The Expensive, Ineffective Truth About Medicaid Expansion

This week I did an interview with a local TV station on why or why not to expand Medicaid. I thought I should offer you some information on the “much talked about subject.” 

 

As you may know, the Governor vetoed the Legislative Budget in a “Medicaid Expansion or nothing” ultimatum. Teacher raises and other state employees raises were held up because there was no budget. Government continues to operate at last year’s budget numbers but any new spending is on hold.

Lets first clear the air and get this out of the way. We all want to provide health care for those who need it. I’ve always been willing to look for solutions. The question is, how do we do it and get it right.

 

Expanded coverage does not mean expanded care. Expanding Medicaid by 25% puts traditional enrollees at risk. Currently, one in five North Carolinians are already on Medicaid. Expansion will further strain a system that is already strained, as 1/3 of North Carolinians who currently receive heavily subsidized private health coverage under the exchanges (ObamaCare) would be thrown onto Medicaid.

 

It’s predicted that expansion would add an additional 500,000-600,000 citizens, predominantly able-bodied childless adults. Most states have seen their enrollment numbers double, triple and even quadruple predictions and have experienced cost overruns of at least 50%. NC is likely to be no different. Only 215,000 people are in the “coverage gap”. That means 300,000 are already eligible for subsidized private insurance in the Marketplace or receiving coverage through their employer.  We would be subsidizing employer provided insurance. 

 

There are unpredictable costs associated with expansion. Medicaid is an entitlement. Once expanded all eligible enrollees must be covered. That is at the top of the Budget list. Other programs, education, criminal justice, road construction, etc. are secondary to Medicaid and would be put at risk. 

 

The federal government will pay most of the cost currently for the expansion. Nobody thinks that will last long, considering the huge deficit and conversations already taking place in D.C. about reducing Medicaid reimbursements. We have seen this happen already in our NC Health Choice (Children’s Health Program). When the federal government reduced reimbursement to the state, the Legislature had to find $140 mil to fill the budget gap. 

New York Governor Andrew Cuomo has declared a state of emergency after an announcement of a $6 billion budget deficit. They attribute this to Medicaid expansion overruns. The Governor is threatening to slash reimbursement rates to physicians and hospitals. Providers already lose money on Medicaid enrollees.

 

I held a press conference earlier this year in which I stated that I wanted coverage for the 12,000 people (many are children) on a Medicaid wait list before expanding to able bodied childless adults. The average time on the wait list is 7-10 years. These are members of the IDD (Intellectually/Developmentally Disabled) population who are cared for at home. Expansion would put the able-bodied adults ahead of the IDD population. Coverage for these truly needy folks are a priority for me.

 

Since providers lose money on Medicaid patients, cost shifting occurs and private payers make up the difference. A study by a leading health consulting firm found that the average American family with private health insurance paid $1,800 more in premiums due to cost shifting. So the federal and state governments aren’t the only ones picking up the tab. 

 

In Arizona, after Medicaid expansion, cost shifting nearly doubled. Before expansion, cost shifting was 14% more to private payers. After expansion, it rose to 27%.

 

Timing is also important. Medicaid Transformation has been under way for some time in NC. Let me explain.

 

Medicaid outcomes are not good. There are studies that show outcomes are no better for Medicaid recipients than those with no coverage at all. In NC, we devised a system, several years ago, to move to Managed Care in order to improve those outcomes. It was to go live November 1, 2019. That date had been in statute for years, everybody knew it was coming and had years to prepare. DHHS has delayed the rollout indefinitely. The Governor and DHHS have claimed the budget delay is the reason. Not True. I sponsored a separate bill, after negotiating for weeks with DHHS Secretary, providing all funding requests and necessary guidelines for moving forward with Medicaid Transformation. The Governor vetoed the bill and the Secretary delayed Transformation. Now we have providers, who signed contracts in good faith with NC, losing millions of dollars each month. If transformation doesn’t happen soon, jobs will be lost and these companies will pull out.

 

If the administration couldn’t handle transition to managed care, how can we believe they could ever manage expansion of at least 500,000 people.

Much of what we hear about the virtues of expanding Medicaid are just not true. We have to examine the statistics thoroughly.

We hear some say it will bring jobs to NC. That Is not what studies show. Numerous studies show a net loss in the job market. The National Bureau of Economic Research found that expanding Medicaid could lower the labor participation rate by as much as 10%. The mission of Medicaid is to provide free healthcare to low income citizens, it’s not intended as a job creator, even if the claims were true. 

 

We also hear that Medicaid expansion is needed to stem the opioid death rates. The top 5 states in opioid deaths were all early expansion states. 

These are just some of the concerns I have regarding expanding Medicaid. As chair of the Senate Health Committee as well as DHHS Appropriations, I want to make certain that we make the right choices. I will continue to look for ways to offer health coverage to those who are in need but we need to have answers on how to deal with the problems that have plagued others. North Carolina is not New York and we don’t want their budget woes.