Not too long ago, the Robert Wood Johnson Foundation in tandem with the Urban Institute released a study assessing the economic consequences for a number of states that vetoed Obamacare’s optional Medicaid expansion. According to that study, North Carolina is losing out on $40 billion of federal funds that would cover medical benefits for the expansion population over the next decade.
Recently, the Asheville Citizen-Times suggested the Tar Heel State is now saying no to $51 billion of federal money. Apart from the inflated figures, I’ve written before about how expansion funds are tenuous, borrowed, and an economic burden on future generations.
But there are more reasons why expanding eligibility rolls will bring on unintended consequences in the near future for those currently on medical assistance — specifically the elderly, blind, and disabled.
Medicaid is jointly funded by the state and Washington. Thus, most state Medicaid expenditures trigger federal funds. While Medicaid costs North Carolina’s General Fund $3 billion a year, total program costs amount to roughly $14 billion. So, for North Carolina to save $1 from its Medicaid budget, it would need to cut $2.93. The majority of savings would revert back to Washington.
Meanwhile, if North Carolina were to expand, Washington would fund full medical benefits only for the expansion population through 2017. Beyond that point, the state would bear incrementally more of the expansion population’s cost. However, due to the enhanced federal match rate, North Carolina would have to cut over $10 worth of services for this population just to save the state $1 in 2020. The chart below illustrates the enhanced federal match rates through 2020.
Should the legislature decide to rein in future program spending, any cuts will most likely affect the most vulnerable populations that Medicaid was originally designed to assist — not the newly eligible population, of whom approximately 80 percent are able-bodied, childless adults who normally do not qualify for other welfare benefits.
The Foundation for Government Accountability’s Jonathan Ingram offers a more in-depth analysis of the issue here.
Katherine Restrepo is Health and Human Services Policy Analyst for the John Locke Foundation.