NC Budget and Tax Center, Trump Administration

Would the U.S. Senate healthcare bill affect NC’s budget in a negative way? Definitely, here’s why…

The Senate GOP has released its proposed healthcare bill, and analysis shows that it would cut federal Medicaid spending even more over the next ten years than the House passed health plan. How much more? $467.4 billion. This cost shift to the states would cause greater state budget shortfalls: Instead of North Carolina losing at least $6 billion over the next 10 years in federal funding for Medicaid, it is estimated that the state would now lose and have to make up at least twice as much ($13 billion) over the same period for Medicaid.

To put that in perspective, North Carolina has only had to contribute $3.1 billion a year for Medicaid in state appropriations, on average, each of the past seven years.

How does this happen? Through a framework proposed by the GOP in Congress called Medicaid Per-Capita Caps. The Urban Institute explains that the American Health Care Act (AHCA) changes the way Medicaid is funded by capping federal Medicaid payments per enrollee, beginning in 2020. Under the House version of the AHCA, these caps would grow at the rate of the medical Consumer Price Index (m-CPI) for most Medicaid enrollees, adding 1 percent to the rate for the elderly and disabled.

The Senate bill, however, lowers the growth rate to the Consumer Price Index for All Urban Consumers (CPI-U) beginning in 2025. Over the next decade, it’s projected to grow at 2.4 percent, compared to the m-CPI rate of 3.7 percent used in the House version. This means a shortfall between federal Medicaid payments and projected costs that will grow over time, and states will have to make the difference up by raising taxes, cutting enrollment, reducing benefits, or reducing provider reimbursement.

President Trump has admitted that he used the word “mean” to describe the House GOP’s health plan. Given the fact that the Congressional Budget Office (CBO) is set to release its estimate for the Senate GOP health care plan very soon, and that it will show that millions of Americans will lose health coverage and billions in Medicaid costs will be shifted to the states, there is one question left to be answered:

Will North Carolina’s own U.S. senators, Richard Burr and Thom Tillis, do the right thing and reject the current proposal that would cut health coverage for millions of vulnerable Americans and shift billions in costs to North Carolina?

In Case You Missed It

Most of the debate regarding North Carolina’s state budget took place last week. And interestingly enough there was one topic that legislators did not address: the federal funding cuts that loom overhead. This is concerning given the massive cuts to federal funding proposed by the President and GOP in Congress. Based on those federal cuts, we know that North Carolina would have to come up with at least $13 billion in additional revenue over the next 10 years to maintain existing vital programs – one of those being Medicaid.

Before the Senate released its proposed health care bill last week we reported that the GOP’s health plan secrecy and Medicaid per-capita caps should raise alarms in NC. We stated If the Senate produces a new health plan bill and keeps Medicaid per-capita caps in its framework, North Carolina’s state budget and its people will suffer in the long-term.”

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.
NC Budget and Tax Center, Trump Administration

Medicaid is the single largest source of care for Americans with mental health, substance abuse disorders

The N.C. House and Senate have voted through their joint budget and it does not strengthen Medicaid nor call for its expansion to help the most vulnerable North Carolinians. At the same time, the closely guarded U.S. Senate health care bill written entirely behind closed doors is finally out and it too does not strengthen Medicaid, but rather proposes deep cuts to the program. By refusing to strengthen Medicaid for North Carolinians and Americans in need of medical assistance, the approach of our General Assembly and Congress reflects not only a lack of leadership but also lack of desire to combat our nation’s opioid addiction epidemic.

Evidence shows that Americans with mental health and substance abuse disorders are the single largest beneficiaries of Medicaid expansion. Based on NC’s growing opioid crisis – an average of 4 deaths a day – the intersection between Medicaid and opioids is very relevant. According to the National Council for Behavioral Health:

  • Medicaid is a vital source of care for people living with mental illness or addiction: In 2014, spending by Medicaid accounted for 25 percent of all mental health spending in the U.S. and 21 percent of all substance use disorder expenditures in the nation. Approximately 29 percent of persons who receive health insurance coverage through the Medicaid expansion either have a mental disorder (e.g. schizophrenia, bipolar disorder, clinical depression, anxiety) or a substance use disorder (e.g. alcoholism, opioid addiction) or both.
  • Medicaid expansion is an opioid treatment program: As drug overdoses have overtaken auto accidents as one of the leading causes of preventable death in the U.S., states have turned to medication-assisted treatment (e.g., Vivitrol, Suboxone, Buprenorphine, and the overdose reversal drug Naloxone) as an important tool in combatting the opioid epidemic. Many states with the highest opioid overdose death rates have used Medicaid to expand access to medication–assisted treatment; for example, in Kentucky, Maine, Pennsylvania, Ohio and West Virginia, Medicaid pays for between 35 and 50 percent of all medication-assisted treatment.

Given these facts, it is unfortunate that the General Assembly’s joint budget, instead of strengthening Medicaid and addressing issues in a comprehensive manner, has simply chosen to allocate $500,000 each of the next two years for a medication-assisted opioid use disorder treatment pilot program.

Given the General Assembly’s lack of interest in strengthening Medicaid to help North Carolinians in need, it is worth noting that President Trump’s Commission on Combating Drug Addiction and the Opioid Crisis held its first meeting last Friday and Medicaid was the elephant in the room.

President Trump appointed Governor Cooper as one of his five commission members to combat the opioid crisis, and Cooper used his allotted time to tie the fate of the American Health Care Act—and the fate of Medicaid—to the future of the opioid crisis, stating:

“At the addiction level we need treatment and prevention … and we’re kidding ourselves if we don’t think that what is happening over in Congress regarding issues of health care, matters to this issue. … If we make it harder and more expensive for people to get health care coverage, it’s going to make this crisis worse.”

Overall, it is critical for legislators to understand that Medicaid is the single largest source of care for Americans with mental health and substance abuse disorders. Given the opioid crisis in North Carolina, legislators must do more to strengthen Medicaid. Cutting Medicaid and reducing access to it will only worsen the opioid crisis that the people of our state are facing.

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.
2018 Fiscal Year State Budget, NC Budget and Tax Center

NC General Assembly’s joint budget falls $188.7 million short of Governor’s proposal for promoting the health of North Carolinians

The N.C. House and Senate have released their joint budget deal and the numbers don’t lie: NC’s Department of Health and Human Services will receive $93.7 million less next year than what the Governor proposed back in March. Over the next two years, the gap is $188.7 million.

This significant gap in funding for a department tasked with providing essential services to improve the health, safety and well-being of all North Carolinians is unfortunate, especially considering our state already lags behind on health compared to other states. For example:

  • NC Ranks 32nd in the nation for overall health (it was 31st in 2015. The state ranks 30th for senior health and 30th for the health of women and children).
  • NC ranks 33rd in the nation for child well-being (placing NC among the poorest performing states in outcomes for children and youth).
  • NC ranks 48th in the nation in the overall effect of state policies and practices on promoting independence for people with intellectual and developmental disabilities.

Here are several ways in which this final budget will make it more difficult to improve our performance on many of these key health indicators.

First, the Division of Medical Assistance will receive $44.6 million less next year than what the governor proposed. This division uses the resources and partnerships of Medicaid to improve health care for all North Carolinians. In light of the current efforts underway at the federal level to further shift costs to the states, the failure to adequately ensure that Medicaid is positioned to deliver health care to our most vulnerable is troubling. Unfortunately, it is no surprise legislative leaders opposed the Governor’s proposal to expand Medicaid to cover 624,000 additional individuals and secure NC’s share of federal resources to inject over $4.4 billion in direct spending into the state.

Second, despite the bipartisan support for addressing the challenges of mental health and substance abuse in our state, the Division of Mental Health, Disabilities, and Substance Abuse will receive $18.4 million less next year than what the governor proposed. This division provides quality services to promote treatment and recovery for individuals with mental illness and substance use disorders. It is unfathomable that, given the current opioid crisis in our state, our legislators are still unwilling to making significant investments to address mental health and substance abuse issues. The fact that NC has four cities listed in the top 25 worst cities in the U.S for opioid abuse is not something to be proud of. Neither is the fact that prescription opioid poisoning deaths have increased statewide by over 256 percent, going from 234 in 2000 to 854 in 2015.

Third, the Division of Child Development and Early Education will receive $18 million less next year than what the governor proposed. This division implements quality standards for child care and increases access to families and their children across North Carolina. With its budget, the General Assembly will exclude approximately 1,714 at-risk 4-year-olds across the state from high quality pre-kindergarten classes. Furthermore, the legislature also limits the value of the Smart Start by funding only a third of what was requested, even though this program provides support and flexibility at the local level to all 100 counties in an effort to improve early childhood educational outcomes and better prepare children for school.

Overall, based on the General Assembly’s joint budget, it is clear that the health of North Carolinians is not a priority for our lawmakers. Given the poor state of health in our state, this mindset must change. A thriving, strong, and competitive North Carolina can only be achieved with a healthy population.

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

NC Budget and Tax Center, Trump Administration

GOP’s health plan secrecy and Medicaid per-capita caps should raise alarms in NC

As Americans we should always expect a transparent and open government. An open government strengthens our democracy and promotes accountability, efficiency and effectiveness in government. Unfortunately, the U.S. Senate has continued to promote secrecy when it comes to its draft legislation to repeal the Affordable Care Act.

Yesterday, the New York Times covered this topic and was precise in pointing out that this secrecy has raised concerns among both Republicans and Democrats, stating:

“Senate Republican leaders are aiming to transform large sections of the American health care system without a single hearing on their bill and without a formal, open drafting session. That has created an air of distrust and concern — on and off Capitol Hill, with Democrats but also with Republicans.

I’ve said from Day 1, and I’ll say it again,” said Senator Bob Corker, Republican of Tennessee. “The process is better if you do it in public, and that people get buy-in along the way and understand what’s going on. Obviously, that’s not the route that is being taken.”

“In theory, the bill-writing process is open to any of the 52 Republican senators, but few seem to have a clear, coherent picture of what will be in it. Senator Ron Johnson, Republican of Wisconsin, offered a hint of the same frustration felt by Democrats seeking more information about the bill.

“I come from a manufacturing background,” Mr. Johnson said. “I’ve solved a lot of problems. It starts with information. Seems like around here, the last step is getting information, which doesn’t seem to be necessarily the most effective process.”

This secrecy, along with the fact that Senate Republicans plan to retain the Medicaid per-capita caps without major changes in their version of the House bill, is bad news for North Carolina. While per-capita caps would shift substantial Medicaid costs and risks to all states, North Carolina would face disproportionately larger cuts. [Note: Under a Medicaid per capita cap, the federal government would set a limit on how much to reimburse states per enrollee.]

The reason is simple, North Carolina is a state that meets most of the criteria laid out by the Center on Budget and Policy Priorities for states that would be most harmed by Medicaid per-capita caps. Below is a table with the criteria and a brief assessment of North Carolina against it. Read more

2018 Fiscal Year State Budget, NC Budget and Tax Center, Trump Administration

Report: North Carolina’s state budget needs to plan for at least $13 billion more over the next 10 years to address federal funding cuts

As the N.C. House and Senate continue their Conference Committee to talk about the state budget, federal funding cuts loom overhead. President Trump’s proposed 2018 budget would cut non-defense programs by an estimated $2.5 trillion nationally over the next decade – the largest dollar cuts to programs for low-and moderate-income people proposed by any president’s budget in the modern era.

Given the massive cuts to federal funding proposed by the President, North Carolina would have to come up with at least $13 billion in additional revenue over the next 10 years to maintain existing vital programs, according to a new report from the NC Budget & Tax Center.

The report finds the proposed federal budget would shift significant costs to North Carolina by cutting federal funding for health care, food assistance, and many other areas. The report points out:

  • Under the proposed budget all low and moderate-income programs would see increasing cuts in spending over the next ten years, reaching a 33 percent cut in 2027.
  • The President’s budget would require North Carolina to pay $562 million annually (25 percent) of SNAP (formerly known as food stamp) benefits by 2023. For NC, this means $3.9 billion over the next 10 years.
  • NC would need to come up with at least $6 billion over the next 10 years to maintain Medicaid.
  • In 2018 alone, North Carolina would need to make up $306 million to replace the loss of discretionary grant funding proposed by Trump’s budget. This includes cuts to Social Services Block Grant, the Low Income Home Energy Assistance Program, and the Community Development Block Grants.

Considering both the U.S. federal budget outlook and the need to continue to support thriving communities here in North Carolina and across America, the report concludes with a timely recommendation:

“An important first step will be for North Carolinians and policymakers to oppose further cuts in state revenue in order to adequately plan and prepare for a challenging fiscal environment.”

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.