaid Leaves Enrollees in the Balance (Phil Galewitz, Andy Miller, Kaiser Health News, 2/10/22)

Understanding the Impact of Medicaid Premiums & Cost-Sharing: Updated Evidence from the Literature and Section 1115 Waivers (Madeline Guth, Meghana Ammula, Elizabeth Hinton; Kaiser Family Foundation, 9/09/21)

Medicaid Section 1115 Demonstrations Summative Evaluation Report (Kara Contreary, Katharine Bradley, Matthew Niedzwiecki, Kristin Maurer, Sandra Chao, Brenda Natzke, Maggie Samra; Mathematica, 1/17/20)

Episode Credits


Katharine “Kate” Bradley, Principal Researcher, Mathematica

Heather O’Loughlin, Co-Director, Montana Budget & Policy Center

Ed Buttrey, Montana State Representative, representing House District 21  

The Tradeoffs theme song was composed by Ty Citerman, with additional music this episode by Blue Dot Sessions.

This episode was produced by Andrea Perdomo and mixed by Andrew Parrella.

Additional thanks to:

Matt Salo, Dennis Smith, Craig Wilson, Joan Alker and Families USA.