Opinion: Daily Journal

How to expand insurance coverage without expanding Medicaid

The state treasurer and the N.C. Healthcare Association can’t reach consensus over how to pay for health insurance for state employees. The governor and some legislative leaders are advocating Medicaid expansion to cover an additional 600,000 people, which would cost the state roughly $600 million the first two years.

The debate, proposals, and arguments have focused on the high cost of health care, who will pay, and ways to shift costs. I think they’re focusing on the wrong things.

Everyone involved in the discussion seems to accept the high cost of health care, which affects and drives up the cost of insurance. The debate is how or who will pay, but not about the root of the problem, which is how to lower the high costs.

Obamacare was supposed to make health care more affordable. It hasn’t. To my dismay, many North Carolinians seem to accept high costs as the new normal. We shouldn’t. Costly medical care drives up the cost of insurance. That doesn’t help anyone. It helps neither those who have insurance nor those who don’t.

Instead of looking for ways to lower costs for everyone through free-market reforms, Gov. Roy Cooper and some legislative leaders are not only doubling down on the high-cost status quo, but they also want to expand it.

Medicaid expansion would add more than 600,000 able-bodied childless adults caught in an insurance gap. That might sound good, but focusing on adding more people to a fragile government program undergoing massive change is the wrong approach. Medicaid is more an issue of government trying to solve a problem government created. We should work to lower the costs. When we do that, those in the insurance gap will have access to affordable insurance coverage.

Here’s what we know about Medicaid expansion’s failed promise: Expansion states are seeing enrollment numbers way over what was predicted, cost overruns that threaten the stability of state budgets, and less access to care.

We don’t have to join the government spiral. When we reduce the cost of health care, and as health care costs go down, the cost of health insurance will go down, too, enabling more North Carolinians to afford the health insurance they want and access the health care they need. All without depending on a government one-size-fits-all program. Here’s how we change the trajectory with a package of reforms focused on individualized, innovative ideas driven by free markets and personal choice:

  1. Repeal Certificate-of-Need laws.
  2. Encourage the use of telemedicine.
  3. Expand the scope of practice for providers, allowing them to offer services they’ve been trained to to provide.
  4. Amend supervisory requirements to allow experienced practitioners to provide care where appropriate.
  5. Introduce dental therapy as a way to extend dental care cost effectively.
  6. Encourage direct primary care practices to continue to grow and flourish.
  7. Allow and expand small business health plans to offer more flexibility and customization of health insurance plans.
  8. Adopt a rule, as is being considered by the Trump administration, to require doctors and hospitals to disclose the rates they negotiate with insurance companies.
  9. Establish a foundation to offer grants or low-interest loans for expansion of medical services, assistance with medical training costs, and housing and personal needs for mid-level providers in rural areas. Use a percentage of hospital nonprofit property, income and sales tax relief to fund the foundation. Allow other businesses or philanthropies to contribute to the fund.
  10. Lead the nation and region by establishing a Southeast compact to offer health insurance plans across state lines.
  11. Encourage competition, discourage monopolies and market consolidation in the hospital, insurance and pharmaceutical industries.

Our reform plan must not leave existing Medicaid recipients stranded. We must ensure Medicaid works better and ensure it provides a safety net to those it was always intended to help. About 12,000 current Medicaid recipients are on waiting lists — some five to 10 years long — to receive support services, the ninth-highest in the country. These services are for people struggling with mental illnesses, opioid addiction, or severely disabled children.

Rather than adding 600,000 mostly childless, able-bodied, working-age adults onto a fragile system, let’s allocate the money to reduce the waiting lists and get these people the help they need.

Becki Gray is senior vice president at the John Locke Foundation.

  • Kerry Willis

    The Treasurer is right on point in reforming the current dysfunctional payment system before other reforms can be made reasonably. Currently, Hospitals consume 60% of the healthcare dollar alone which translates into over 1.5 trillion dollars for the State Employees health plan alone. Administration consumes 15% of the healthcare dollar in most plans and primary care a mere 4% of NC based plans. Until we understand the current hospital compensation system which is based on paying what hospital executives think they want. They plan to set their charges without oversight or a basis for comparison to any standard to produce profit margins they need to support their operations as they deem fit.
    At a recent conference a presenting company with a national database of hospital charges discussed that many small 100 bed hospital operations in the Carolinas have charges that exceed 350% of Medicare. Many of the larger regional operations that provide referral center services average 500-1200% of Medicare. In effect, if Medicare allows $1000 for a service, the State Health plan would receive a charge of $6000 and might pay less depending n the discount negotiated by BCBS. The Citizens of NC and the state employees become responsible for paying these charges. Medicare allows a profit on their charges and allows them to write off a portion of any bad debt incurred at the hospital. If the discount is 50% of the submitted charge its still not a bargain when we know the bill is still paid at 300% of Medicare.

    A system that spends over three times more on administration than primary care is severely dysfunctional and sick. Care provided by primary care physicians is associated with lower overall cost and easier access than other providers. Costs associated with employed Physicians are 30% higher based on this one variable alone. Moving to a single fee schedule for physician services, imaging and outpatient services would help greatly in providing NC Citizens with transparency and information to introduce competitive market forces into our healthcare system.

    In summary, only with a careful understanding of what we are paying for healthcare in a system that allows comparison to a standard can we begin to understand where reform needs to begin.