GOP pushes ahead with Medicaid expansion

The entrance of the state legislative building in Raleigh is shown. North State Journal

RALEIGHNC House Republicans approved an updated Medicaid expansion bill last week that would see North Carolina become the 40th state to back adding as many as 600,000 to the government-backed entitlement program. 

The finalized package and rules are still far from complete, however, as the NC Senate Republican leadership will look to add additional regulatory changes, including overhauling the state’s “Certificate of Need” restrictions. 

The NC House Republicans’ bill, HB 76, was approved by a vote of 96-23 including unanimous support of NC House Democrats. 

“I’m asking for you to support Medicaid expansion because it is a smart and necessary investment in our state,” said state Rep. Donny Lambeth (R-Forsyth). “Think about the people you represent who will actually benefit from this.” 

The move to how, not if, to expand Medicaid marks a substantial victory for two-term Democratic Gov. Roy Cooper. 

An advocate of expansion since entering office in 2017, Cooper has repeatedly made Medicaid expansion a significant part of his agenda, at times berating the General Assembly to act. 

One of Gov. Cooper’s first moves in office was to notify the U.S. Department of Health and Human Services (HHS) that North Carolina would expand Medicaid bureaucratically; the Republican-led legislature then swifty acted to prevent him from doing so. 

In 2019, the state operated without a signed budget due to a stalemate over the program, along with education spending and other issues. 

When NC Senate Republican leaders announced their flip to supporting expansion in 2022, Cooper told Politico, “All these years, we’ve been expanding our coalition of people who have begun to realize that this is an absolute necessity and that North Carolina is being foolish and deadly in refusing to expand Medicaid. This Republican legislature has fought Medicaid expansion every step of the way … They’ve done a complete about face over the last few months. They know it’s the right thing to do.” 

Much of the Republican plan centers on what they believe is an “out” if the federal government stops paying 90% of costs or if the nonfederal share costs cannot be met with the dedicated funding sources outlined in the bill. 

Those sources are increases in revenue from the gross premiums tax due to NC Health Works coverage, increases in intergovernmental transfers due to NC Health Works coverage, hospital health advancement assessments enacted as part of the bill, and “savings to the state attributable to NC Health Works coverage that correspond to general fund budget reductions to other state programs. 

The North Carolina Hospital Association, which has strongly backed Medicaid expansion for years, released a statement in support of the NC House Republican bill.  

“Passing Medicaid expansion and HASP is a bipartisan issue. Members of all political parties want communities that are healthy and hospital doors that are open. We look forward to continuing to work with members of the General Assembly to make this a good bill that will help hundreds of thousands of our neighbors and that we can all point to with pride,” said Steve Lawler, president and chief executive officer of the North Carolina Healthcare Association. 

HASP, the Healthcare Access and Stabilization Program, will pump billions into the state’s hospitals from Medicaid reimbursements. The tradeoff for the state’s hospitals is to pay an assessment as part of North Carolina’s 10% share of expenses. 

Some Republicans supporting the bill also point to a “sweetener” in Medicaid expansion as a reason to pass the bill. The American Rescue Plan Act offers an additional 5 percentage points on the state’s federal Medicaid match to be applied to the existing Medicaid population for 2 years. North Carolina would qualify for the higher federal match, which would result in $900 million per year in additional federal Medicaid receipts for 2 years. 

Yet despite assurances that hospitals, particularly in rural areas will benefit from Medicaid expansion, the Foundation for Government Accountability says expansion has actually contributed to the closing of more hospitals. 

According to a research study, FGA found that, “While expansion proponents are fixated on one side of the ledger — uncompensated care costs — they often ignore the effect of shifting untold numbers of able-bodied adults from private insurance (whether through their employer or the individual market) onto Medicaid, which has lower provider reimbursement rates.”  

“Since Medicaid pays roughly 60% of what private insurance reimburses, expansion states ultimately lose money on every patient they crowd out of their existing private coverage and shift onto Medicaid,” the study’s executive summary adds. 

The American Legislative Exchange Council (ALEC), a nonpartisan organization made up of policy experts and state legislators around the country, is also sceptical of Medicaid expansion. 

In a Jan. 30, 2023 update, ALEC research stated that expansion has led to $100 billion in waste, fraud, and improper spending. 

“Additionally, the data is mixed on whether expanding Medicaid translates to better health outcomes. A recent National Bureau of Economic Research (NBER) study casts doubt on the claim many proponents make about Medicaid expansion saving lives,” the report states. “Regardless, many Americans have reported longer wait times, provider shortages and delayed care in states that have expanded their programs. The federal government cannot continue to run massive deficits forever and states will likely be on the hook for a lot more than they bargained for.” 

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Matt Mercer is the editor in chief of North State Journal and can be reached at [email protected]