An assessment of Medicaid expansion, done by a Wake Forest law professor and a researcher, finds that its economic benefits and savings would about equal the extra expense when North Carolina would have to pay its maximum share of the cost.
Medicaid, a government health insurance program, covers low-income children, some of their parents, the elderly and disabled people.
Under the Affordable Care Act, states can add adults who earn no more than 138 percent of the federal poverty level to the program. The federal government picks up the full cost of most of the people added until next year, and then gradually lowers its financial share to 90 percent by 2020. States then pay 10 percent.
Estimates are that such a Medicaid expansion in North Carolina would insure 300,000 to 500,000 people. About 1.9 million residents now have Medicaid.
Mark A. Hall, director of Wake Forest law school’s health law and policy program, and research associate Edwin Shoaf compiled a summary of economists’ estimates of the costs and benefits of expansion. They found that secondary benefits – job creation and economic stimulus, reducing the cost to treat uninsured people, and reducing costs of other state programs – would offset the state’s 10 percent share of the total cost of expansion, when the state begins shouldering that portion.
Their analysis was released in conjunction with a forum this week in Winston-Salem.
“Undoubtedly, expanding Medicaid will incur some substantial cost to the state once its cost-sharing portion increases to 10 percent in 2020,” they wrote. “However, based on expert economic forecasting and actual experience in other states, it appears that most or all of these direct state costs will be offset by financial benefits.”
They referred to a 2014 study by George Washington University researchers for the Cone Health Foundation and the Kate B. Reynolds Charitable Trust that put the state cost of expansion at $600 million in 2020, and the financial benefits at $556 million.
Legislative leaders oppose expansion. Senate leader Phil Berger, an Eden Republican, “has a well-known and established position against Medicaid expansion,” his spokeswoman said in an email Tuesday. “If for some reason his position ever changes, we will be sure to announce it.”
Last year, Gov. Pat McCrory seemed open to expansion, but he said in an interview published last February that he was looking for options for covering the 10 percent funding gap. McCrory has mentioned several times since last January, including last week, that he’s gotten a cool reception from President Obama when they’ve discussed adding conditions to expanding insurance coverage.
So far, 31 states and Washington, D.C., have expanded Medicaid simply by adding people or through special arrangements with the federal government.
The Wake Forest review references economic studies done for North Carolina, for other states and for the nation. Some estimate Medicaid expansion would create 19,400 to 43,000 jobs or more in the state, about half of those in health care.
New jobs would lead to more sales and income taxes collected. The George Washington University study estimated that expansion would generate an economic stimulus that would produce an additional $266 million a year in state and county taxes by 2020.
Medicaid expansion would save the state money by reducing the cost of uncompensated care and state spending on other government programs — mental health treatment, for example.