Rescue plan bribes N.C. to expand Medicaid

COVID subsidies seemingly makes it ‘profitable’ to boost federal insurance program

State lawmakers will give Gov. Roy Cooper’s budget director Charlie Perusse his first legislative grilling on the governor’s 2021-22 budget proposal Thursday morning at 8:30. Expect Perusse to push large raises for teachers, school support staff, and state employees. His boss probably will urge the General Assembly to exhaust the pass, unamended, the Leandro deal on school spending worked out by executive branch officials and litigants — but not lawmakers, who have the constitutional duty to handle spending and taxes and were excluded from the negotiations.

I expect the governor to cite better-than-expected estimated tax collections in his call to spend, spend, spend. I also predict he’ll once again chide the General Assembly for failing to expand Medicaid under the Affordable Care Act.

Cooper and state Health Secretary Dr. Mandy Cohen have pushed Medicaid expansion at recent virtual COVID briefings — even if they were answering questions having nothing to do with Medicaid. Expansion remains a priority of the administration. 

This time, Cooper can deploy a new rhetorical weapon: lots of extra money from Washington.

North Carolina is one of 12 states* that hasn’t expanded Medicaid coverage to healthy adults who earn 138% of the federal poverty level or less. Fiscal conservatives, including my former John Locke Foundation colleagues, cited a host of reasons not to do it. 

  • Expansion would expand an entitlement targeted at the poor, disabled, elderly, and children to a group never intended to get it — able-bodied, working adults earning above-poverty wages.

  • Enticing working people to take a government benefit could discourage them from seeking private health insurance (or discourage their employers from offering coverage if they haven’t done so).

  • States that expanded Medicaid have cut payments to providers; fewer doctors are taking Medicaid patients, leading to problems with the quality and availability of care to the people who were getting Medicaid before it was expanded. Having an insurance card is no guarantee a doctor (or equivalent) will be around to see you.

  • Federal subsidies dangled in front of states during the original expansion — picking up 90% of the state’s costs rather than the roughly 73% N.C. gets now — still would drain state coffers significantly. (Locke’s fiscal policy analyst Joe Coletti set up scenarios estimating extra taxpayer costs ranging from $568 million to $632 million even with the subsidies.)

The Biden administration’s American Rescue Plan may have knocked the pins from under the final argument. On the surface, anyway. 

The ARP maintains the 90% match and gives new expansion states another 5% match for current Medicaid patients. The feds would pay roughly 78% of the cost of traditional Medicaid recipients and 90% for the new enrollees.

A study by the Kaiser Family Foundation predicted North Carolina would net $1.14 billion in the 2022-23 fiscal year if the state expanded Medicaid. The new patients would cost $490 million to cover, but the 5% match for current patients would bring in an extra $1.7 billion.

A study by the left-leaning Center for Budget and Policy Priorities estimated a $2.4 billion “windfall” for North Carolina over the first two fiscal years.

In other words, using tax subsidies to bribe us with our own money.

In an email, Colleti suggested Cooper probably would spend the new federal money on recurring costs (aka teacher raises or other programs that are cooked into the budget every year) rather than one-time expenses such as highway construction. Then, when the ARP’s federal match ends in two years, state taxpayers will be on the hook for that extra $2.4 billion annually.

The extra money, as Locke researchers said, might give more people insurance cards. But it wouldn’t guarantee they’ll get health care. “Federal data designates 87 out of North Carolina’s 100 counties as areas with persistent shortages of primary care providers,” North Carolina Health News reported in September. ARP money wouldn’t ease those shortages, though a bill I discussed last week — unrelated to Medicaid expansion — would.

A group of Republicans in the state House have pushed a form of Medicaid expansion for several years. The most recent version paired expansion with a work requirement and a mandate that new recipients pay some costs out-of-pocket. 

Democrats balked at both. State Senate Republicans have shown no interest in expanding Medicaid.

Meantime, the U.S. Supreme Court pulled a case from its docket earlier this month challenging a work requirement pushed by the Trump administration..

Gridlock in D.C. means it’s unlikely Congress will add a “public option” to Obamacare. President Biden ran against a single-payer or “Medicare for All” federal system. The Affordable Care Act may be tweaked. But it won’t be overhauled.

This will keep Medicaid expansion at least a debating point between N.C. Democrats and Republicans for another year. It may be a salient campaign issue next year, too.

Today is William Shatner’s birthday

He’s 90. He’s still awesome.

Unlike the Star Trek movies, the first sequel of this franchise was a disappointment. But it had Shatner.

*Missouri and Oklahoma have enacted Medicaid expansion. The new coverage kicks in later this year.