Medicaid expansion is a bad deal for North Carolina
As the Biden administration tries to sidestep states refusing to expand Medicaid, all eyes are on North Carolina. It is one of only 12 states that have held out for a decade—and for good reason.
Medicaid expansion has proven to be a disaster in every state it has been implemented. It has ballooned program enrollment, busted state budgets, and overrun hospitals at the expense of the most vulnerable among us. More than 20,000 truly needy Americans have died on Medicaid waiting lists in states which have expanded Medicaid.
For a decade, our country has observed other states expand Medicaid to able-bodied adults who don’t actually need the program, but now qualify, so they sign up. As a result, states have enrolled double the number of able-bodied people initially projected at a jaw-dropping 76 percent more per enrollee than promised.
This has resulted in hundreds of millions—and in some cases billions—of unexpected state spending, all paid for by the taxpayers. In Alaska, Gov. Bill Walker predicted no more than 23,000 adults would enroll in Medicaid expansion in the first two years, costing less than $320 million. In reality, more than 36,000 able-bodied adults signed up, costing nearly $593 million.
In California, officials predicted that 910,000 adults would enroll in the first two and a half years, costing no more than $11.6 billion. Yet in 2017, enrollment passed 3.8 million able-bodied adults. The price tag? An unfathomable $43.7 billion, nearly four times the forecast.
In Ohio, Medicaid had already taken up about half the general budget. After expansion, officials were so desperate to cover soaring costs that Gov. John Kasich suggested cutting payments to pediatric hospitals and cutting eligibility levels for pregnant women. In 2016, it eliminated Medicaid eligibility for more than 34,000 seniors and individuals with disabilities.
And that’s just health care. Soaring Medicaid costs swallow funds that should go to critical priorities like schools, roads, and law enforcement. Want to defund the police? Medicaid expansion is a good first step.
Is this really what North Carolina wants?
Medicaid expansion would add roughly 900,000 able-bodied North Carolinians to the rolls. Of these new enrollees, 63 percent would already have private insurance—including 160,000 residents who would be kicked off their federal subsidies for private insurance and forced into Medicaid expansion whether they wanted it or not.
In other words, North Carolina taxpayers would be funding Medicaid for those who already have private health insurance at the expense of vulnerable residents who need Medicaid the most. And doing so would cost the state $6 billion in the next 10 years. Or likely more, as we’ve learned from other states.
Not only would Medicaid expansion break the budget, it would break the effectiveness of the program itself. Expansion states have struggled with massive provider shortages following Medicaid enrollment booms. Since Medicaid only pays providers 60 percent of private insurance rates, it is only accepted by 71 percent of providers nationwide.
Difficulty finding providers—especially surgeons and specialists—can have serious consequences for the people who truly need Medicaid care, including children, seniors, and people with disabilities. And when people cannot find a doctor, they go to the hospital.
Overwhelmed hospitals in expansion states have endured significant financial losses. Data from more than 2,200 hospitals in expansion states have shown that Medicaid shortfalls grew by nearly $5 billion after expansion. Those losses have turned into layoffs, fewer hospital beds, fewer services, and some hospitals closing for good.
There is a significant benefit to being one of the last states to decide on Medicaid expansion. North Carolina gets to learn from the mistakes of others. In every single case of Medicaid expansion, states have scrambled to find money they don’t have to provide coverage to those who don’t need it. They have created budget and bandwidth problems for hospitals already overwhelmed with the demands of the pandemic.
Medicaid expansion states have put the solvency of state budgets at risk, and siphoned tax dollars away from schools, roads, law enforcement, and more. And worst of all, expansion states have created health care shortages for the vulnerable populations that Medicaid was created to serve in the first place.
The General Assembly can’t let the rush to pass a budget cloud its judgement on the failures of Medicaid expansion. It needs to remember why North Carolina resisted it in the first place and hold the line. The lives of their constituents are very literally depending on it.
Nick Adolphsen is a state government affairs director at the Foundation at the Foundation for Government Accountability.