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The Daily Tar Heel

How a push to expand Medicaid in the N.C. Legislature could cover 500,000 uninsured

nc medicaid expansion

North Carolina is looking to expand Medicaid options for its citizens.

No longer facing a Republican supermajority, Democrats in the General Assembly are focusing their newfound leverage on expanding Medicaid for almost half a million North Carolinians. 

Major state overhauls to Medicaid are already underway in accordance with a 2015 state bill to shift the state's Medicaid program toward privatization.

In the opening legislative session, Democrats introduced identical state House and Senate bills to expand Medicaid for North Carolinians at or below 133 percent of the federal poverty line.

North Carolina would not allocate any money toward the expansion, with the federal government covering 90 percent of the cost, and state health providers designated to pay the remaining 10 percent.

A 2016 study by UNC's North Carolina Poverty Research Fund found expanding Medicaid in North Carolina would provide health coverage to almost 500,000 currently uninsured people and create 43,000 new jobs.

N.C. Senate President Pro Tempore Phil Berger, R-Caswell, objected to the expansion proposal, saying new enrollees to Medicaid would crowd out resources for current recipients.

“Expanding Medicaid would add an estimated 500,000 able-bodied adults to North Carolina's Medicaid program, forcing current enrollees to compete with them for access to health care,” Berger said in a Feb. 11 tweet.

In June 2018, Berger’s Senate removed a bipartisan amendment to a rural health education bill that would have studied Medicaid expansion’s costs and benefits, specifically for rural communities.

N.C. Rep. Graig Meyer, D-District 50, said Medicaid expansion is the single most important action the state can take for its constituents.

“In Orange County, we’re very fortunate to have a strong hospital presence and easy access to health care, but we still have a lot of people who are working and are uninsured,” he said.

About 10 percent of Orange County residents are currently uninsured, according to the latest U.S. Census data from 2015.

Meyer said expansion would have a large and beneficial financial effect on UNC health care services, and would especially support the funding and development of rural hospitals. A 2018 study by Health Affairs found hospitals are six times less likely to close in a state that has expanded Medicaid.

“One of the most important impacts of Medicaid expansion will be stabilizing the bottom-line of rural hospitals that tend to be in very precarious financial situations,” Meyer said. “This will mean they actually get paid for a lot of the care that they’re currently paying for out of their bottom-line.“

A total of 14 states have not adopted Medicaid expansion, including North Carolina. In these states, people with an annual income above $8,935 a year for a family of three but below $28,676 are not eligible for any federal insurance plan, leaving them in the nation’s “coverage gap.”

Jordan Roberts, a health care policy analyst for the John Locke Foundation, said he believes Medicaid expansion detracts from the program’s initial intention to serve the most disadvantaged populations.

“It was originally for the most needy, the most vulnerable, women, children, disabled, blind, elderly, and now we’re using it as a tool to supplement private insurance,” he said. 

Roberts said the federal government’s 90 percent funding commitment has allowed states to spend an excess amount of money on healthcare.

“There’s no cost-reduction tools within it, so the system just incentivizes spending to draw down as many federal dollars as possible,” he said.

As the debate over expansion consumes North Carolina’s political forefront, the state has begun a Medicaid transformation this year after receiving federal approval in October to shift the existing fee-for-service Medicaid program to a managed care system.

Under the new system, the state awarded four statewide providers and one regional provider a set amount in Medicaid coverage funds each month, rather than per-service reimbursement. Because the managed care contracts are pre-paid, the provider could keep any excess dollars or must bear fiscal responsibility if their cost exceeds the allotted monthly amount.  

The new managed care system will roll out in two phases, according to the N.C. Department of Health and Human Services — in November 2019 and February 2020. Orange County is included in the November 2019 phase.

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Elizabeth Hinton, a senior policy analyst for health policy nonprofit the Kaiser Family Foundation, said the likely motive behind the shift is to ensure a consistent state budget for Medicaid services.

“Typically when states make transitions to managed care, one of the chief reasons is for predictability for costs,” she said. 

George Pink, a UNC health policy and management professor, said the effects of a managed care system elsewhere have varied by state and can financially harm rural hospitals due to the select number of statewide providers awarded contracts.

Meyer said while there are unknowns, he believes the policy can incentivize cost-saving for Medicaid providers. 

"If it works, then it will be good for everyone because we'll continue to have high-quality care but at less cost," said Meyer.