2013 Legislative Report: North Carolina's Rejection of Medicaid Expansion

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Summer research assistant Brittany Croom writes about NC's decision not to expand Medicaid under the Affordable Care Act and the implications for poor people across the state who will remain uninsured and without access to quality health care.

North Carolina officially rejected Medicaid expansion under the Affordable Health Care Act on March 6, 2013, as Governor Pat McCrory signed Senate Bill 4.[1] The provision of the Affordable Care Act was intended to expand Medicaid eligibility to adults with incomes below 133 percent of the federal poverty line. [2] Qualifying persons would have ultimately included all adults below 138 percent of the federal poverty line since 5 percent of income is disregarded when determining eligibility. The Affordable Care Act provides federal funding for the expansion for the first three years, and then at least 90 percent for each of the following years.[3]

Medicaid now covers 1,589,807 low income parents, pregnant women, children, seniors and individuals with disabilities.[4] Parents must not only have dependent children under the age of 21, but they must also have very low incomes to be eligible. For example, the income for a family of four may not exceed $594/month for the parents to be eligible.[5] Additionally, very poor adults between the age of 18 and 64 with no children or disability do not qualify for Medicaid despite how low their income is. Under the expansion, adults with incomes less than $14,856 would be eligible for Medicaid, regardless of their familial status.[6] Studies have estimated the expansion would have provided an additional 500,000 uninsured adults with eligibility in North Carolina[7]. If the state had adopted the program expansion, it has been estimated North Carolina would have saved between 1 and 2 billion over a five year period.[8] Still, North Carolina decided to join more than twenty states, including its neighboring states – South Carolina, Tennessee and Virginia – in rejecting the expansion of Medicaid program.

Opponents of the expansion are concerned about the state budget and potential limitations to quality care.[9] They argue Medicaid is a “broken” system that needs revamping before it is expanded because adding more people to the system will not fix it.[10] Those against the expansion are further concerned about taxpayer expenditure. They argue those who are currently enrolled in private insurance, but also eligible for Medicaid, will opt to drop their private insurance if given the option. Additional arguments for rejecting the expansion include the potential for increased future Medicaid spending even with federal assistance, increased competition for health services among the poor, and a decline in the availability of healthcare services as fewer doctors begin to accept Medicaid. [11] Ultimately, challengers of the expansion argue that states should have more control and flexibility.

But for the states that have decided to expand the program, estimates show their decisions could be rewarding. Proponents of the expansion argue the program will pay for itself and allow the state to bridge the gaps that have developed over time. For example, many minorities compose the low-income, uninsured group and their health is the most compromised. The expansion of Medicaid would allow the state to promote equal access to healthcare and effectively bridge this gap. Estimates show the expansion of the program would cut premature deaths, which the uninsured are at greater risk for, and save an additional 2,840 lives each year.[12]

Those in favor of the expansion also believe it is the best way to save money since the state already spends a large amount of money on health services for uninsured.[13] The North Carolina Justice Center estimates North Carolina would have spent 830 million on Medicaid over the next six years if it had expanded, but will now spend billions on healthcare for the uninsured in light of the rejection. Because the expansion would leave fewer uninsured, North Carolina would have saved roughly 65 million over an eight year time period by expanding Medicaid.[14]

Despite the state’s decision not to expand the program, it is expected more than 150,000 uninsured adults who are currently eligible for Medicaid, but not enrolled, will enroll after the Affordable Health Care Act goes into effect.[15] It is also likely half of uninsured, low-income adults will remain uninsured.[16] As studies have revealed, North Carolina’s decision will bear many indirect and direct costs to the state. Such indirect costs include the opportunity to produce the projected 25,000 new jobs and provide preventative healthcare to prevent future healthcare costs.[17] Other costs will be incurred with higher insurance premiums, increased risk of penalties for employers, and uncompensated care.[18] And still, low-income, uninsured adults will be denied the opportunity for preventative health care which would decrease future illnesses and care costs.

[1] Senate Bill 4/ S.L. 2013-5 http://www.ncga.state.nc.us/gascripts/BillLookUp/BillLookUp.pl?Session=2013&BillID=S4

[2] Journal of American Medical Association http://jama.jamanetwork.com/article.aspx?articleid=1672246

[3] North Carolina Justice Center. http://www.ncjustice.org/?q=medicaidexpansion

[4] NC Dept of Health and Human Services. http://www.ncdhhs.gov/dma/medicaid/who.htm

[5] NC Dept of Health and Human Services. http://www.ncdhhs.gov/dma/medicaid/medicaideligchart.pdf (no longer available)

[6] NC Budget and Tax Center http://www.ncjustice.org/sites/default/files/BTC%20Brief%20-%20Medicaid%20Expansion.pdf (PDF).

[7] Id.

[8] Id.

[9] Galen Institute. http://www.galen.org/topics/why-states-should-not-expand-medicaid/

[10] Id.

[11] Id.

[12] North Carolina Justice Center. http://www.ncjustice.org/?q=medicaidexpansion

[13] Id.

[14] Id.

[15] NC Budget and Tax Center http://www.ncjustice.org/sites/default/files/BTC%20Brief%20-%20Medicaid%20Expansion.pdf (PDF).

[16] The Journal of the American Medical Association. http://jama.jamanetwork.com/article.aspx?articleid=1672246

[17] North Carolina Justice Center. http://www.ncjustice.org/?q=medicaidexpansion

[18] American Academy of Actuaries http://www.actuary.org/content/actuaries-medicaid-expansion-decisions-can-affect-private-plans

Posted by Brittany C. Croom on Wed. August 28, 2013 1:45 PM
Categories: 2013 Legislative Report, Student Research, Through Our Eyes

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