The Slow Squeeze on Montana’s Nonprofits

When people debate Medicaid expansion, the conversation usually lands in predictable places — government growth versus safety nets, federal dollars versus dependency. But inside a nonprofit behavioral health system in rural Montana, the debate feels far less abstract. It feels like payroll. It feels like caseload numbers. It feels like trying to recruit and retain staff in a labor market where reimbursement rates haven’t kept pace with the real cost of delivering care.

Montana adopted Medicaid expansion in 2015, and since then tens of thousands of low-income adults have gained coverage. The federal government covers 90 percent of the expansion population, bringing hundreds of millions of federal dollars into our state each year. That influx has stabilized rural hospitals and reduced uncompensated care. For nonprofit providers, that stability matters. When clients are insured, agencies can bill for services instead of absorbing the cost. Revenue becomes more predictable. Financial volatility decreases. In rural communities where nonprofit behavioral health and developmental disability agencies are often the only providers, that stability can mean the difference between staying open and shutting down.

But expansion doesn’t control reimbursement rates.

Nonprofits are mission-driven, not profit-driven, but they still operate on math. Staff must be paid. Insurance premiums don’t disappear. Compliance requirements grow more complex each year. Most behavioral health and DD nonprofits rely heavily on Medicaid as their primary payer source, and reimbursement rates are set through legislative appropriations and state budgeting decisions. Those rates determine what an hour of therapy pays. They determine what case management pays. And they ultimately determine wage ceilings.

If reimbursement rates are low, wages are constrained. Recruitment becomes harder.

Experienced staff leave for better-paying sectors. Caseloads grow. Waiting lists lengthen.

Even when expansion increases the number of insured clients, if the per-service rate doesn’t reflect real operating costs, nonprofits remain financially tight. Volume increases. Margins don’t.

From a fiscal standpoint, Medicaid is now one of the largest components of Montana’s state budget discussions. Even with a 90 percent federal match for the expansion population, the overall size of the program influences how lawmakers approach rate increases. Raising reimbursement across a larger Medicaid base costs more in total dollars. That makes reform politically harder, not easier.

This is where a conservative critique deserves serious consideration. When government expands eligibility, it expands structural obligations. If reimbursement rates don’t rise in proportion to the demand created, nonprofits become shock absorbers for that gap. The system grows horizontally — more covered lives — but not vertically — stronger workforce support. Agencies stretch staff thinner. They freeze wages. They rely on grants to subsidize underfunded services. They accept higher turnover as normal, because they have no choice.

In rural Montana, that quiet squeeze has consequences. When a nonprofit closes its doors, there isn’t always another provider waiting to step in. Services don’t shift — they disappear.

Families travel farther. Waiting lists grow longer. Crisis systems absorb the overflow.

Repealing expansion wouldn’t eliminate need. Mental illness and developmental disabilities don’t disappear because eligibility and selection process narrows. Substance use disorders don’t resolve because coverage contracts. Costs would shift, often into emergency rooms, jails, or state facilities at a higher per-unit or per service cost. But maintaining expansion without meaningful reimbursement reform leaves nonprofits operating in a structural tension: stable coverage on paper, fragile sustainability in practice.

Coverage determines who can seek care, but reimbursement determines whether someone is still there to provide it. Expanding eligibility without strengthening the system underneath it doesn’t build resilience — it stretches what already exists. And eventually, math catches up with mission.

Nonprofit doesn’t mean unlimited resilience. It means mission anchored in responsibility. If Montana is going to rely on Medicaid as the backbone of behavioral health and developmental disability services — and it clearly does — then fiscal stewardship demands more than enrollment numbers. It demands reimbursement structures that reflect inflation, rural recruitment challenges, and the true cost of delivering care.

Because a system can grow for a long time without appearing to break.

But growth without reinforcement is not strength.

It is pressure accumulating quietly — until something gives.