In an interview published today , Governor Pat McCrory said the reason he wouldn’t expand Medicaid in NC under the Affordable Care Act was the following:
Then there was McCrory’s decision not to accept three years of “free” Medicaid extensions from Washington. “That doesn’t include the administrative cost,” he said. “I would have had to hire a thousand more people, and set up a whole new bureaucracy.
I guess the Governor felt that since he was talking to a smaller regional media publication he could be a little more flexible with the facts around Medicaid expansion. But let’s be clear. Sure, there would be some administrative costs, but the federal government would pay the lions share of those and overall we save money. Yes, North Carolina would actually save money by expanding Medicaid – mostly because suddenly so many people who currently don’t have health insurance would now be able to pay their bills instead of relying on a patchwork of often state-financed programs that pay for some of the minimal and expensive care they get. The bottom line from the NC Institute of Medicine?  $65 million dollars in state savings from expansion:
In summary, a decision to participate in Medicaid expansion as put forth in the PPACA would provide insurance coverage to approximately 500,000 North Carolinians; most of whom would remain uninsured without the expansion. Providing health insurance coverage will help people gain access to the care they need, which can help improve health outcomes. The gross service costs to the state would be $840.9 million and the new administrative costs would be $116.3 million between SFY 2014-2021. However, these new costs would be offset by pharmaceutical rebates ($60.9 million), redirecting existing state appropriations for other programs ($464.9 million), and the new tax revenues likely to be generated as a result of the increase in state domestic product from the infusion of $14.8 billion in new federal dollars ($496.9 million). Because of the high federal match rate, the offsets, and the new tax revenues, the state will actually experience a net savings of $65.4 million from the Medicaid expansion over the eight year time period (SFY 2014-2021). On a yearly basis, the state is expected to save a high of $124.2 million in SFY 2016.
Finally, just step back and think for a minute about that “hire a thousand more people” figure. A thousand more people to do what? We already have a system that pays Medicaid providers (as messed up as McCrory’s rollout of a new payment system has made it) and doctors and hospitals are the ones delivering the services. We have a system that handles enrollment and a system of Departments of Social Services in all 100 counties that routinely enroll people in Medicaid. Every time we have expanded Medicaid – to seniors, to more children – we haven’t had to “hire a thousand more people” – or even hundreds more people. The statement simply makes no sense.
So, of course NC Medicaid would expend some more administrative effort to cover an additional 500,000 people. Setting aside the moral argument of why that is a good idea, just on the pure financial deal offered by the federal government not only does NC recoup any administrative costs but actually saves substantial amounts of money.