Senate Republicans back Medicaid expansion, with health care access reforms

Senate Leader Phil Berger, R-Rockingham, hold press conference to announce legislation expanding the N.C. Medicaid program.

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  • Editor's Note: HB 149 could face a floor vote of the full N.C. Senate as early as Wednesday, June 1, 2022 after passing the Committee Rules and Operations of the Senate with little debate on May 31.

On Wednesday the N.C. General Assembly’s Senate leadership announced a health care proposal that includes Medicaid expansion under the federal entitlement program, the Affordable Care Act. House Bill 149 contains work requirements for Medicaid expansion enrollees and measures the senators say would cut regulations on the health care industry that limit the number of providers and facilities. State Medicaid expansion could put more than 600,000 able-bodied, working-age adults onto the taxpayer-funded health care program.

“If, as a result of giving half-a-million people that card, you end up creating longer lines for folks who already have insurance coverage, we really haven’t helped in terms of access,” said Senate Leader Phil Berger, R-Rockingham, in a press conference at the state Legislative Building in Raleigh. “It is our belief that partnering the increased coverage with measures designed to increase the number of providers and the number of facilities people can go to is the right balance to achieve an overall improvement in access and quality.”

Work requirements could be dead on arrival

Waivers to allow states to put work/volunteer requirements or a small co-pay into expansion plans were a carrot put in by the Obama administration to encourage states to expand the program. Under the Trump administration, states that expanded Medicaid had the waivers approved, but the Biden administration has put a hard stop to them.

“The bill as drafted has a work requirement. That is what we would like to see,” said Berger. “We will get it passed, and then we will deal with how to convince the Biden administration and the courts.”

According to the bill language, the new enrollees would continue to be eligible for Medicaid, even while the work requirement was being litigated.

“Republicans have done a complete about-face, and it’s a massive risk to take the work requirements to court,” said Donald Bryson, president of the John Locke Foundation, a free-market organization that oversees the Carolina Journal. “If they lose, then it’s just Medicaid expansion as Obama wanted it.”

In Wednesday’s press conference, Berger was joined by members of the Joint Legislative Oversight Committee on Medicaid and N.C. Health Choice, which studied the idea of expansion and heard testimony over six meetings.

Part of the deal to get Gov. Roy Cooper’s signature on the latest state budget was for the legislature to study expansion. The committee’s recommendations have not been released, but Berger says they are likely to resemble this bill.

Long opposed by Republican lawmakers and state economists, Medicaid expansion has held up nearly every state budget since Cooper has been in office, as he vetoed any that did not fund it. State Republican leadership filed a bill in 2019 that would have instituted work or volunteer requirements into any expansion plan. They now say that COVID changed the calculus, because so many people were added to Medicaid with federal rescue plan money, and hospitals took on a lot of extra expense.

“The environment has clearly changed in North Carolina,” said Sen. Ralph Hise, R-Mitchell.  “As we continue through this pandemic, we have reached a situation where the federal government has prohibited removing anyone from the Medicaid rolls, and we are estimating that around 300,000 ineligible people are on the Medicaid rolls in North Carolina, and would have to be removed within a year.”

The federal government would cover 90% of the bill for Medicaid expansion, with the 10% fiscal gap paid covered by an assessment levied on hospitals, which will in turn draw that money from the federal government. The offer lawmakers would not refuse was a sweetener put on the table by the Biden administration. In expanding the program, 10% of the expansion cost falls to the state, which means North Carolina could face a funding gap between $119 million and $171 milliom . The Biden administration is offering one-time American Rescue Plan money to the 12 states that have not expanded Medicaid; for North Carolina that would mean $1.2 billion.

Increasing supply

While the bill increases the demand side of the health care equation, lawmakers say they are including some cleanup measures in regulations on the supply side. Among those issues, the partial repeal of certificate-of-need laws. This bill repeals CON for some areas of health care, but not all, and reduces the number of medical specialties for which the N.C. Department of Health and Human Services is allowed to dictate “market need.”

“It’s absolutely crucial that the General Assembly work to increase health care supply in our state,” said Jordan Roberts, director of government affairs for the John Locke Foundation. “Across North Carolina, numerous counties suffer from a lack of critical care. In many cases, restrictive state laws cause this shortage. Health care demand is there; we need to ensure our state can serve all the patients in need.”

The bill also contains the SAVE Act, which allows nurses to practice at the top of their training without a doctor present. It’s a measure that doctors’ groups have opposed but is targeted to rural areas where staffing shortages have reduced access to health care.

The bill further directs insurance companies to cover telehealth services and requires some medical billing transparency. Patients would have to be notified 72 hours ahead of a procedure or visit if they may have an out-of-network provider.

Sen. Joyce Krawiec, R Forsyth, has been working to stop surprise billing in health care and found a spot for it in this bill. She also co-chaired the Medicaid and health choice committee, working with hospitals who wanted expansion and coverage for telehealth, among other items.

“I think the bill is a rescue plan for our hospitals, especially our rural hospitals who have had some tough times this last couple of years through the pandemic,” she said.

If the bill passes out of the Senate as Berger expects, there will likely be a full-court press on House members from the Senate and the governor’s office to agree. So far, Speaker Tim Moore has said that there is little appetite for Medicaid expansion in the House.

“I would like to see us pass it in the Senate and get it over to the House and continue the process of educating our colleagues on why we have changed our mind,” said Berger.

How did we get here?

As the N.C. Medicaid program stands today, there are about 2.6 million people in the state covered. They have incomes of 40% or less of the federal poverty level. The new expanded population could make up to 138% of the federal poverty level. They are working age, not disabled, and some already have private health insurance. Existing Medicaid patients are generally the sickest North Carolinians, including children and the elderly, and this would add more than a half million people to the program.

“This would force-feed half a million people into a system that is already overwhelmed,” said Brian Balfour, Locke senior vice president of research. “Coverage will not mean access to care, and do lawmakers really want to expand with a recession coming, which will further swell Medicaid rolls with the newly unemployed?”

One of the primary reasons that Berger and fellow Republicans had vehemently opposed Medicaid expansion is concern that the federal government could reduce its 90% share promise and leave N.C. taxpayers with a gaping hole in the state budget. The new measure ends the Medicaid expansion program if the federal government changes its contribution, a provision that may sway some Republicans in the House who are concerned about a recession on the horizon.

“It makes zero sense for the N.C. General Assembly to consider expanding Medicaid now. With rising inflation, shortages of supplies like baby formula, and signs of increasing economic uncertainty, it’s incredibly risky to saddle taxpayers with a multibillion-dollar ongoing government obligation,” said Amy Cooke, CEO of the John Locke Foundation.

After years of opposition to Medicaid expansion, which included passing a law in 2013 saying the state would not expand, last year Berger indicated that he was softening to the idea. However, he led the press conference on Wednesday saying that they tried to push a free-market-driven solution to health care access but couldn’t get it through.

“The legislature has consistently filed other market-oriented health care reform bills that would have increased insurance plan options for patients and increase health care provider choices, and increase the number of places for patients to seek medical care,” said Berger.

In 2019, Republicans proposed  House Bill 655, which would have expanded Medicaid, but It contained some of the fiscal measures that made it more palatable. For example, it would have permitted large group insurance plans to cover self-employed people and other populations. However, It was not the full, Obama-style expansion, so the bill was relegated to the House Rules Committee in fall 2019 as the governor demanded a “clean” Medicaid bill.

Back then, it was estimated that expansion would add 600,000 people to the Medicaid rolls, but that was pre-COVID, so now lawmakers are not sure.

Sen. Joyce Krawiec, R-Forsyth, in a press conference on May 25, 2022.

“We really don’t know how many because we expanded a lot during the pandemic, so we are not sure how many. That’s why this bill pairs with many other policy changes that will improve access to care,” Krawiec said.

Louisiana faced a similar unknown when lawmakers there expanded Medicaid.  The Pelican Institute recently reported that since Louisiana expanded Medicaid in 2015, there has been a 65% increase in the number of people joining the program from the expanded population. Researchers there say the cost ballooned from $1.4 billion in projected costs to $3.1 billion in actual costs.

“Medicaid expansion has singularly failed to meet its advocates’ own promises of success,” said the Louisiana researchers. “Louisiana should begin the process of unwinding this failed experiment and put into practice reforms that can reduce the cost of care for beneficiaries, while focusing Medicaid on the vulnerable populations for which it was originally designed.”

Worse, a Duke study in 2019 outlines how the existing Medicaid program is not serving patients adequately. Duke University scholars found that organization problems within the current system are already harming the poorest and sickest North Carolinians because of red tape and staffing shortages. Other states, like Arizona and Oregon, which has already partially expanded Medicaid, report an overall increase in the number of people getting health care but say now that expansion put obstacles in the care of existing patients and cost more than expected.

Republicans have focused in recent years on reforming Medicaid and its chronic cost overruns. Now, they say it has improved enough to handle the unknown number of new enrollees.

“Medicaid was a program that was mismanaged, burdened taxpayers with billion-dollar shortfalls on a regular basis,” Berger told reporters. “Fortunately, over the past decade, Republican leadership in the General Assembly has turned Medicaid around in North Carolina. We’ve had eight straight years of solid Medicaid budgets without cost overruns. We reformed the system and implemented Medicaid transformation. … Here’s another reality: The Affordable Care Act is not going to go away.”

What do voters think?

The more voters learn about Medicaid expansion, the less likely they are to agree. A recent Civitas Poll revealed that 58% of likely Republican primary voters opposed expanding Medicaid. In the same survey, 56% of those polled were less likely to support expansion when learning that the federal government does not allow waivers for expansion to be tied to work requirements. Plus 65% of respondents said they were less likely to support expansion when learning that the expanded population was primarily healthy, working-age adults with no children.

Berger told reporters Wednesday that he would welcome the opportunity to explain why he changed his mind on Medicaid expansion.

“I still believe that there are better ways to address some of these issues, but reality has to play a part in the solutions that we offer,” said Berger. “We are talking about helping people and ensuring that when the Biden recession hits us, the state’s budget will be in good shape.”