The respected Kaiser Family Foundation came out with its estimates today on what states can expect to spend on Medicaid between 2014 and 2019 as a part of the expansion of health reform. Kaiser gives a range of figures based on the expected participation rate in Medicaid. Additional costs to the state range between $171 million each year to $299 million each year or between 1.02 billion and 1.8 billion between 2014 and 2019. Because the federal government picks up 93%-95% of the total costs of the Medicaid expansion, the feds will invest between $21 billion and $25 billion in North Carolina.
But spending is not the only important measurement. The Kaiser report says between 633,000 and 888,000 people in NC will get reliable health insurance as a result of reform. This means nearly a million people in NC – all making under 133% of federal poverty level, or $14,400 a year – will go from being uninsured to have a good, basic health insurance package. The impact of this change is hard to understate, especially in the poorer counties in North Carolina. Thousands of people will find their lives changed for the better when they are able to get decent health coverage regardless of their job or financial situation.
Very conservatively, this spending will also have an enormous economic effect on North Carolina, creating over 37,000 new jobs, $3.9 billion in business activity, and $1.4 billion in new salaries and wages. Additional savings to the state as a result of expansion need to be counted too. For example, NC provides nearly $50 million a year to UNC Hospitals to help pay for care for the uninsured. As the number of uninsured drops, so does this cost.
Finally, to put the cost of reform in perspective, North Carolina currently collects $428 million each year from our expanded tobacco taxes and the 1999 tobacco settlement. Even if NC didn’t want to devote current tobacco dollars to insuring nearly a million North Carolinians, a 50 cent increase in NC’s low cigarette tax would raise $210 million a year, likely paying for all or a majority of the increased costs.
As a state with high numbers of low-income people, national reform’s expansion of Medicaid will mean big changes in NC. Thousands of new jobs created, jumps in business activity – especially in the more rural and lower-income parts of our state, and security and stability for hundreds of thousands of lower-income workers. And all this with the federal government picking up 93% to 95% of the costs.