On March 27th, North Carolina passed legislation to expand Medicaid. This came as a surprise to many; after all, the first states to expand Medicaid announced their intentions to do so back in 2010, and while many others have followed suit in the years since, observers were unsure about whether certain states like North Carolina would ever do the same.
One of those unsure observers was North Carolina Republican State Senator Phil Berger, who cheered on the announcement after feverishly opposing it for a decade. Berger himself was surprised by his turn, telling Pluribus News that, even a few years ago, few could have predicted his switch of stance.
“I would have tried to figure out what planet you had come from, because you had not paid any attention to anything that I said,” he told Pluribus News.
So what happened? This is a topic we intend to explore in this article — how 40 states came to sign on to Medicaid expansion, and what the change in mentality in places like North Carolina can tell us about the remaining states that have not expanded Medicaid.
First, some background on Medicaid expansion. When the Affordable Care Act (ACA) was passed, it contained a provision calling for the expansion of Medicaid eligibility to cover a higher number of low-income Americans.
Prior to this, Medicaid was generally unavailable to non-disabled adults under the age of 65 unless they had minor children; with the expansion, Medicaid would be extended to all adults under the age of 65 who had incomes up to 138% of the federal poverty level, with an enhanced federal matching rate (FMAP) offered by the government to help fund the expansion.
However, in 2012, the Supreme Court ruled that the federal government could not force states to expand Medicaid. This meant that it was up to each individual state to implement their own Medicaid expansion — a big ask given the political fraughtness of Obamacare.
While many Republican-led states were slow to adopt Medicaid expansion, some eventually came around to the idea.
North Carolina is the latest state to do so. In a press release posted to the Governor’s website, the office notes that “in North Carolina, rural residents are 40% more likely to be uninsured and eligible for Medicaid expansion, and eleven rural hospitals have closed in North Carolina since 2005, with more at risk of closure due to a lack of paying customers.” The site further notes the state’s current issues with opioid and substance abuse may be helped by the expansion.
The expansion has the potential to bring more money into the state. As the Governor’s site states, “without Medicaid expansion, North Carolina has missed out on an estimated $521 million each month that could go to improving mental health and helping rural hospitals remain open.”
The money in question comes from the federal government. First, while states can pay up 50% of Medicaid’s costs without expansion, the federal government pays 90% of the Medicaid costs for those covered by the expansion, leaving the remaining 10% to the state.
Second, part of the Biden administration’s American Rescue Plan Act of 2021 included a provision to entice states that haven’t opted to expand Medicaid to finally do so. This provision stated that the government would add 5 percentage points to their current FMAP for two years, meaning that the U.S. government would cover more of the costs for those already covered by Medicaid.
As North Carolina currently covers only around 34% of its Medicaid costs, this additional 5% would result in substantial savings for the state.
This fiscal factor may be the biggest in bringing non-Medicaid expansion states toward actually doing so. Numerous Republican lawmakers in the state, including the aforementioned State Senator Berger, cited cost savings as among the reasons why they eventually decided to back expansion.
Furthermore, a substantial amount of data backs up the idea that expanding Medicaid saves the state money.
“In many cases, researchers have found that Medicaid expansion generates enough savings and/or new revenue to more than offset a state’s share of the cost,” reads a 2020 report from The Commonwealth Fund. “Building from these studies, researchers in at least eight nonexpansion states project similar savings and revenue, should their states expand Medicaid.”
One of the reasons for these savings is the fact that those who were not previously covered by Medicaid often still received treatment. However, instead of their costs being covered by the federal government, they were taken on by the state.
“Right now, we pay for this care for people, no matter what, when they end up in the emergency department with a stroke or a major cardiovascular event,” Kody Kinsley, Secretary of the NC Department of Health and Human Services, told PBS. “Reaching them at a point of prevention and getting them on preventative care is a lot cheaper. This is not only a smart investment for resources. It’s going to make a large difference over time.”
Medicaid expansion will soon be rolled out across North Carolina — and, if the state’s shift on the topic is any indication, the remaining states without Medicaid expansion may soon do the same.