‘Downright unaffordable’: State employees in Montana to face higher healthcare costs

Nathan Betz, a probation officer for the adult treatment court in Helena, was blindsided Tuesday afternoon when he learned through an email that an additional $100 every month would soon be docked from his paycheck to cover the costs of his family’s health insurance.

Things are tight already for the father of three and his wife. They have a mortgage and a car payment, and the cost of groceries seems to rise every time they visit the store. Earlier this summer, Betz had knee surgery and his daughter broke her finger, and, according to that same email, the costs for those follow-up specialty visits are also poised to rise.

“It’s downright unaffordable,” he said.

Betz is one of the 13,000 active state government employees who receives health insurance through the state of Montana. A total of 28,000 past and present employees and their families will see healthcare costs balloon next year as part of the remedy for a strain on the account that funds the insurance program.

However, state officials have known accounts were draining, and questions about other options they considered, beyond passing the cost onto employee healthcare costs, remain unaddressed.

The email Betz received came from the Montana Department of Administration announcing hikes to premiums, deductibles and out-of-pocket maximums that will kick in on Jan. 1. A person working 30 hours a week, for example, could see their monthly contribution double. Deductibles will bump up from $1,000 to $3,000 for each individual enrolled in the state healthcare plan.

Similar to a private-sector company, the state government offers health insurance to eligible workers. Coverage is funded by a mix of employee contributions and payments from the state into an account that’s designed to be self-sustaining, meaning the revenues shouldn’t outpace expenditures in the form of health insurance claims.

That task has become increasingly tenuous since 2024 as stagnant funding from the state and largely unchanged employee contributions have failed to keep up with runaway healthcare costs and a growing number of pricey insurance claims.

So while the account’s diminishing reserves weren’t a surprise to the top brass of the state’s largest union of government employees, the timing of DOA’s announcement certainly was.

Compensation and benefits are key parts of collective bargaining negotiations that take place between unions and the governor’s office every two years heading into Montana’s legislative session. Agreements reached there are then wrapped into a single budget bill that allocates state dollars for employee pay, worker’s compensation and benefits. Those meetings are scheduled to begin next week.

“We really expected and anticipated that this would be a part of a bargaining conversation, and so getting to the point where we are today was a surprise,” said Melissa Romano, president of the Montana Federation of Public Employees.

How did we get here?

At an interim committee meeting in June, staff from the Department of Administration, which oversees the State of Montana Benefit Plan, warned lawmakers that the account was hemorrhaging funds. It would soon dip beneath the threshold that, according to state law, requires the government to change how it fills the account in order to maintain solvency.

House Bill 13, the funding package that determines compensation for government employees, had been passed by the 2025 Legislature and signed into law by Gov. Greg Gianforte without much fanfare. It included the first increases in nearly a decade to both the state’s contribution into the government healthcare account and the price of insurance passed along to employees.

But Amy Jenks from DOA said the government was still losing an average of $141 per month on medical plan enrollees, a gap she attributed to skyrocketing healthcare costs and forecasting from the department that underestimated just how expensive the cost of care would be.

“Our projections were off pretty dramatically,” Jenks told the interim committee in June.

She also added that extreme cases of big-ticket health claims were becoming more frequent.

During a typical year, there might be one person that files claims worth $1 million, Jenks said. In 2025, the State Plan had five people with claims that blew by that mark. Those included two cancer patients whose prescription drugs alone cost $2 million a year and two children whose gene therapy treatments totaled around $1 million each.

“Those are things that we did not anticipate fully,” Jenks said.

DOA Director Misty Ann Giles offered some solace to lawmakers in June, noting that because Montana law requires the plan’s account to maintain a certain amount of cash in the bank, it’s better off than many other states that don’t have such guardrails but are facing similar cost trends. Her home state of Georgia, for example, is millions in the red, Giles said.

State government can’t control the cost of healthcare, only how much the Legislature allocates to keep the insurance fund afloat. Until the 2025 Legislature, it had been nearly a decade since the state had increased its contribution.

In 2017, lawmakers allocated $1,054 per month for every enrolled individual from the general fund into the State Plan account; the 2025 Legislature increased that to $1,080 in 2026 and bumped up employees’ monthly contributions.

According to the memo sent out by DOA, those changes couldn’t offset the $81 million imbalance coming next year. A stopgap that would go into effect at the start of 2027 would be critical — rather than waiting for the next Legislature to sign off on changes agreed to for 2028.

DOA in that memo said that it planned to propose increasing its contribution during the next legislative session by approximately $8 million, but that, until then, the crux of the cost would fall on employees themselves.

“We at MFPE recognize that the State Health Plan needs additional funding. We also strongly reject this idea that state employees should be expected to solve that problem,” Romano said. “We view health insurance as compensation."

Representatives from DOA and the governor’s budget office told members of the oversight committee that they had entertained all options, and this was deemed the best path forward.

“The State is proposing additional funding, but fully absorbing the increase would require substantially more public funding,” said Kaitlin Timken, a spokesperson for the governor, in an email. “The administration must balance the need for a sustainable employee health plan with its responsibility to taxpayers and other essential state services.”

What’s unclear is whether any of the separate accounts that have been created in recent legislative sessions, using the state’s run of surplus dollars driven by pandemic relief funds, were considered as a short-term solution.

Romano, a Democratic state lawmaker, said she had not been given a clear answer about what scenarios had been entertained by DOA or its partners in Gianforte’s budget office, but that MFPE would be asking further questions during collective bargaining.

DOA did not respond to requests for comment by press time.

For Betz, it almost doesn’t matter how they got here, only that this is where they landed.

“I really love my job. I think what I do matters and makes a difference in my community,” Betz said. “But I think that the powers that be, whoever makes these decisions regarding benefits and wage increases and what comes out of my paycheck and doesn't come into my pocket should consider their employees.”

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