RALEIGH — Fresh off taking his oath of office shortly after midnight New Year’s day, Gov. Roy Cooper spoke before the 2017 Economic Forecast Forum in Durham Wednesday to offer three ideas to take the economy of the Old North State from good to great.
The event, sponsored by the North Carolina Chamber and North Carolina Bankers Association, was attended by some of the State’s most powerful business leaders to which Cooper made policy statements that sparked controversy Wednesday afternoon.
Cooper first expressed his intent to unilaterally expand Medicaid under the Affordable Care Act (ACA) via amendment to the State Medicaid Plan, presenting it as a way to spur billions in investment dollars and to create thousands of new jobs.
“We have to accept Medicaid expansion as being offered to our state,” asserted Cooper. “It will provide us significant investment. There’s a reason I’m saying this – not at a health clinic, not at a hospital – I am saying this at an economic forum because of the jobs it is going to bring, because it is fiscally responsible…”
The governor said the expansion would add approximately 650,000 people to Medicaid rolls, create $2-4 billion in annual investment and create 20,000-40,000 jobs, as well as help ailing rural hospitals achieve better fiscal positions.
Under the ACA, a state can elect to expand Medicaid coverage with a federal promise to temporarily cover 95 percent of costs, while the remaining five percent must be covered by the state. Cooper proposed that state match be covered by North Carolina hospitals in lieu of taxpayers.
The N.C. Hospital Association (NCHA) came out in support of expansion as hospitals would benefit the most financially from expanded insurance coverage despite being called upon by Cooper to fund the five percent state match.”
North Carolina hospitals and health systems strongly support expanded insurance coverage, inclusive of Medicaid expansion, to provide essential health coverage for North Carolinians,” stated the NCHA in a press release. “Given the complexity of the issue and the process, we believe coverage expansion can only happen through a bipartisan, collaborative effort. We are prepared to work with the Governor, the General Assembly, and our members of Congress to achieve this goal.”
On the issue of expansion benefiting rural hospitals, Julie Henry of the NCHA cautioned that Medicaid expansion alone is not a silver bullet.
“I think the notion that Medicaid expansion is the sole saving grace for rural hospitals is overstated,” said Henry.
State Law notwithstanding Cooper’s proposal, a 2013 state law that explicitly forbids Medicaid expansion by the State’s executive branch may prove fatal for the proposal. That statue declares that:
“The State will not expand the State’s Medicaid eligibility under the Medicaid expansion provided in the Affordable Care Act, P.L. 111-148, as amended, for which the enforcement was ruled unconstitutional by the U.S. Supreme Court in National Federation of Independent Business, et al. v. Sebelius, Secretary of Health and Human Services, et al., 132 S. Ct. 2566 (2012). No department, agency, or institution of this State shall attempt to expand the Medicaid eligibility standards provided in S.L. 2011-145, as amended, or elsewhere in State law, unless directed to do so by the General Assembly.”
When asked about the apparent legal roadblock, Cooper, the former state attorney general, demurred.”That law is certainly there,” admitted Cooper. “I do believe it invades on the core executive authority of the governor to accept federal funds that look out for the public health of the people, but I would rather not get into a dispute with that. I also think that it’s important that we move expeditiously. This has been debated back and forth now for several years. Someone needs to take action, so I’m going to take action, and then we’ll try to work it out with [the legislature].”
Medicaid expansion has been an item of partisan contention in the state since the passage of the ACA and the subsequent determination by the U.S. Supreme Court that states could not be mandated to expand Medicaid under the law as it represented an unfunded liability.
The proposal received immediate criticism from the state legislature’s Republican leadership.
“Just days into his term as governor, Roy Cooper already intends to violate his oath of office with a brazenly illegal attempt to force a massive, budget-busting Obamacare expansion on North Carolina taxpayers,” said Senate pro tempore Phil Berger (R-Eden). “Cooper is three strikes and out on his attempt to break state law: he does not have the authority to unilaterally expand Obamacare, his administration cannot take steps to increase Medicaid eligibility and our Constitution does not allow him to spend billions of state tax dollars we don’t have to expand Obamacare without legislative approval.”
N.C. House leaders Speaker Tim Moore (R-Kings Mountain) and majority leader Rep.John Bell (R-Wayne) echoed Berger’s sentiments, saying, “fortunately, Governor Cooper lacks the authority to implement his proposed plan and cannot unilaterally raise taxes on the people of North Carolina.”
Americans for Prosperity (AFP), a right-leaning free market advocacy group, also blasted the proposal as a financial burden to North Carolina taxpayers.
“The General Assembly is not yet in session, and Governor Cooper is already seeking to break a law and cost North Carolinians $6 billion over the next decade,” said AFP state director, Donald Bryson. “Expanding Medicaid is a completely irresponsible policy due to the high cost to the state and the high likelihood that the Affordable Care Act will soon be repealed, of which Medicaid Expansion was a linchpin.”
Cooper’s second and third ideas for spurring economic growth were to invest more in education and teacher salaries, and repealing the controversial House Bill 2 respectively.
The forum also included a panel discussion with four leading N.C. based economists who discussed economic prospects for 2017 under a Trump administration, as well as the new political dichotomy in state government.
Michael Walden, a distinguished economic professor at N.C. State; Mark Vitner, senior economist at Wells Fargo; Harry Davis, an economics professor at Appalachian State University; and John Connaughton, an economics professor at the University of North Carolina-Charlotte participated and spoke to Cooper’s proposals.
The panel had a consensus view that House Bill 2 was bad for the economy as it created a public relations nightmare for economic developers recruiting large companies to the state. Still, the actual impact remains elusive and urban markets were undoubtedly suffering more than rural areas, said Connaughton. The economists also agreed that education was a priority for a healthy economy that needs a skilled and educated workforce to thrive.
On the issue of Medicaid expansion, the responses were more nuanced. Short term, the panel foresaw a positive economic impact, but levels of uncertainty rose over the long term.
“In the short run, yes. I think the concern is the long run,” said Walden. “What’s the tab going to be for the State long run?”That sentiment was echoed by Davis, who said, “The trick is what do you think is going to the real cost of the program out in the future – that’s unknown.”
Regardless of the legal and financial questions inherent in expanding the entitlement program in North Carolina, Cooper told reporters he plans to file the amendment sooner rather than later to preempt expected changes to the ACA by the incoming Trump administration.
“I am planning to file an amendment to our plan by Friday,” said Cooper. “I believe that time is of the essence because there are potential changes coming down the pipe, so I believe NC needs to move forward with this plan. I would appreciate the legislature working with us and not try to stop this, because it is in North Carolina’s best interest to get this approved before the turmoil begins with the Affordable Care Act and where we don’t know what’s going to happen.”
The North Carolina General Assembly returns to session January 11 to face what has already become an apparent test of the State’s separation of powers.