News: CJ Exclusives

House Medicaid expansion plan getting chilly reception

'Carolina Cares' sold as a way to expand affordable coverage to middle-class workers; GOP leaders aren't buying

Rep. Greg Murphy, R-Pitt, introduces the Carolina Cares legislation at a Tuesday press conference. He is flanked at the podium by (from left) Reps. Donna White, R-Johnston, Josh Dobson, R-McDowell, Donny Lambeth, R-Forsyth, and Gale Adcock, D-Wake. (CJ photo by Dan Way)
Rep. Greg Murphy, R-Pitt, introduces the Carolina Cares legislation at a Tuesday press conference. He is flanked at the podium by (from left) Reps. Donna White, R-Johnston, Josh Dobson, R-McDowell, Donny Lambeth, R-Forsyth, and Gale Adcock, D-Wake. (CJ photo by Dan Way)

If it is modeled after a Medicaid expansion program, and is funded like a Medicaid expansion program, it is a Medicaid expansion program.

That’s what health care analyst Nic Horton says. Horton, a senior research fellow at the Florida-based Foundation for Government Accountability, which has scrutinized Medicaid and expansion plans around the nation, says House Bill 662, known as Carolina Cares, is Medicaid expansion that North Carolina would do well to shun.

Yet Rep. Donny Lambeth, R-Forsyth, lead sponsor of the legislation, insists H.B. 662 is not a Medicaid expansion plan, but instead an opportunity to provide health care coverage for up to 350,000 uninsured North Carolinians. The leaders of his party in the House and Senate aren’t sold.

Under Carolina Cares, participants would pay a nominal premium and small co-pays, and have to work. North Carolina hospitals would be charged an assessment to help pay costs. Other unspecified assessments also could be levied.

Lambeth says North Carolina would save approximately $45 million in traditional Medicaid expenditures on an annual basis under the plan. That is the amount Medicaid pays hospitals to  their emergency room costs for uninsured patients.

But the added coverage would cost federal taxpayers — including those in North Carolina — plenty. Backers of the legislation say it would bring $21 billion in federal funding to the state. Those tax dollars may be funneled through Washington rather than Raleigh, but North Carolinians still pay their share of them.

Lambeth wasn’t able to estimate the costs to state taxpayers. But in an email, he said under current law, the federal government is picking up 90 percent of the costs. The sponsors anticipate that level of support would continue under the federal waiver, which is negotiated between state and federal officials.

“This product is unlike any other state in the nation. It establishes a new health care paradigm in North Carolina rooted in consumerism and personal responsibility,” Lambeth said. It focuses on preventive care with a wellness emphasis, and participants who don’t comply with those primary care conditions could be removed from the program.

“They tried this in Arkansas, where I live. Since they tweaked how the Medicaid benefits are delivered, they think they can pretend it’s not Medicaid,” Horton said.

“But the beneficiaries are Medicaid expansion beneficiaries, as set forth in federal law. They receive Medicaid benefits, paid for with Obamacare dollars, and receive federal Medicaid expansion matching funds for the program,” Horton said. “It is absolutely Medicaid expansion, and the same would be true in North Carolina if they pass this.”

Bill co-sponsors at a Tuesday press conference with Lambeth were Reps. Josh Dobson, R-McDowell, Greg Murphy, R-Pitt, and Donna White, R-Johnston. Early indications are the bill is in for rough sledding in the General Assembly.

House Speaker Tim Moore’s office said the Cleveland County Republican remains opposed to Medicaid expansion, and referred to a statement he made Monday: “The best thing to do for the working poor is to continue to grow the economy.”

Senate leader Phil Berger, R-Rockingham, has opposed Medicaid expansion numerous times in the past, “and his personal position has not changed,” his office said.

Lt. Gov. Dan Forest, speaking Wednesday morning on the KC O’Dea show on WTKK-FM, said the renewed debate in Washington over health care reform makes discussion of state-level Medicaid expansion even more confusing to policymakers and the public.

Despite the promise from bill sponsors that no state funds would be required, Forest said, “there’s no free ride.” He also noted that while he respects the bill’s sponsors, many of them are connected to the health care provider community, which would stand to receive more money from expanding Medicaid.

Lambeth said his bill “is self-sustain[ing], and we can roll this out with no new state money supporting the initiative.”

But some analysts who have reviewed the legislation say it has the same funding problem as an expansion proposal advanced by Gov. Roy Cooper, which drew a federal lawsuit from Berger and Moore.

If the Affordable Care Act stays in place for several more years, the subsidy the federal government sends to states covered by expansion plans would decrease from 100 percent of the cost to 90 percent. If North Carolina paid for expansion entirely through higher taxes on health care providers, it would have to double the tax to cover the state’s portion. There is a 6 percent cap on provider taxes, and North Carolina already is at 4.1 percent. There might not be enough capacity left in the provider tax to cover costs of expansion.

Congressional Obamacare replacement plans all have included phasing out the Medicaid expansion, which would mean the 90 percent federal share would drop to the normal 66 percent funding level, leaving the state to bridge the gap.

H.B. 662 is modeled after Indiana’s Healthy Indiana Plan, an Obamacare expansion Horton calls a failure. Like other expansion states, Indiana has spent more tax money on the plan and put more able-bodied adults on Medicaid than expected.

“As Congress continues to push forward on repealing Obamacare, it doesn’t make sense for North Carolina to go down this path. If they do, they’ll be putting taxpayers on the hook and putting the truly needy at risk,” Horton said.

Julie Henry, a spokeswoman for the North Carolina Hospitals Association, said the organization is prepared to work with the General Assembly and Cooper if they agree on a plan.

The Hospitals Association balked at Cooper’s Medicaid expansion plan because hospitals would have paid for it. But the group’s concerns have diminished because Congress and the Trump administration have failed to agree on how o replace Obamacare, and no replacement plan seems imminent.

“We weren’t sure in January about what was going to happen with the ACA. It appears that for now the ACA is still in place,” Henry said.

Lambeth and others touted the economic benefits of the legislation. They cited a George Washington University study that said the expansion would create 43,000 new jobs, half of those in the health-care sector, and bring $21 billion in federal funds into the state.

If the program did create that many jobs, it would represent one new health care position per 16 Carolina Cares enrollees, assuming Lambeth’s 350,000 projection.  

Horton said he was puzzled that conservative lawmakers were touting a government program as a jobs bill, when Medicaid properly should be viewed as a temporary safety net.