Congress has a new way to push states to expand Medicaid. Will it work in NC?

Brian Murphy
·5 min read

More than a decade after passage of the Affordable Care Act, the federal government is still trying to encourage holdout states, like North Carolina, to expand Medicaid.

The latest congressional COVID-19 relief package would give new financial incentives to expand Medicaid. But the short-term promise of billions of federal dollars seems unlikely to break North Carolina’s stalemate over expansion.

North Carolina is one of 12 states nationally that has not expanded Medicaid under the Affordable Care Act, which was enacted in 2010. It allows states to cover more people by raising the income threshold at which people become eligible for Medicaid and extending eligibility to more groups of people.

Under the $1.9 trillion coronavirus relief package being pushed by the Biden administration, states that newly expand Medicaid would receive additional federal funding for their entire Medicaid program, not just those eligible under expansion.

Democratic Gov. Roy Cooper has repeatedly pushed for expansion since first being elected in 2016, while Republican state lawmakers have thwarted his efforts. The fight over Medicaid expansion was at the heart of the 2019 and 2020 budget standoff.

State Senate leader Phil Berger, a Republican, outlined his objections to expanding Medicaid in a 2019 opinion piece, arguing that the “vast majority” of those in the coverage gap are able-bodied adults between 18 and 50 and that expanding Medicaid would delay care for 12,000 disabled residents with severe developmental needs on wait lists at the time.

Those issues still remain, Berger’s spokesman Pat Ryan said in an email exchange this week. He said his office is aware of the congressional proposal and following it.

House and Senate Democrats in Congress are working to pass the package before March 14, when previously passed unemployment benefits related to the COVID-19 pandemic are set to expire. The legislation has yet to pass either chamber.

“There have been productive conversations about ways to improve access to affordable health care in North Carolina, and we expect those conversations to continue. It seems that all sides share the goal of making health care more affordable and accessible to more people, though opinions differ on the best way to achieve that goal,” Ryan said.

The coronavirus pandemic spurred another round of debate over the issue. During the pandemic, Department of Health and Human Services Secretary Mandy Cohen, a key member of Cooper’s administration, has often called for Medicaid expansion in the state.

Cohen said in April that 2 million North Carolinians are covered by Medicaid and that 1 million people in the state do not have health insurance.

“That’s the one thing our state could do right now to protect families and put our rural hospitals and providers on strong financial footing,” Cohen said of expanding Medicaid.

Ways to add incentives for Medicaid expansion

When the Affordable Care Act first passed, the federal government covered 100% of the costs for the newly eligible population for the first three years before eventually moving that to 90%. The provision for 100% coverage has expired, and states are no longer eligible.

Some Democrats, including U.S. Senate candidate Cal Cunningham in the 2020 election, called for restoring that provision for states that expand now. Berger expressed concern about the budget hole that could be created if the state expands coverage and the federal government lowers or changes its reimbursement rate,

But the current proposal in Congress would increase the amount of matching funds the federal government gives the state for its Medicaid program by 5 percentage points for two years.

“Once the American Rescue Plan is enacted, the North Carolina legislature should expand Medicaid, and they should do it at their earliest opportunity,” said U.S. Rep. G.K. Butterfield, a North Carolina Democrat and member of the House Energy and Commerce Committee where the provision originated.

Butterfield said expansion in North Carolina would cover 600,000 additional people, create more than 37,000 jobs by 2022 and increase state and county tax revenues by more than $600 million.

“This is exactly the economic boost that rural communities need,” said Butterfield, who is from Wilson.

In 2018-19, federal funds accounted for more than 65% of the state’s $14.65 billion Medicaid budget, according to the General Assembly’s Fiscal Research Division.

The coverage gap

In states that haven’t expanded Medicaid, some people fall into a coverage gap between the very poor, who may already qualify for Medicaid, and those who make enough to qualify for federal subsidies to buy health insurance. Estimates of how many people could be added to Medicaid under expansion vary wildly — from 300,000 to 600,000 — and that was before the coronavirus pandemic resulted in lost jobs.

Most of the states that have not expanded Medicaid are in the Southeast with South Carolina, Georgia, Tennessee, Alabama, Mississippi and Florida joining North Carolina as non-expansion states. Texas, Kansas, Wisconsin, South Dakota and Wyoming also have not expanded.

Kansas’s Democratic governor earlier this month proposed paying for Medicaid expansion through legalizing medical marijuana, The Kansas City Star reported.

Missouri and Oklahoma have approved expansion, both by ballot measures in 2020, but have not yet implemented it.

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