Wake Forest health law researchers argue in favor of Medicaid expansion in North Carolina

The Winston-Salem Journal originally published the following story by Richard Craver here on Monday, Jan. 25, 2016:

The debate about whether to expand Medicaid coverage to an additional 500,000 North Carolinians has reached a political crossroads, according to two Wake Forest University researchers. Mark Hall and Edwin Shoaf, nationally recognized health care law experts, released Monday a 12-page brief that weighs the pros and cons of expanding the N.C. Medicaid program. The brief can be accessed here. They come down in favor of expansion, saying the time has come “for an honest dialogue about the costs and benefits of expanding Medicaid.”

Medicaid covers about 1.9 million North Carolina residents and is a $14 billion-a-year program.

North Carolina is one of 19 states that have chosen not to expand their programs, even with the federal government paying 100 percent of the cost for the initial three years (2014-16) of expansion. States are required to provide 5 percent of the expansion costs beginning in 2017 and up to 10 percent beginning in 2020.

The Affordable Care Act provides resources for states to extend coverage to all non-elderly adults with income below 133 percent of the federal poverty level, currently $32,253 for a family of four and $18,000 for an individual.

A White House proposal presented Jan. 14 offers an exemption for the 19 non-expansion states to get 100 percent federal funding for the first three years no matter when they start. Congress would have to agree to amend the ACA for the proposal to go into effect.

“It is entirely possible that our next president will be both willing and able to dismantle the ACA,” the researchers said. “However, what is possible is not necessarily likely. It seems unlikely that a new administration would completely roll back expansion.”

Gov. Pat McCrory has said repeatedly he opposes expansion unless he can secure federal waiver exceptions for what he has called “a North Carolina plan, and not a Washington plan.”

McCrory and many state Republican legislative leaders also say they can’t support expansion because they don’t trust the federal government to fulfill its funding pledge. They fear states being on the hook for expansion costs.

“It’s a very complex issue,” McCrory said June 25. “You can’t just say you are for it or against it because you don’t know where the future payments will come from. No one knows what that 10 percent cost would be.

“You have to weigh that against more people getting services.”

Hall and Shoaf said they believe the federal government can be trusted to meet its political and financial obligations.

“The federal government would have relatively little to gain from the political and public policy firestorm that would result from reducing its match rate for Medicaid expansion,” the researchers said. “Although expansion costs are substantial, the enhanced match rate accounts for only 7 percent of the federal government’s overall Medicaid budget.”

The researchers said some people “worry that the state simply cannot afford to expand Medicaid, or that doing so will draw state funding away from other needs that are more compelling.”

“This concern, however, is reduced by noting ways in which Medicaid expansion could bring other, secondary financial benefits to the state,” such as up to 40,000 new jobs and reduced physical and behavioral health care costs for covered individuals.

“Even if some risk remains, states are not defenseless,” the researchers said. “They can take several steps to protect themselves in the forms of (lack of federal funding) triggers, sunsets or waivers.”

The researchers said two other arguments McCrory and the legislators have made against expansion — the constitutionality of the ACA and the need to fix the state Medicaid program through reform — have been settled.

The Supreme Court has upheld the ACA’s constitutionality twice, and the legislature passed a reform plan in September that creates roles for for-profit insurance and provider-led entities. State health regulators are to submit their reform plan to the legislature March 1.

“North Carolina’s recent reform to Medicaid will help to control its costs and make them more predictable,” the researchers said.

The professors noted that Medicaid has been a contentious issue historically in N.C. It took the state until 1970 to adopt its program — five years after Congress created a federal Medicaid program.

“For those who distrust the federal government with a fiery passion, there may be nothing that can convince them to consider this major expansion of federal support,” the researchers said. “However, a more dispassionate examination of the issues greatly reduces well-founded concerns over expansion costs to the state.”

rcraver@wsjournal.com (336) 727-7376 @rcraverWSJ