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Research & Commentary: Medicaid Expansion Would Bankrupt North Carolina

July 11, 2019

In this Research & Commentary, Matthew Glans examines a revised Medicaid expansion proposal in the North Carolina legislature that uses the illusion of free-market reforms in an attempt to appease expansion opponents.

A revised Medicaid expansion proposal in the North Carolina legislature uses the illusion of free-market reforms as an attempt to appease expansion opponents. Introduced in the House by Rep. Donny Lambeth (R-Forsyth), House Bill 655 would add hundreds of thousands of new enrollees into North Carolina’s Medicaid system. This would include North Carolinians who make up to 133 percent of the federal poverty level. To implement H.B. 655, the state would need to apply for and receive an 1115 waiver from the Centers for Medicare and Medicaid Services (CMS).

This proposal does address some valid concerns by adding work requirements for able-bodied adult recipients without dependents and cost sharing measures such as premium payments for certain recipients. Participants would also be required to undergo annual physicals and other preventative procedures. H.B. 655 would also require recipients to pay 2 percent of their household income for premiums.

Unfortunately, these reforms are only window dressing; they hide the true costs and burdens of Medicaid expansion. Despite claims by supporters that H.B. 655 is not Medicaid expansion, this is simply not true. Jordan Roberts, health care policy analyst at the John Locke Foundation told the Carolina Journal the new bill is expansion under a different name. “If the state accepts a federal match rate of 90 percent, imposes provider assessments, and has to amend that Medicaid state plan to cover people through the Medicaid managed care providers, we are expanding Medicaid,” Roberts said.

States that have expanded Medicaid have experienced rapidly rising Medicaid costs. According to a study by the John Locke Foundation, “Medicaid expansion would cost North Carolina an estimated $6 billion between 2020 and 2039.” To cover the costs, the study found the state would “need to reduce provider payments, divert resources from other important parts of the budget such as education or transportation, or greatly increase taxes.”

There is also a real concern that providers may be unwilling to accept Medicaid patients due to the regulatory hassle and relatively low reimbursement rates. According to Civitas Institute President Donald Bryson, the number of physicians in North Carolina who accept Medicaid has dropped by 13 percent since 2003.

Medicaid expansion would produce disastrous economic and social consequences for all North Carolinians. It would reinforce government dependency, sap self-reliance, and balloon the state budget. North Carolina lawmakers should reject Medicaid expansion. Instead, they should use Section 1115 waivers to institute free-market reforms that would increase access to high-quality, affordable health care without breeding government dependency, raising taxes, growing state budgets, or adding to the $22 trillion (and counting) national debt.

The following documents examine Medicaid reform and expansion in greater detail.
 

The Case Against Medicaid Expansion
https://www.johnlocke.org/update/the-case-against-medicaid-expansion/
In this paper, Jordan Roberts of the John Locke Foundation discusses how expanding Medicaid will fail to address the costs of high medical care and entrench a system that inflates health care costs.

Medicaid Expansion Is a Political Loser for NC Conservatives
https://www.nccivitas.org/2019/medicaid-expansion-political-loser-nc-conservatives/
In this article, Donald Bryson of the Civitas Institute argues Medicaid expansion in any form is bad policy and a political trap for conservative politicians.

Government Report Finds Obamacare Medicaid Enrollees Much More Expensive than Expected
http://www.forbes.com/sites/theapothecary/2016/07/20/government-report-finds-that-obamacare-medicaid-enrollees-much-more-expensive-than-expected/ - 75a85aba2dd0
Brian Blase wrote in Forbes the costs for newly eligible adults were not decreasing as expansion supporters predicted they would.

Work Requirements Are Working for Kansas Families: How Welfare Reform Increases Incomes and Improves Lives
https://thefga.org/wp-content/uploads/2017/07/Work-Requirements-are-Working-for-Kansas-Families.pdf
In this study, Nic Horton and Jonathan Ingram of the Foundation for Government Accountability examine Kansas’ welfare reforms and how recipients fared after leaving the program.
 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

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Author
Matthew Glans joined the staff of The Heartland Institute in November 2007 as legislative specialist for insurance and finance. In 2012, Glans was named senior policy analyst.
mglans@heartland.org @HeartlandGR