The Daily Tar Heel

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Friday May 27th

NC set to reject Medicaid expansion, but financial questions linger

Republicans in the N.C. General Assembly continue to cite the “Medicaid monster” as a funding fiasco — but a new study sheds light on the financial penalties the state could face by not expanding Medicaid.

A study released by the Rand Corporation earlier this month predicts that states rejecting Medicaid expansion will collectively have 3.6 million fewer insured residents, an $8.4 billion decrease in federal funding and a $1 billion increase in state spending on uncompensated care.

North Carolina is one of 14 states with governors who have said their states will opt out of the Medicaid expansion provision of the Affordable Care Act.

“If you look out the rearview mirror, it may look like a sunny day,” said Don Dalton, spokesman for the N.C. Hospital Association.

“But hospitals have to look out the windshield — and we see some real dark clouds up ahead because of federal cuts.”

Dalton said one-third of all hospitals in the state have operating margins in the red — and more reductions will give them bleak outlooks.

But Katherine Restrepo, an analyst at the conservative John Locke Foundation, said Medicaid cost overruns from last year sit at $330 million.

Experts have said the number could approach $400 million before the end of the fiscal year June 30.

Many legislators have blamed Medicaid’s inefficiency as a principal cause of forthcoming budget cuts to several government sectors — including the UNC system.

“(The Medicaid shortfall) takes away from other parts of our budget, like education,” Restrepo said.

Medicaid expansion would have extended coverage to 500,000 more North Carolina residents, in addition to the 1.5 million already in the program.

N.C. Sen. Ellie Kinnaird (D-Orange) said the health services lost by rejecting Medicaid will impact the state more severely than any expansion costs would have.

A study done by the N.C. Justice Center earlier this year found that expanding Medicaid would have brought more than $15 billion in federal funds to the state and created 25,000 jobs by 2016.

“We are going to experience some severe shortfalls in our rural hospitals, to the point where some of them might have to close,” Kinnaird said. “It’s a very difficult situation.”

Still, Restrepo said the legislature’s decision to focus on reform would improve the state’s future outlook for health care, while reducing the Medicaid tab that taxpayers are on the hook for.

She added that Medicaid’s cost per enrollee in 2009 was just over $6,000, higher than both the average in Southern states and the national average.

“To be fiscally responsible, Medicaid expansion is not the way to go,” she said. “It’s a broken system that we have to fix now before we throw money at it.”

Gov. McCrory proposed his privatized alternative to Medicaid expansion, called the “Partnership for a Healthy North Carolina,” in April.

The plan would allow health care providers offering different packages of services and benefits to compete in a market system.

The final policy changes under the Affordable Care Act will take effect in January.

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