In addition to extending health care coverage to nearly a half million people, creating over 40,000 jobs by 2020, and preventing nearly 15,000 families from facing catastrophic medical bills annually, new data from the Kaiser Family Foundation shows that Medicaid expansion actually helps slow state Medicaid spending growth.
A survey of Medicaid directors in all 50 states showed that Medicaid expansion states only saw a 3.4 percent increase in state Medicaid spending growth compared to non-expansion states like North Carolina that experienced on average a 6.9 percent increase in state spending growth. What is more, Medicaid expansion states were still able to control Medicaid spending growth despite Medicaid enrollment increasing by 18 percent.
State spending growth in expansion states is less because the federal government continues to cover 100 percent of Medicaid costs through 2016 for expansion states. Starting in 2020, the federal government‘s contribution will remain at 90 percent. For non-expansion states, the federal government contributes much less. For example, the contribution from the federal government for Medicaid only increased 0.36 percentage points from 65.88 percent in fiscal year 2015 to 66.24 in fiscal year 2016. With only a slight increase in federal support for Medicaid, North Carolina will have to spend more as Medicaid enrollment continues to grow. The average monthly Medicaid and CHIP enrollment before the ACA was 1,595,952 and in July 2015 enrollment was reported at 1,911,334 individuals. Considering that there is a 20 percent change in Medicaid enrollment growth, North Carolina policymakers, especially our governor must develop a plan to address Medicaid spending and enrollment growth.
This past legislative session, the legislature passed a short-sighted Medicaid Reform bill that is supposed to increase budget predictability and control costs. More specifically, the bill states that North Carolina’s “risk-adjusted cost growth for its enrollees must be at least two percentage (2%) points below the national Medicaid spending growth…”. However, failing to expand Medicaid and rejecting $2 billion dollars in federal funding annually will act as a major barrier to decreasing spending growth below the national average.
But, it is not too late for North Carolina to expand Medicaid to help control spending growth. A Medicaid expansion plan that is tailored to meet North Carolina’s needs can be added to the Medicaid reform plan waiver that will be submitted to the federal government. In other words our state can reform and expand Medicaid at the same time. These data prove that our state policymakers can no longer use the excuse that Medicaid expansion burdens state budgets. If anything, failing to close the coverage gap through Medicaid expansion strains North Carolina’s budget.