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GovBeshear_300Today in the Joint Appropriations Committee at the NC General Assembly there was a suggestion that closing the insurance coverage gap in states has proven much more expensive than first anticipated. Just after the conclusion of our legislative meeting Kentucky Governor Steve Beshear held a press conference addressing this very issue. In his statement to the media Gov. Beshear said claims that Kentucky could not afford Medicaid expansion have been “buried under an avalanche of facts.”

He went on to say:

An avalanche of facts that demonstrate to the satisfaction of anyone and everyone with an open mind that Kentucky can indeed afford to take care of its people. In fact, we can’t afford not to do so.

The focus of Gov. Beshear’s press conference was a new report from the Urban Studies Institute at the University of Louisville showing that the first year of expansion saved millions of dollars and created thousands of jobs in Kentucky. In addition, health care providers were paid an addition $1.16 billion for services.

The report also shows that for the FY17-18 state budget Kentucky will pay a biennial total of $247.6 million for expansion, which will be offset by $511.8 million in savings and additional tax revenue.

We have similar studies in NC showing that covering 500,000 more people would create jobs and boost state revenues. We just need more policymakers willing to listen to the facts flowing from states that have already made the wise decision to invest in the health of their people.

Commentary

NC Left Me OutA group of coalition partners working in North Carolina to close the Medicaid coverage gap has launched a new website called NC Left Me Out to collect stories of people who make too much for Medicaid and too little for private insurance. As the website explains, the Affordable Care Act specifically allocated funds to provide affordable insurance coverage to approximately 500,000 people in our state. Unfortunately, the Governor and the legislature have blocked those funds from coming to North Carolina. Many of the individuals and families who could use this money to get insurance coverage work in low-wage professions like construction, day care, and food service.

At a press conference today Dana Wilson, a woman in the coverage gap who suffers from MS, shared her story. You can watch her video here.

The legislature and the Governor need to hear from more people like Dana, the working poor who are being unfairly denied coverage. If you are in the coverage gap please consider sharing your story on the NC Left Me Out website. If you want to support the campaign then you can sign up as well.

Every week a new Governor shows the leadership to formulate a plan for extending insurance coverage to people in the Medicaid gap. Last week the conservative state of Indiana had a plan approved. States like Wyoming and Utah are moving forward with similar ideas. We need Governor McCrory to show us his plan for closing the coverage gap. He has publicly hinted that he wants to design a state-specific Medicaid waiver. Great, let’s get moving. Every day that we wait is another day people like Dana suffer.

We need to continue telling our stories to the media, to legislators, and to the Governor. If the economic arguments and moral arguments don’t win the day, maybe looking into the eyes of those who have been denied coverage will begin changing minds.

Commentary

As noted below, Gov. McCrory met with President Obama to discuss flexibility in using Medicaid expansion money to implement a North Carolina specific program that will extend health insurance to more low-income residents. As we have also said, the federal government has shown a tremendous willingness to accommodate governors who request authority to design new and innovative programs. This is all encouraging and kudos to the Governor for sticking his toe in the water.

What is not encouraging is McCrory floating the idea of work requirements as a condition to receive health insurance. As McCrory notes in the article, Utah’s Governor has pushed this idea unsuccessfully. Our Governor feels that President Obama may reconsider his opposition to this idea. That will not happen.

As background, an 1115 waiver allows states to waive some traditional protections in Medicaid to experiment with new ideas that can improve this important health insurance program. Specifically, waivers are meant to promote the ultimate objectives of Medicaid. Several states, for example, now have waivers to purchase private insurance plans for low-income people who would be eligible for Medicaid under expansion. This is an interesting and worthwhile experiment and we will collect important information on outcomes and costs from these state innovations.

Some Governors are abusing this process by applying for 1115 waivers that do nothing but erect barriers for people who need health insurance. A prime example is requesting a waiver that requires people to report to work search programs as a condition of receiving health insurance benefits. This is not innovative. It is not new. We know what happens when you include work requirements as a condition for receiving public benefits. It means many people will not be able to access insurance.

The waiver approved in Pennsylvania includes a provision that automatically refers unemployed people to job programs when they enroll in insurance. That’s fine as long as insurance is not contingent on participation in the work program.

We know, for these reasons, that a work requirement will not be approved by the federal government. There is some concern that Gov. McCrory may use this as a poison pill to sink a Medicaid expansion proposal and then blame the Obama Administration for not showing enough flexibility. Let’s hope that’s not the case.

Gov. McCrory has plenty of room to create a North Carolina specific plan to cover low-income people in the state. He should drop this one idea that everyone knows will never get approved and move forward with an evidence-based, innovative policy.

NC Budget and Tax Center

The 13th Annual Economic Forecast Forum, sponsored by the North Carolina Chamber of Commerce and North Carolina Bankers Association was held on Monday, January 5th. The event raised a range of issues, but a few are particularly relevant to the upcoming legislative session and the economic prospects of North Carolinians.

More cash for incentives is Governor McCrory’s first legislative priority: In his remarks, Governor McCrory launched an impassioned plea for a new economic development fund to lure large businesses to North Carolina. Saying that he is negotiating with companies that are considering investing in North Carolina, the Governor said that his first legislative priority is creating a new incentive fund. North Carolina already gives away millions of dollars a year in incentives, but being even more generous with large companies is the Governor’s first order of business for the new legislative session.

Regardless of what you think about incentives generally, it is rather odd to see the Governor making the creation of a new fund his top priority. First, incentives often go to companies that locate in parts of the state that already enjoy robust economic growth, so doubling down on this approach to economic development will likely do little to help areas that are struggling the most. Second, the program that the Governor described would only help very large corporations, which would ignore the vital role that small and medium sized companies play in creating new jobs. Third, we are heading into a legislative session where funds are already stretched thin for vital state services, so it is unclear what would have to be cut in order to free up funds to pay out to large mobile companies. If this policy is passed early in the legislative session, as the Governor insists is necessary, the real cost will only become clear when it comes time to produce a balanced budget several months later.

Head of Blue Cross Blue Shield of North Carolina touts Medicaid expansion: Brad Wilson, President and CEO of Blue Cross Blue Shield argued that state leaders should change course and opt to expand Medicaid, a move that would cover hundreds of thousands of people, with the bill being largely paid by the federal government. Wilson pointed out that the failure to expand Medicaid has left more than half a million North Carolinians without health coverage and has cost the state $1.1 billion in federal funding. Not expanding Medicaid results in North Carolina taxpayers subsidizing health care costs in other states with none of those funds returning to serve the residents of our state. Moreover, because people who would otherwise be covered by expanding Medicaid are forced to seek medical care through emergency rooms, and often lack the resources to pay for that care, health insurers are forced to increase premiums on North Carolina rate payers to cover the costs of covering the uninsured. The result is that North Carolinians end of paying twice for not expanding Medicaid, once when we file our federal taxes and again when we pay our health insurance bill.

Mr. Wilson referenced a new economic report showing that all counties would benefit from expanding Medicaid. In contrast to most economic development grants, Medicaid expansion would inject capital and create jobs in virtually every community across North Carolina, while also improving the health and productivity of the workforce in the process.  Wilson’s statements are important in and of themselves, but they are also part of a larger trend. More Republican governors, like Florida’s Rick Scott, who initially wanted nothing to do with anything connected to Obamacare, have come to support expanding Medicaid. Beyond the moral dimension, expanding Medicaid has significant economic upside for the state, and it is telling that this event featured a prominent member of the business community making just that case.

Wells Fargo economist projects robust growth in coming years: Wells Fargo Managing Director and Chief Economist Mark Vitner is bullish about North Carolina’s economic prospects in the next few years. Saying that we have finally hit the “sweet spot” of the current expansion, Vitner expects 3-4% growth per year for 2015 and 2016. Vitner noted that all sectors except government saw employment growth in the last year, and expects to see the same this year. Even the residential housing market is starting to recover, having digested the glut of housing left by the recession, and North Carolina’s growing population creating more long-term demand for homes and apartments.

Current growth does appear to be strengthening but the recovery to date has been too reliant on low-wage jobs, has been largely concentrated in urban areas and frankly employment growth has been insufficient to keep up with the state’s growing population. So while North Carolina is poised to follow the national trend of an improving economy, we need to keep an eye on whether growth translates into decent pay and jobs for everyone in the state who wants to work.  State policy decisions over the next year will influence whether the recovery comes home across North Carolina. Policymakers will have opportunities to address the uneven recovery and ensure that people can find good jobs, affordable healthcare, quality education, and economically vibrant local communities.

Concerns about a “barbell economy”: A morning panel on the role of technology in North Carolina’s economic future repeatedly addressed the disappearance of mid-wage jobs. The term “barbell economy” was used to describe the rapid growth in low-wage and high-wage jobs in recent years, coupled with meager job opportunities in the middle of the wage scale. Panelists expressed concern that as technology replaces human labor in many industries, we could be looking at a long-term decline in the number of middle-income jobs. This may be the most troubling long-term trend facing North Carolina. The hollowing-out of the labor market, with more and more of the wealth generated by the economy going to a smaller and smaller group of people, makes it more difficult to sustain the middle class economic activities—buying goods and services, purchasing homes, sending kids to college– that support robust growth.

The forecast presented at the Chamber forum was generally sunny, with solid growth over the next few years across most industries, but there are deeper questions about the long-term structure of the labor market, and whether solid growth will continue to create enough medium-wage jobs to support a middle-class. This is not just a North Carolina story, but it is something that we can do something about, and it was heartening to see this issue highlighted at this event.

Commentary

A new report from Cone Health Foundation and Kate B. Reynolds Charitable Trust finds that North Carolina lost out on billions of dollars and thousands of jobs by refusing to close the Medicaid coverage gap in 2014 and 2015. If the state acts in 2016, however, we can recoup some lost ground by covering 500,000 more people. Such a move would create 43,000 new jobs by 2020 and reap $1 billion in tax revenue for the state and counties. Closing the coverage gap would save the state budget more than $300 million by 2020.

As followers of this blog know the state had a chance, starting in 2014, to expand Medicaid eligibility to all individuals and families earning less than 138 percent of the federal poverty level. More than half the states have now opted into this deal and they are attracting a huge return on investment. This new report is the first of its kind in the nation that takes a detailed look at every county in the state and uses a nationally respected model to estimate the impact of Medicaid expansion on tax revenue, job creation, business activity, and coverage.

The results are startling. In Robeson County expanding Medicaid would generate more than 700 jobs. In Moore County it would create nearly 500 jobs. In Nash County it would create more than 300 jobs. This is the equivalent of a fleet of new large employers locating in dozens of communities across the state. The increased economic activity will produce more county tax revenue at a time when many local governments are sputtering by on fumes. For Wake County, Medicaid expansion would net more than $25 million in tax revenue. It would earn Guilford County more than $11 million.

New data confirms in finer detail what we have always known, expanding Medicaid eligibility is a no-brainer. Thankfully, Gov. McCrory seems to be moving to the right (or should I say correct) side of this issue. Now that the federal government is allowing governors and legislators the flexibility to design state-specific expansions Wyoming, Indiana, Utah, and Tennessee — hardly redoubts of liberalism — are starting to embrace expansion. We should follow suit.

This is a rich report that deserves a close reading. You can find some reporting on it here, here, here, and here.