The business case for expanding Medicaid

North Carolina has the opportunity to energize its business climate with thousands of new jobs, millions in new consumer spending, and lowered health costs for all. How can we make this happen? Medicaid expansion.

As of 2019, 36 states have expanded Medicaid in order to cover more uninsured people. The data show promise for a successful expansion in our state with benefits to North Carolina businesses and the economy as a whole.

North Carolina has about 500,000 citizens who would be eligible for coverage under an expanded Medicaid program. These are people who make too much to qualify for traditional Medicaid, but earn too little to receive subsidies to purchase affordable insurance through the Affordable Care Act (ACA) marketplace.

One of the chief selling points of Medicaid expansion has been that the federal government pays the lion’s share, with 90% of the costs covered in each state.* However, skeptics have expressed concern that this funding could be reduced, that enrollment numbers could be higher than projected, or that extending this benefit might somehow discourage work.

As the number of states expanding Medicaid continues to rise and with NC taxpayers already paying for Medicaid expansions in other states, it’s time for North Carolina to consider it.

Here is a look at some of the ways expansion could benefit NC businesses and the economy:

• Gain Jobs: North Carolina could add as many as 40,000 jobs from Medicaid expansion. Two states offer a good prediction of our state’s success: Michigan and Ohio each expanded Medicaid in 2014. With similar populations and numbers of Medicaid expansion enrollees, they both saw significant employment gains. Michigan gained 30,000 new jobs (with 85% of those jobs in the private sector), and Ohio gained 54,000 jobs.

• Lower Healthcare Costs: About 18% of NC residents are uninsured. Uncompensated care provided at hospitals across the state raises health care costs for all. With Medicaid expansion, we can reduce this burden, while benefiting consumers who buy their insurance through the ACA marketplace. A study of expansion and non-expansion states found about a 7% reduction in private insurance premiums in those states that expanded Medicaid.

• Boost Consumer Spending: Montana, a state with a tenth of North Carolina’s population, had $400 million injected into their economy after enacting its Medicaid expansion in 2016. With money freed up from healthcare spending, consumers have money to pay for other goods and services.

• Increased Employment and lowered dependence over time: Ohio has seen a 15% increase in employment among those who enrolled through their program. The most common reason for not re-enrolling has been that recipients landed a job offering health benefits. Governor Kasich has also touted the expansion’s role in addressing the opioid crisis and helping those affected to get treatment and get back to work.

• Use data and studies of other states’ implementations to our advantage: With four years of data and 36 states’ experiences to learn from, North Carolina can pick and choose the best strategies and avoid pitfalls. For example, Ohio and Michigan both built in a “kill switch” to their laws to discontinue expansion should costs exceed savings. Arkansas petitioned to receive their federal funds to subsidize private health premiums through the ACA marketplace.

Other states’ experiences will help us plan better and also offer ideas for points of compromise.

• Help employers who don’t provide medical benefits: For employers with less than 50 employees who are not required to provide medical benefits under ACA, they could see their employees benefit from this expansion.

• Improve employee performance: In Ohio, 84% of employed enrollees said that Medicaid expansion helped make working easier. With less stress from untreated health conditions and unpaid medical bills, employees are more productive and less prone to missing days of work.

With the ACA continuing to be the law of the land, and with almost 75% of states enacting Medicaid expansion, it is time for North Carolina to consider it anew. We encourage the General Assembly to take up this issue again and find points of compromise for the benefit of NC businesses and our communities.

Vicki Lee Parker is the Executive Director of the North Carolina Business Council