A way out on Medicaid expansion and Medicaid privatization for Governor McCrory?

After reading Rose Hoban’s story about the out-of-state Medicaid managed care companies who still seem eager to come to NC and privatize our award-winning Medicaid program and my friend and colleague Joan Alker’s blog today about how Arkansas is using private insurers to expand Medicaid I had some thoughts for our own Governor and his many Medicaid dilemmas.

First, despite the newfound enthusiasm reported among the out-of-state for-profit managed care industry that they can swoop into NC next year and grab a lucrative chunk of the Medicaid market, I really don’t think that’s going to happen. And this is despite the obvious need the General Assembly and Governor will have next year for finding major money to raise teacher pay and restore some of the massive cuts to the education budget they made this year. After seeing their approval ratings drop precipitously and a constant stream of stories about their education cuts, political leaders will want to do something, especially in an election year, and what better way to find money than take it from the health care program for poor people by selling it off at a discount to the for-profit vultures like Wellcare who paid $137 million in fines for fraud over the last couple of years?

Well, it won’t happen. It’s an election year next year and those out-of-state companies make money in one major way when they take over a Medicaid program – they pay doctors and hospitals less and they pay for fewer health services. There’s enough experience around the country that doctors and hospitals in our state know exactly what to expect when these vultures come calling, and it isn’t pretty. Every legislator who contemplates this sort of sale is going to hear an earful from some pretty big hospital employers and well-loved pediatricians, family physicians and other groups back home about selling off NC Medicaid. And don’t forget, NC’s Department of Health and Human Services has squandered through blatant cronyism, drastic fumbles in how they pay Medicaid provider bills and general arrogance any hope the McCrory’s administration had for forcing through such a big and unpopular change. The health players in NC simply don’t respect the McCrory’s administration enough to make a deal like this work even if it did make policy sense.

Here’s the second problem for McCrory. His staff at least has to know what a great deal accepting the federal Medicaid money is to expand health coverage to 500,000 of our poorest people under the Affordable Care Act. We save millions of dollars in the state budget for literally for years according to the NC Institute of Medicine. And so the McCrory administration would – I think – secretly love to do a Medicaid expansion. Because of this, staffers must be looking at the Arkansas Medicaid expansion for inspiration as the only other Southern state to take the plunge. In Arkansas they are taking the Medicaid money and buying people private plans on the Arkansas health exchange. There has to be some serious evaluation of this approach – for one thing, it’s almost certainly going to be more expensive than a straight Medicaid expansion – but politically it is a winner in a conservative state.

That brings me to my possible way out. Could people in McCrory’s staff who actually know about healthcare be thinking to do a Arkansas-type expansion where we use Medicaid money to buy private coverage? In NC that would mean that NC Blue Cross would benefit as a private, in-state, nonprofit company from the Medicaid expansion and McCrory could say he was expanding Medicaid using private plans. This would leave the out-of-state companies out of the loop but is much less politically problematic for both the legislature and Governor. It also leaves the majority of the NC Medicaid program as-is, but since Medicaid is saving money and winning awards, how bad can that be? Although don’t expect a governor who says “Medicaid is broken” at every opportunity to admit that. If he did decide to try the Arkansas expansion approach, McCrory could  point out a strong program evaluation could see if the NC’s private exchange plans for Medicaid were working any better than the rest of the program to test his privatization theories. And McCrory would also know that because we are expanding NC Medicaid with 100% federal dollars we are still saving money for the state regardless of which approach we take.

So, let’s recap. An Arkansas Medicaid expansion solution lets McCrory claim some victory on privatization without angering a powerful state constituency that General Assembly members likely don’t want to make mad in an election year. It saves a substantial amount of money – over $100 million in the first two years that can be put to good use. And finally it doesn’t require the painful process of regaining the trust of the medical and public health communities that a wholesale change in NC’s Medicaid program would require. I’m not going to hold my breath, but this is one way out of the hole we’ve dug ourselves into in North Carolina.


  1. Alex

    October 4, 2013 at 5:15 pm

    There’s only one problem with your argument Adam. The Federal government has no money to expand Medicaid, or even pay all of it’s bills. The government is completely broke, and would have to borrow all of these dollars. What sense does it make to expand entitlement programs when we can’t even pay for the ones we currently have. It’s nothing but total insanity !

  2. James

    October 4, 2013 at 5:53 pm

    I think this is a great idea. No one can say that our citizens on Medicaid won’t be receiving quality care. And this could provide some level of predictability to our skyrocketing Medicaid costs as well as provide a way out for the Mcrory administration.

  3. ML

    October 4, 2013 at 6:21 pm

    Alex my simple friend, sorry but we do have the money available, we just declined it for political reasons. If nc does what is supposed to then we will receive the funds. The government shut down and debt ceiling issues has no bearing money that has already been allocated to the states for Medicaid expansion. Just like it will have no affect on obama care bc the program has already been funded and allocated.

  4. Alan

    October 4, 2013 at 6:36 pm


    There’s only one problem with your argument, it’s completely false. The US isn’t “completely broke” as you state. Perhaps we should bring an end to all of the corporate welfare & tax avoidance that does exist in the US instead?

  5. GeneB

    October 4, 2013 at 7:51 pm

    “e Federal government has no money to expand Medicaid, or even pay all of it’s bills ” Even if that was true, and it’s not, the national budget is not like a household budget. Households are not the value currency holders for the world capable of the sorts of investments, leverages, etc. that the US is capable of.

    “The government is completely broke, and would have to borrow all of these dollars. -“No, it’s not. We pay our debts. Most of the debts we owe are actually to ourselves anyway. Wow.

  6. Alex

    October 5, 2013 at 7:48 am

    Poor Alan and ML are both delusional if they think this government isn’t broke. At the end of September Jack Lew had only $30 billion dollars(chump change) to pay all of the bills of the US government ! We borrow over $50 billion dollars each month just to pay the current bills, and our unfunded liabilities for entitlements total well into the trillions in addition to $17 trillion of current debt, and another $4 Trillion sitting off the books at the Federal Reserve, the highest amount ever recorded. Obamacare is certainly not funded, as we don’t have any idea what it will cost and no money is set aside in trust funds. Social Security is now paying out more than it takes in, and the demographics of our aging population hasn’t fully kicked in yet. When they say “ignorance is bliss”, it certainly applies here.

  7. NoGOPinNC

    October 5, 2013 at 10:47 am

    If you research our financial status as a nation there is a pattern conservatives run up huge bills leave office Dems fix problem cons whine and throw tantrums uninformed voters vote in cons and the cycle starts again-rinse and repeat.

  8. LayintheSmakDown

    October 8, 2013 at 6:06 pm

    Here is where you are wrong. barack and Harry Reid have almost exponentially increased our borrowing through their mismanagement of the budget process. According to this web site, starting debt was just over $10 trillion in 2008. We are now at close to $17 trillion. We are on track to double by the end of barack’s reign of fiscal terror.


  9. Milton McDonald

    October 9, 2013 at 12:35 pm

    Representative Paul Stam, in a letter to the N&O October 4th, said that those denied Medicaid through the expansion could get coverage on the exchange. Is this true? Isn’t the idea of Medicaid expansion to cover those who can’t afford insurance?

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