Montana Cuts Healthcare Costs

The state of Montana has undertaken an experiment in cutting its healthcare expenses that I thought I’d pass along:

A year ago, Montana opened the nation’s first clinic for free primary healthcare services to its state government employees. The Helena, Mont., clinic was pitched as a way to improve overall employee health, but the idea has faced its fair share of political opposition.

A year later, the state says the clinic is already saving money.

Pamela Weitz, a 61-year-old state library technician, was skeptical about the place at first.

“I thought it was just the goofiest idea, but you know, it’s really good,” she says. In the last year, she’s been there for checkups, blood tests and flu shots. She doesn’t have to go; she still has her normal health insurance provided by the state. But at the clinic, she has no co-pays, no deductibles. It’s free.

That’s the case for the Helena area’s 11,000 state workers and their dependents. With an appointment, patients wait just a couple minutes to see a doctor. Visitation is more than 75 percent higher than initial estimates.


Physicians are paid by the hour, not by the number of procedures they prescribe like many in the private sector. The state is able to buy supplies at lower prices.

The public employees are happy. The healthcare providers are happy. The public employees are healthier. The state is saving money—possibly as much as half of what it would otherwise be paying. What’s not to like?

Critics of the approach have generally taken one of two tacks. Either they object on philosophical grounds, i.e. the state just shouldn’t be in the healthcare business, or they make a sort of “free rider” argument, i.e. the state is saving money but local hospitals are making up the difference by charging more to people other than public employees. I’m not sure that either argument holds water.

Maybe Montana’s circumstances are unique but I think this is an experiment that bears repeating elsewhere.

9 comments… add one
  • sam Link

    “Physicians are paid by the hour, not by the number of procedures they prescribe like many in the private sector.”


  • jan Link

    What works in Montana may not work in California, as each state has it’s own demographics, political bent, fiscal responsibilities, strengths and weaknesses etc. Why not let states then figure out their own health cost-savings plans, instead of some gigantic plan, like the PPACA, devised by the federal government?

    I personally have always liked the idea of walk-in clinics, even drug-stores who can offer low-cost or free services to people in monitoring their BP, blood sugar, respiratory problems, give vaccinations, flue shots and so on. It certainly takes a load off of ERs! IMO, this is part and parcel of having greater consumer involvement in one’s own healthcare — making choices in where and how often to seek care or monitor health conditions

    I think that the key in Montana’s plan is that it is a medical staple available to everyone, and not just based on financial need. The financial underpinnings for such services are also developed around a viable business model regarding payment of medical personnel, as well as lowering costs by purchasing through volume. Lastly, this plan appears to not subvert insurance or other aspects of existing medical care. It seems to simply offer an overlay of more options and choices.

  • PD Shaw Link

    I will speculate that there is a group selection issue here. State government employees would by and large be average to above average in socio-economic status and have had good access to healthcare for many years prior to the experiment. That they are employed discounts some of the most debilitating ailments.

    And since the employees have the choice to take their condition to the free clinic or their traditional healthcare provider, I would speculate further that the employee is taking the more serious health concerns to the traditional doctor and making routine checkups or prescription visits at the free-clinic. If this division of labor saves money, then it supports the argument that health care reform should focus on the serious stuff, and leave the less serious stuff to a separate system (free clinic, Wal*Mart, or out-of pocket).

  • steve Link

    It is important to note here that the private sector could have done this, but it did not. I havent read any details on this, but i suspect that what we are seeing is that the kinds of outpatient care that are often touted as being most amenable to market mechanisms for cost control just dont matter that much. What really drives costs is the expensive stuff. If you manage patients well, and do basic management for free, you save costs in the long run, as PD alludes to above.

    I occasionally have the opportunity to talk with docs from other countries. They often tell me that one of the biggest differences between the US and other OECD countries is diabetes management. They put in a lot more preventive effort, which is easier to do in system not designed for profits.

    PD- Cost shifting just doesnt happen that much. Lots of studies on this. Granted, it has not been studied for this particular instance, but I cant see why it would be more true for this case.


  • It is important to note here that the private sector could have done this, but it did not.

    Absolutely true. If insurance companies had an interest in keeping healthcare costs low, they would have done something like this decades ago.

    But the incentives for insurance companies are perverse: since in so many cases they are simply administrators and paid a percentage of the amount administered it is actually in their interests for healthcare costs to rise.

  • Trumwill Link

    I’ve been batting this idea around in my head for a while. I think the main concern would be scalability. Can you find enough doctors to staff these places on a large scale? Or is it being staffed primarily by doctors that are especially motivated?

  • Trumwill Link

    Or, put another way, I think we should look at this the same way we look at a pilot program in education that produces good results. Keep looking at it, expand it, and see what happens. With some caution.

  • PD Shaw Link

    @Trumwill, convenient care clinics have been growing around the country to handle the less serious stuff, not all have doctors. “A major driver of the walk-in clinic growth trend is the focus on cost. As more patients with higher deductibles seek out care options, the reduced cost of retail settings is a viable option for routine care. For example, according to one analy[s]is, the typical cost of diagnosing an earache was $59 at a retail or walk-in provider, $95 in doctor’s office, $135 at urgent care, $184 in an emergency room.”

  • steve Link

    PD- We don’t know if those urgent care clinics decrease total spending. Do they do follow up? Do they keep people from having expensive and not needed studies? Or is it just extra care? They might, but we don’t know. Doing much of the same stuff for free saved costs, but I would rather have the long term follow up to be sure.


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