North Raleigh Today

Expanding the Medicaid program has expensive consequences for a state, according to a study by the American Legislative Exchange Council.

And although the expansions will lead to higher Medicaid enrollment, perhaps more than twice as many new patients as anticipated, per-person Medicaid cost increases also follow, leading to an average state Medicaid cost spike of 157%. 

Earlier this year North Carolina Gov. Roy Cooper, a Democrat, introduced a budget slated to spend tens of billions of dollars next year alone. After re-voting the fiscal year 2020-21 Republican-passed budget in 2019 that did not include Medicaid expansion, Cooper's most recent budget proposal is another attempt to bolster the program despite historical GOP opposition in the legislature. 

Jordan Roberts, government affairs associate at the John Locke Foundation, said there are many downsides to expanding Medicaid, namely substantially increasing the amount of people reliant on the program when it already supports over one-fifth of North Carolina residents. 

North Carolina's Medicaid program already supports more than 2 million people at a price tag of nearly $17 million. For the state fiscal year 2020, there were 2.1 million Medicaid beneficiaries in North Carolina, 74,700 providers and 227 million processed claims. 

The expenditures were $16.9 billion. The breakdown of ages of beneficiaries is 16.6% for infants to age 5, 37.9% for ages 6 to 20, 36.9% for ages 21 to 64, and 8.6% for 65 and older.

"The state would be on the hook for a 10% share of the total expansion cost, which will likely run over cost projections from the Governor’s Office and have to be made up by cuts to the budget elsewhere or higher taxes," Roberts told North Raleigh Today. "Furthermore, Medicaid expansion does nothing about the supply shortages in the state. Expansion will result in intense pressure on the current providers by a significant increase in demand for services. This will exacerbate the current health system problems across the state."

The Locke Foundation, an independent, nonprofit think tank based in Raleigh, found the budget gap could reach as much as $171 million just in the first year, according to a 2020 analysis. 

A 2017 commentary in the North Carolina Medical Journal by Christopher Conover argues that expansion of Medicaid in North Carolina will reduce access to care for the highly vulnerable individuals already on Medicaid. He cites that due to a physician shortage at the time, an expansion "would increase the unmet demand for physician services by over 25%."

Conover argues the current financing structure of Medicaid encourages unnecessary spending and waste given that the federal government reimburses 90% of all expenditures.

"If we can justify an expenditure only when someone else pays for it, then we ought to be thinking very hard before incurring that obligation," he wrote. "We can do better. State policymakers would be far better served by resisting the urge to take federal money now and instead waiting until Medicaid financing is reformed along the lines of a more sensible capped entitlement."

Roberts also said that lawmakers should focus on reforms that increase access.

"Coverage does not equal care," he noted. "Simply giving someone a Medicaid card doesn’t guarantee access to medical care due to the substantial provider shortages across the state. The focus should be on increasing the supply of care, putting downward pressure on prices and insurance costs."

What steps will Cooper and the Republican-controlled legislature take next? 

The next goal in finalizing the two-year budget plan is for Republicans to present their reformed plan to Cooper. Even without his approval, the legislature could still pass their own bill and force Cooper to make a veto decision.

The events could track the same as they did in 2019. The governor's 2019 budget veto and urging that Medicaid expansion be up for discussion led to a stalemate that year.

"Gov. Cooper and many in his party tend to believe the only way to expand health coverage is through government-run and government-financed health care," Roberts said. "He has made Medicaid expansion a central part of his agenda ever since becoming governor. Wisely, Republican lawmakers in the state have rejected this program to the point where Cooper sank the entire 2019 biennial general fund budget because there was no funding for Medicaid expansion."

Cooper argues that the plan will be free to the taxpayers of North Carolina. However, many argue that is not the case. 

Democrats supporting the expansion believe that this is an excellent opportunity to bring health coverage to those who do not have it and the federal money given to the state is believed to be the ticket to do so.

"Make no mistake, Medicaid expansion is not free," House Majority Leader John V. Bell IV (R-Wayne County) tweeted in 2019. 

Bell stated earlier this year that there is no appetite in his caucus to expand Medicaid, although that does not mean they don't want to improve access to healthcare services for their residents.

"We could look at ways to expand telehealth, look at the associated health care plans, look at reducing barriers for rural North Carolinians to access care and how we put more providers in these rural communities," Bell said. "These are all areas that I think we can have great bipartisan support." 

For the seventh consecutive year, North Carolina's Medicaid budget finished with cash on-hand. The Locke Foundation is urging the repeal of anti-competitive certificate of need laws, "granting full practice authority to highly trained advanced practice registered nurses, and occupational licensing rollbacks that increase the number of providers in the state, especially via telehealth," according to Locke. 

If expansion in the absence of reform continues, so, too, will the strain on the state and country's medical infrastructure, some argue. Analysts Brian Blase, Sam Adolphsen and Grace-Marie Turner wrote in a 2020 report for the Galen Institute and the Foundation for Government Accountability that expanding Medicaid has been shown to increase the waiting time to get seen by a medical provider, particularly in the emergency room.

“For Medicaid to meet its core mission, its focus should remain on the truly vulnerable—low-income children, pregnant women, seniors and individuals with disabilities," their report read.

The writers added that the Affordable Care Act (ACA) created an entirely new class of recipients dependent on Medicaid, the: "childless, able-bodied, and working-age adults."

"Starting in 2020 and continuing until Congress changes the expansion matching rate, the federal government pays 90% of the costs of medical assistance for the expansion population," the Galen report continued. "By providing a higher reimbursement for this population, the federal government discriminates against the traditional Medicaid populations in favor of the able-bodied, working-age adult population."

Earlier this year Cooper said Medicaid expansion is the best way to get more healthcare coverage to every resident of North Carolina. What the North Carolina legislature and governor don't agree on may be pushed through by President Joe Biden's federal reconciliation bill and his federal bypass attempt. 

"Biden and his administration seem poised to railroad states that have chosen not to expand Medicaid by implementing a federal bypass program that puts us on the road to a wholly federalized health system," Roberts said. "This is a last-ditch effort to try to fully implement the failed Affordable Care Act, which has increased health insurance costs across the country and was unable to prop up the individual markets in states. As with Gov. Cooper, President Biden seems to believe the only way to increase health coverage is through a massive increase in the public financing of health coverage which will likely result in marginal coverage gains for an exorbitant price tag for taxpayers."