On March 23, 2023, the North Carolina House of Representatives voted 87-24 in favor of a Medicaid Expansion deal that would provide healthcare coverage to over 600,000 people in the state.[1] In finalizing the legislation, North Carolina became the 40th state to adopt Medicaid Expansion, an Obama-era program associated with the Affordable Care Act.
Nearly six months later, the proposed expansion had not been implemented, nor had a date been set for the expansion’s rollout. In late July, both the North Carolina Department of Health and Human Services and Governor Roy Cooperannounced an anticipated October 1, 2023 rollout date and clarified that the only hurdle preventing expansion was legislative approval of a state budget bill.[2] Budget bills are usually passed by early summer, but negotiations stretched into August and September, pushing the anticipated October 1st rollout date out of reach. Finally, in late September a definitive launch date of December 1, 2023 was announced by Governor Cooper.[3]
Why Expansion Was Tied to Passage of a Budget Bill
The Medicaid Expansion bill includes a provision that the expansion is “not effective” until the 2023-2024 state budget has been enacted.[4] In practice, this means that Medicaid Expansion was tied to the Republican-majority legislature’s ability to resolve a myriad of unrelated and contentious budgetary issues such as legalizing video gambling and non-tribal casinos.
Governor Cooper has criticized the provision, stating, “Making Medicaid Expansion contingent on passing the budget was and is unnecessary, and now the failure of Republican legislators to pass the budget is ripping health care away from thousands of real people and costing our state and our hospitals millions of dollars.”[5] However, Republican lawmakers repeatedly balked at suggestions to pass legislation that decoupled Medicaid Expansion and the budget bill, citing concerns about the workability of decoupled Medicaid Expansion. As a result, the provision in the Medicaid Expansion bill still tied expansion to the state budget.
How Federal Funding for Medicaid Works
The federal government sets broad guidelines that allow states to create their own plans with regard to eligibility, benefits, and administration. Financing for Medicaid is shared between the federal government and the states. The federal government matches at least $1 for every $1 a state spends on its Medicaid program. Each state is assigned a fixed percentage (known as FMAP—the Federal Medical Assistance Percentage) that the federal government pays toward Medicaid expenses, with poorer states receiving a higher percentage of federal funding. In North Carolina, the FMAP rate is 65.91%.
In addition to the FMAP, federal dollars pay for 90% of Medicaid Expansion costs when states opt in to expansion. In North Carolina, Medicaid Expansion comes with a “signing bonus” that will amount to $1.6 billion in federal funding when expansion is implemented and enrollment begins. The Medicaid Expansion bill also includes a provision called the Healthcare Access and Stabilization Program(“Program”), which will expedite reimbursement procedures for hospitals that serve Medicaid patients. However, if the Program is not implemented at the same time as Medicaid Expansion, the state could lose up to $60 million in federal funding.
The Human Cost of Delay
The financial risks of delaying expansion are clear, but how does that delay affect people who will qualify for coverage under the new rules?
One crucial change that will come with Medicaid Expansion is extended eligibility to all adults aged 19-64 with incomes at 138% of the federal poverty level ($20,120/year) or lower. This will bring in a new population to the program and simplify the application process.[6] Under current Medicaid rules, childless non-elderly adults with no disabilities are generally not eligible for benefits. In addition to providing coverage for this population, income limits for families will rise as well.[7] Every month of delay is a month of uncertainty and lost healthcare opportunities for these populations.
Furthermore, the cost of delaying Medicaid Expansion is exacerbated by the fact that Medicaid started unwinding pandemic-era “continuous coverage” requirements in April 2023. Medicaid recipients are now subject to the recertification process for the first time since before the pandemic, and terminations began on July 1st.[8] Nearly 100,000 people in North Carolina have lost coverage since then. Many who lost coverage will be eligible under the new rules and are facing a gap in healthcare coverage due to the delay in implementing Medicaid Expansion..
In addition to the obvious health hazards created by the delay—like inability to obtain coverage for critical surgeries or cancer treatments—research suggests that Medicaid Expansion is a criminal justice issue as well. One study found a correlation between adoption of Medicaid Expansion and reduced police arrests, particularly arrests related to drugs. The authors conclude, “…greater insurance coverage creates new avenues for individuals to seek care, receive treatment, and avoid criminalization.”[9]
The impacts of Medicaid Expansion in North Carolina will be profound. Coverage will extend to over 600,000 new individuals, many of whom are among the most vulnerable populations in the state. Life-saving treatments will suddenly be within reach for many who have struggled to obtain coverage in the past, and improved access to mental health and substance abuse treatments will likely reduce crime by providing support to people who desperately need it.
Every month of delay matters.
[1] Gary D. Robertson, North Carolina Approves Medicaid Expansion, Reversing Long Opposition, PBS News Hour (March 23, 2023), https://www.pbs.org/newshour/politics/north-carolina-approves-medicaid-expansion-reversing-long-opposition.
[2] Megan Messerly, N.C. Governor Sets Medicaid Expansion Date, Pressuring Republicans To Act, Politico (July 26, 2023), https://www.politico.com/news/2023/07/26/roy-cooper-north-carolina-medicaid-expansion-00108297.
[3] Sam Chan, NC Medicaid Expansion Will Launch on Dec. 1, 2023, N.C. Off. of the Governor (Sept. 25, 2023), https://governor.nc.gov/news/press-releases/2023/09/25/nc-medicaid-expansion-will-launch-dec-1-2023.
[4] H.R. 76, SL 2023-7. Reg. Sess. (N.C. 2023).
[5] Messerly, supra note 2.
[6] Jaymie Baxley, DHHS Plans To Speed Up Medicaid Expansion; What Would That Mean for North Carolina?, City View (Aug. 15, 2023), https://www.cityviewnc.com/stories/dhhs-plans-to-speed-up-medicaid-expansion-what-would-that-mean-for-north-carolina,52382.
[7] Id.
[8] Fact Sheet: Continuous Coverage Unwinding, N.C. Dep’t of Health and Hum. Serv., https://medicaid.ncdhhs.gov/ccu-fact-sheet/download?attachment.
[9] Jessica T. Simes & Jaquelyn L. Jahn, The Consequences of Medicaid Expansion Under the Affordable Care Act for Police Arrests, 17(1) PLOS One (2022) https://doi.org/10.1371/journal.pone.0261512.