Report updates estimates on potential Medicaid expansion benefit

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By Rose Hoban

About 634,000 people could benefit if North Carolina expanded the Medicaid program to cover more people, according to an updated report released today on the effects of the policy.

The report, commissioned by two state foundations and completed by economists from George Washington University, says that Medicaid expansion would inject about $11.7 billion in federal funding into the state between 2020 and 2022, produce about 37,200 jobs and boost North Carolina’s Gross State Product by $2.9 billion in 2022.

“As we’ve looked at a variety of other literature, Medicaid expansions, have proven enormously successful in other states,” said Leighton Ku, a professor of health policy research and management at GWU.

“[They] have really helped reduce the number of uninsured people, have improved healthcare access, have improved people’s access to services, have helped hospitals and health clinics have not broken state budgets, have done all sorts of activities that we might not have expected,” he said.

Medicaid expansion in every state was part of Pres. Barack Obama’s signature legislation, the Affordable Care Act, but a U.S. Supreme Court ruling in 2012 found that requirement to be an unconstitutional form of federal coercion, and struck down that portion of the law, making the move optional for states. Since that time, 37 states plus Washington, D.C. have chosen to expand the program to people who make too much to qualify under current eligibility rules, but too little to qualify for subsidies to pay for health insurance available on the online marketplace created by the ACA.

Any new enrollees would be added to the approximately 2.1 million people currently on the program, which serves low-income children, some of their parents, pregnant women, people with disabilities and low-income seniors. Right now, single, childless adults are essentially unable to receive Medicaid, which is only available for people who earn less than $5,948 per year.

The current plan for expansion would cost a total of about $2.13 billion, of which 90 percent, or $1.91 billion, would be paid by the federal government and the remainder by a variety of sources, with assessments on the state’s hospitals being the largest portion.

The report is an updated version of a study originally commissioned by the Kate B. Reynolds Trust and the Cone Health Foundation (disclosure: both foundations have funded NC Health News), both organizations that fund a variety of health care projects around North Carolina. The original study, completed in 2014, found that North Carolina was foregoing about $22 billion in business activity by not expanding the program.

Kate B. Reynolds Trust head Laura Gerald said that commissioning the study wasn’t a political statement, so much as in keeping with her organization’s mandate to help provide health care access for low-income North Carolinians.

“We know that without health insurance, they really cannot access hospital care,” said Gerald, citing the instructions that Reynolds left as she established the Trust in the 1940s. “That’s how we came to support and advocate for and provide education around Medicaid access, affordable direct access.”

“Since more low-income people will get health insurance coverage, increasing health care access across the state, the benefits will be broadly dispersed,” reads the report, which estimates that about half the jobs gained will occur in six large counties, while about 19,200 new jobs will be scattered across the state in hospitals, clinics, physicians’ offices and surrounding communities. The report notes that about half the job growth will be as a result of increased funding to health care providers and the effects will “ripple out into other parts of the economy.”

Legislative tug-of-war

Funds to expand Medicaid were absent from the conference committee budget rolled out by legislative leaders yesterday and tension over the move is at the heart of what’s shaping up to be a long, hot summer of budget back and forth between the Republican-controlled General Assembly and Gov. Roy Cooper, a Democrat who supports expansion.

Senate leader Phil Berger (R-Eden) criticized Cooper during a press conference Tuesday afternoon where he and House Speaker Tim Moore (R-Kings Mountain) rolled out their conference committee budget.

Chart courtesy Leighton Ku/ George Washington University.

“The governor is not provided us with any specific proposal beyond general philosophical opposition to a few of the major items that we include in this budget and his desire to expand Medicaid,” Berger said. “We can’t preordain the outcome of any policy proposal, but we can at least bring it up for discussion. And we’ve included in the budget of provision to do just that: hold a special session on health care access, including Medicaid expansion.”

Senate minority leader Dan Blue (R-Raleigh) shot back with a press release criticizing the budget proposal and saying that voters were sending a message for the two parties to work together during the last election.

“The conference report … makes clear that Republicans don’t understand the value of finding common ground,” Blue said.

Cooper has made it clear he will veto a budget that lacks expansion in it, and now that Republicans no longer have veto-proof majorities in either legislative chamber, it’s likely Cooper’s veto will be sustained.

Advocates for Medicaid expansion shouldn’t think this study will move the needle on the standoff. The study will instead provide more talking points for the back and forth that’s likely to delay the adoption of a final state budget into the summer.

Bringing in federal dollars

Study author Ku noted that about 200,000 of those people who would be covered under North Carolina’s expansion would be those who are currently buying insurance on the health insurance marketplace established by the ACA. Subsidies start for those people who earn above 138 percent of the federal poverty level, or about $34,600 per year for a family of four.

“It’s a good thing for them because basically speaking, this will make it easier for them to get coverage for other things, and it will have lower out-of-pocket costs,” Ku said. “Right now they’re getting health care through the marketplaces, they have to pay a certain amount in monthly premiums, a certain amount of deductibles, a certain amount in copayments.”

An analysis by the federal Congressional Budget Office last year found that it makes fiscal sense for the federal government to cover people via Medicaid expansion, which pays 90 percent of the cost, rather than having to pay for subsidized private insurance. The report found that the average subsidy paid out to an enrollee on a marketplace plan was about $6,300 in 2018, meanwhile, the average annual cost of an adult Medicaid beneficiary in North Carolina came to about $6,500. Presumably, the new Medicaid enrollees would be cheaper to cover as many of them are able-bodied, with an estimated 60 percent or more of them participating in the workforce.

In other states that expanded, many of the new beneficiaries were able to work if they were not working already. In Montana, for example, about two-thirds of those receiving coverage under that state’s plan were already working and 81 percent lived in families where there was one worker. An analysis performed in the years following Montana’s implementation found that people who participated in a job-connection program for new Medicaid enrollees were able to either get jobs or get higher-paying jobs. Officials in Louisiana and Ohio reported similar advances in getting people employed, and even off of Medicaid altogether.

“Medicaid basically recognizes that [new enrollees] have low income, there ought to be very low cost sharing, so it’s better for the sake of the recipients in that regard,” Ku said. “I think the health care providers might find it somewhat easier too because then they don’t need to worry about whether someone will or will not pay their copay.”

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