RALEIGH — North Carolina Republicans made it official last Thursday, passing a massive Medicaid expansion bill that will add as many as 600,000 able-bodied North Carolinians to federal health care rolls.
The final passage of the bill, HB 76, was celebrated by Republicans, Democrats and hospital leaders, as billions in federal funds will now be used to cover nearly 4 in 10 citizens in the state.
At a ceremony Monday at the Executive Mansion, Democratic Gov. Roy Cooper basked in the glow of realizing one of his top priorities since becoming governor. The scene featured dozens of legislators, doctors and stagecraft touting the measure.
“Medicaid expansion is a once-in-a-generation investment that will strengthen our mental health system, boost our rural hospitals, support working families and so much more,” said Cooper. “This is a historic step toward a healthier North Carolina that will bring people the opportunity of better health and a better life.”
The swift turnaround of state Republicans, which began in 2022, completes a long-sought goal of Democrats and hospital leaders.
While legislative leaders’ support made the deal fait accompli, fiscal conservatives still sounded alarms before passage.
One of the leading groups opposing the efforts was the Foundation for Government Accountability, which warned state leaders that 39 other states have tried — and failed — to keep costs associated with expansion reined in.
“Every state that has expanded Medicaid has seen a huge influx of able-bodied adults crowding their programs,” the FGA noted. “In all these states, total enrollment far exceeded what expansion advocates estimated. What would make North Carolina any different?”
The group gave two examples. In Virginia, initial projections for expansion enrollment were 300,000 people. Enrollment sits at more than 730,000 people, crowding out budget resources for essential services such as roads, law enforcement and schools, according to research. In addition, a ballot initiative in Idaho expanded the program, which quickly grew from 62,000 to over 120,000 able-bodied adults and continues to increase.
The John Locke Foundation, a North Carolina-based think tank, called the deal “the largest expansion of entitlements in state history.”
“This course reversal on Medicaid expansion is hugely disappointing,” said JLF President Donald Bryson. “For years, the fiscally conservative legislature has stuck to sound economic principles. Their assertions that expansion will end if it becomes fiscally untenable is a pipe dream. Expanding entitlements while cutting taxes is a recipe to turn North Carolina from the national tax reform model to the disappointment of Kansas’s fiscal failures.
“In addition, their failure to meaningfully address supply-side problems will only exacerbate the statewide healthcare shortage and drive up wait times and costs for the general public.”
The think tank has spent decades advocating for Certificate of Need reforms, a few of which are included in HB 76. Those laws, instituted in 1978, require state regulatory approval for health care and hospital providers to build new facilities, enter new markets, and a host of other actions that are limited in state law.
The CON changes would remove psychiatric beds and facilities, chemical dependency treatment beds and facilities, replacement equipment up to $3 million, and various pediatric treatment services from review under the law.
In addition, the bill exempts ambulatory surgical centers from CON review if they are licensed by the N.C. Department of Health and Human Services (NCDHHS), are located in a county with a population greater than 125,000 and commit 4% of their total earned revenue to charity care. The measure also removes MRI machines in counties with a population over 125,000 from CON review. According to population estimates, 23 of North Carolina’s 100 counties would meet that threshold.
In a 2022 press conference, Senate Leader Phil Berger (R-Eden) said he believed it was time to launch expansion in the state, saying he was convinced the 90% portion the federal government pays wouldn’t change. He added at the time that there was “no fiscal risk” to the state budget.
State economists back that claim up based on the available numbers.
The expansion’s Healthcare Access and Stabilization Program (HASP) will increase Medicaid hospital reimbursements for services provided to enrollees. HASP is funded with new receipts from hospital assessments and transfers, and NC Health Works, the expansion vehicle, is funded with a combination of departmental receipts from a new hospital assessment structure and increased gross premiums tax revenues.
Republicans are taking advantage of the Biden administration’s American Rescue Plan, which passed in March 2021, to receive an increased match for the first two years of the program. The ARP offers an additional 5% on the state’s federal Medicaid match to be applied to the existing Medicaid population for two years. That is expected to result in an additional $912 million per year for those two years.
Those figures, though, are based on projections. As the FGA has noted, every state expanding Medicaid has seen higher than projected enrollment and costs.
One well-known Republican operative in the state told North State Journal there will be electoral consequences for the deal.
“Adopting Democratic talking points to deliver a victory for Democrats will do more to destroy the base’s trust in Republican leaders than it will ever improve health care access in North Carolina,” the operative said.
That statement was echoed by Americans for Prosperity’s state chapter.
“After a decade of opposing mandates from Washington, lawmakers in Raleigh — with encouragement from Washington — abandoned innovative solutions in exchange for taxpayer handouts from D.C.,” said Americans for Prosperity North Carolina Deputy State Director Tyler Voigt. “Lawmakers should note this vote will be scored on our annual scorecards.”
