NC needs to look again at Medicaid expansion

June 6, 2013 

For all the wrong done during this stormy session of the General Assembly, the greatest wrong remains what lawmakers have chosen not to do: expand Medicaid.

Republicans who lead the legislature have balked out of spite. The expansion is a key part of President Obama’s Affordable Care Act, and they want no part of “Obamacare.” Republican Gov. Pat McCrory has said he would consider expansion after North Carolina’s “broken” Medicaid system is fixed.

The Republicans’ reasons for opting out vary, but the effect is same: A forgoing of federal funds that will leave many low-income people uninsured and will cost the state and hospitals more for uncompensated care. Those consequences did not stop North Carolina and 14 other states – all with Republican governors – from refusing to participate.

Now a new report by the RAND Corp. shows how colossal is the cost of this obstinacy. The report, published in the June edition of Health Affairs, looked at 14 states whose governors were opposed to expanding the Medicaid program as of April 25. The costs will likely be higher because at least one more state has joined the holdouts and several are still weighing going that route.

Rand, a nonprofit research organization, found that the states would lose $8.4 billion a year and would spend an additional $1 billion of their own money in 2016 alone to cover increased levels of uncompensated care. In the 14 states studied, the reports said, 3.6 million people would be left uncovered.

Carter Price, a RAND mathematician who co-authored the report, said the scale of the impact suggests there is no advantage in opting out. “They’re huge numbers,” he said. “It’s surprising that states are having a lot of trouble making this decision.”

The report did not include a state-by-state breakout, but the direct cost to North Carolina will be painful. The Affordable Care Act anticipated universal expansion of Medicaid and included reductions in what hospitals will be paid for uncompensated care when the law takes effect in 2014. The Supreme Court complicated the situation by ruling that expansion was optional for states. Now those that opt out will not have more people insured, but will still face cuts in federal payments for uncompensated care.

Even as North Carolina says no to expansion, its taxpayers will still pay fees and charges that support the plan.

“The citizens of North Carolina will be paying for the expansion without getting the benefits,” Price said. “You can’t opt out of the provisions to pay for it.”

Indirect costs could be even bigger. First, the state will lose the multiplier effect of an estimated 23,000 more health care-related jobs that would come with expansion. Second, it will lose access to preventative care that could reduce costly operations and treatments for uninsured, low-income people.

The expansion would extend coverage to all adults with incomes below 138 percent of the poverty line, or about $15,400 for a single person or $31,800 for a family four. Currently, Medicare covers only low-income parents, children, seniors and people with disabilities.

The RAND report said that nationally about 42 percent of non-elderly adults with incomes below 138 percent are uninsured. In North Carolina, it’s estimated that as many as 500,000 more people would be covered by the expansion. Its cost would be paid for entirely by the federal government for the first three years, and the federal government would pay no less than 90 percent thereafter.

Medicaid expansion is a great deal for states. There’s no savings and huge new costs in rejecting it. Saying no doesn’t hurt the president. It hurts North Carolina. Opting out should be reconsidered. It’s a “no” North Carolina can’t afford.

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