Blocking NC's Medicaid expansion takes a heavy toll

Editorial by News and Observer, August 16, 2014.

The Republican-led General Assembly plans to address ways to reform Medicaid in its next session, but there’s one thing it won’t do to the program: expand it. This resistance is a scandal and a growing one. It’s well past time for responsible and influential forces in North Carolina – the universities, banks, high-tech businesses, hospitals, clergy and others – to make expanding Medicaid the state’s No. 1 priority.

In 2013, Republican legislative leaders indulged in partisan grandstanding by declaring that North Carolina would be among the 24 states refusing to expand the federal-state health program for low-income people. They also refused to set up a state-run health care marketplace from which North Carolinians could buy subsidized health insurance under the Affordable Care Act.

Now that Republican partisans have had their year on the ramparts shouting “no!” to what they call “Obamacare,” cooler heads should intervene. The resistance is only hurting North Carolina, especially the working poor who would have qualified for Medicaid under an expansion. The Kaiser Family Foundation estimates that expansion would insure 319,000 North Carolinians.

And the refusal is not a one-time injury. The cost grows every year. Under the ACA, the federal government offered to pay 100 percent of the expansion cost for three years starting in 2014 and 90 percent thereafter. North Carolina has already squandered that first free year and is about to lose a second one.

By saying no, the state gave up $601 million in federal funds in 2014, according to state fiscal researchers. Next year, it will be foregoing $2.3 billion. For 2016 through 2021, the state’s refusal will cost $2.5 billion annually. And there are others costs. Expansion also would pick up the cost of medical care for some mental health patients and state prisoners now paid for entirely by the state. The savings to state taxpayers would be $62 million a year.

A report this month from the Robert Wood Johnson Foundation projects that if North Carolina holds out on expansion to 2022, the total in lost funding will be even higher than state estimates, plus $11 billion in lost federal reimbursements to hospitals.

Turning away federal money doesn’t hurt just the poor. It also hurts all who need medical care and drags on the state’s ability to recover from the financial crisis and the Great Recession. An economic impact study commissioned by the state projected that accepting Medicaid expansion would have produced more than 20,000 health care related jobs in the first year alone.

Now the state’s refusal is cutting into existing jobs as North Carolina’s 109 acute care hospitals struggle with federal funding cuts without the offset of Medicaid expansion. Hugh Tilson, executive vice president of the North Carolina Hospital Association, said hospitals have laid off 2,000 employees because of the budget squeeze. Meanwhile, vacancies are left unfilled. The health care workforce, a driver of the state economy, has been constrained even as the state’s population – and the number of indigent patients – grows. The General Assembly has compounded the hospitals’ difficulties by cutting the state’s share of Medicaid payments.

This is not a situation that can continue indefinitely. Hospitals are dipping into reserves to manage costs, a trend that could affect their ability to borrow for capital improvements. At hard-pressed rural hospitals, the pressure could force some to consolidate with other hospitals or close.

Republican leaders have various reasons for turning away billions of Medicaid dollars. Gov. Pat McCrory says the Medicaid system is too “broken” to handle expansion. That’s more of a dodge than a reason. The system needs improvements, but it has worked for decades and likely would gain economies of scale with expansion.

In any case, McCrory isn’t fixing Medicaid. More than year after declaring Medicaid broken, he has yet to get a reform plan through the legislature. Meanwhile, his secretary of the Department of Health and Human Services, Aldona Wos, has run off state employees who know the system. She is now having Medicaid administered by consultants hired on a no-bid contract that pays the three principal consultants $473 an hour. Their contract was recently renewed and doubled to $6.8 million. More repairs like that and Medicaid really will be broken.

Other Republicans say the state’s share of funding expansion, even at 10 percent, is too expensive. But the influx of federal dollars likely would generate more than enough jobs and increased tax revenue to cover the state’s cost.

Refusing Medicaid expansion is holding North Carolina back. It’s costing jobs and will cost lives. The powers that be in North Carolina need to make their voices heard. When the legislature returns for its long session in 2015, Medicaid expansion must be No. 1. If not, the power of North Carolina voters should ensure that state Republican lawmakers come out of the 2016 election back to being No. 2.