Failing to expand Medicaid costs more

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.

Medicaid expansion: the state-by-state picture

Health numbersThe legislative debate over Medicaid reform over the last two weeks once again revealed the Senate’s misplaced priorities – profits over people. The health of North Carolinians was not only compromised by pushing reform that employs commercial insurers and dismantling Community Care North Carolina (CCNC), but also by failing to expanding Medicaid to the half million people in the Coverage Gap. It is surprising that for a governing body that focuses most of its efforts on profits, the Senate fails to recognize the economic benefits of Medicaid expansion.

Unfortunately, many conservative policymakers agree with Sen. Harry Brown when he stated, “Every state that has expanded Medicaid has created a financial problem in their state budgets” during the expansion debate. Black and white statements like his fail to present the complete and complex picture of each state’s expansion experience. To present a more accurate picture, the Health Access Coalition created a chart outlining the successes and challenges for each of the 30 states and DC that has expanded Medicaid. The chart also provides information on whether the state used a waiver to expand Medicaid. Waivers allow states to tailor Medicaid expansion to meet specific state needs and even include Medicaid reform.

After reviewing this chart, it becomes clear that the biggest challenge states have experienced is providing health coverage to more people than expected – being able to reduce a state’s uninsured rate to 5 percent should be noted as a success! Further, “over-enrollment” proves that need for health care is great and that the long term benefits will be even greater. However, expansion is complex and along with increased enrollment comes budget concerns for the years when the federal match for expansion lowers from 100 percent to 90 percent starting in 2020. Even though states have to reassess their budgets and establish tools to cover Medicaid costs such as hospital assessments, there are several states that have experienced an economic boost. For example, Arkansas reports a combined savings of $120 million between fiscal years 2014 and 2015 due to expansion. Arizona has also gained of over $30 million in new revenue. Colorado has created 20,000 jobs since Medicaid expansion. One county in Illinois has seen a decrease of $158 million in costs associated with providing care to people without health coverage. Other states like New Hampshire are seeing reduced use of emergency rooms as health services are finally being provided to individual that face many barriers to health care for health concerns such as substance use and mental health.

Unlike Sen. Brown’s sales tax distribution plan, Medicaid expansion will have economic benefits for all 100 counties in North Carolina. Sen. Brown’s district, District 6, includes Jones and Onlsow counties. Failing to expand Medicaid by 2016 will cost Jones County $8.4 million less in business activity, $5.6 million less growth to the county’s economy, and $155.8 thousand less in tax revenue between 2016 and 2020. In Onlsow County, there will be $53 million less to the county’s economy, $77.3 million less in county business activity, and $292.9 thousand less in county tax revenue between 2016 and 2020 without expanding Medicaid. The most important benefit to these counties is that over 5,000 people will gain access to health care, but just in case North Carolina’s health benefits aren’t convincing, expansion will allow for $21 billion in federal funds to enter North Carolina.

Time for public health action

After reading this fact sheet from the American Public Health Association (APHA), it is apparent that NC policymakers need to take action in order to improve our state’s public health. If our state legislators were assigned a grade for how they are investing in NC’s public health, it would not be a passing grade. The following statistics show there is much room for improving NC’s public health rankings:

  • Ranks 8th for prevalence of diabetes amongst adults.
  • Ranks 47th for the availability of dentists.
  • Ranks 10th for infant mortality.
  • Ranks 47th for the amount invested in each person’s public health needs. NC spends $11.73 per year per resident.
  • Ranks 5th for the number of children living in poverty.

While these numbers are unimpressive at best, there are some public health areas that NC has improved on. First, the high school graduation rate has improved, but then again the Senate budget proposes tax cuts that lower the number of teacher assistants, which could negate the progress made. Second, NC has made great progress in reducing air pollution, but then again the House wants to cut auto emissions tests in some counties.

Even though the sequester led to significant cuts in public health funding, there is federal funding available to address the poor rankings listed above. NC could receive funding to help the following:

Fifteen percent of North Carolinians are uninsured and 500,000 people are in the Medicaid coverage gap. These are people that could seek primary preventative health care that will yield better health outcomes such as prenatal and maternity care to ensure healthy outcomes after childbirth. Research has shown that children eligible for Medicaid miss fewer school days, have higher educational attainment. and their families have more financial security. There are also 150,000 people in NC in the coverage gap with mental health and substance use disorders that need ongoing treatment. The Affordable Care Act has written into law that the federal government will cover 100% of Medicaid expansion costs until 2016 and up to 90 percent of costs starting 2020. Ensuring coverage to one half million North Carolinians is one public health act that will pull NC up the rankings.

King v. Burwell: What will it mean for NC?

While many of us are anxiously waiting for the Supreme Court decision on King v. Burwell, a recent poll shows that 44-percent of people still don’t know much about the case.

The King v. Burwell ruling will determine the legality of health insurance subsidies for states using the federal marketplace. If the Supreme Court rules against the Affordable Care Act (ACA) and decides that health insurance subsidies for the 34 states that do not have a state marketplace are “illegal,” more than six million people across the U.S. may lose their ability to access affordable health care. Since they live in one of the states that rely on the federal marketplace, 458,738 North Carolinians could lose their health coverage. Nationally, the average subsidy (or advance tax credit) amount is $272 per month and in North Carolina, people receive $316 per month.

Considering that subsidies could become unavailable as early as September 2015 and that North Carolina has failed to expand Medicaid, the number of uninsured could increase to nearly one-million people. Sylvia Burwell, the Secretary of Health and Human Services, has stated that if there is a negative outcome from the Supreme Court decision on King v. Burwell, the U.S. Congress and state policymakers will have to decide on how to keep access to health coverage affordable.

As data continue to show that the ACA is working to increase access to care – for example, the rate of uninsured women has decreased nearly eight percent since 2013 and 12.2 million adults have access to health care in the 30 states (including DC) that have expanded Medicaid – state lawmakers and Congress may be feeling even more pressure to keep subsidies. Even the Congressional Budget Office has reported that gutting the ACA would increase the deficit by $137 billion by 2025. Despite the potential economic impact, media reports continue to highlight the fact that conservative policymakers in Washington D.C. do not have a better alternative to the ACA. Further, one “fix” proposed by Sen. Ron Johnson of Wisconsin would only extend subsidies for current ACA enrollees until 2017.

If the outcome of King v. Burwell isn’t positive, let’s hope that our state and national policymakers work to keep 6.4 million people insured. No matter how the Supreme Court rules, let’s hope that our state policymakers will take on the next challenge – extending access to affordable health care to 500,000 North Carolinians in the coverage gap as Medicaid expansion makes economic and moral sense.

Medicaid reform: How the House and Senate compare

Since 1978 North Carolina’s Medicaid program has been managed by the Division of Medical Assistance, which is within the NC Department of Health and Human Services (DHHS). As the state’s Medicaid program stands today, most Medicaid enrollees are categorically needy – in other words, aged, blind, disabled or very low-income families (including pregnant women). As Medicaid enrollment has grown from under 500,000 enrollees in 1978 to over 1.5 million enrollees in 2015 so have the expenditures. Even though Medicaid spending growth between 2007 and 2012 was less than growth in private health insurance premiums, many states are reforming Medicaid to enhance budget predictability, increase quality of care, and promote long-term cost savings as enrollment increases. NC is no different as both the House and Senate have recently released their plans for Medicaid reform.

The House Medicaid reform bill was discussed in a previous post, but here is a quick recap. The House reform bill aims to build upon the system NC already uses by establishing provider led entities (PLEs). As the transition takes place, the PLEs can rely on the expertise and knowledge of Community Care of North Carolina. This model is similar to an Accountable Care Organization (ACO) approach in that networks of providers such as hospitals and doctors take responsibility for not only coordinating patient care, but for the finances. This model moves away from the current fee-for-service payment model, which rewards quantity of medical visits and/or procedures over quality of care and ultimately increases costs to providers taking a capitation payment. Capitation payment allows for providers to take on financial responsibility as they receive one risk-adjusted payment per patient. Providers in an ACO work to refer patients to other providers within the network. It is important to note that patients can select a provider outside of an ACO at no additional cost. Finally, five million dollars has been provided to reform Medicaid over a five year period in the House bill.

The Senate budget provides 10 million dollars to reform Medicaid by 2017. Like the House Medicaid reform bill, the Senate also includes the transition from a fee-for-service model to a capitation payment model. One major difference is that instead of using one type of organization to provide care and take financial responsibility, the Senate’s version of Medicaid reform uses a hybrid model. NC would contract with outside Managed Care Organizations (MCOs) who would then work with regional PLEs to provide care to Medicaid enrollees. Another significant difference between the two reform bills is that the Senate’s version of reform would remove oversight of Medicaid from DHHS to a new Health Benefits Authority, an eight member board focused on Medicaid and NC Health Choice. What is interesting is that members of the board would be appointed by the Governor, President Pro Tempore of the Senate, Speaker of the House of Representatives, and Secretary of Health and Human Services .

No matter how NC lawmakers ultimately decide to reform Medicaid, there is one action that both versions fail to do – expand Medicaid to 500,000 North Carolinians in the coverage gap. The same waiver that policymakers will submit to CMS to reform Medicaid can also be used to expand Medicaid as many other states have done.