Focusing on merely expanding ‘health coverage’ will do nothing to address the inadequate supply of health care in states such as North Carolina.
Medicaid-expansion discussions have accelerated in North Carolina as the governor and the General Assembly attempt to come to a final agreement on a general-fund budget for the biennium. Democratic governor Roy Cooper has reiterated his intent to expand Medicaid with the help of progressive lawmakers in the Tar Heel State, a sticking point between Republican leadership in both chambers of the statehouse that resulted in a budget stalemate during the 2019 session. Now a new move by progressives in Congress is giving new urgency to the Medicaid debate.
Ever since the passage of the Affordable Care Act allowed for states to add able-bodied adults up to 138 percent of the federal poverty level to Medicaid programs, such organizations as the John Locke Foundation — where I work on health-care policy and other free-market initiatives — have repeatedly argued that expanding Medicaid is the wrong policy prescription for North Carolina.
This time around is different from previous budget fights, however, because the Biden administration has signaled its intent to bypass states that have thus far fought the federal government’s encroachment. Congress’s hotly debated $3.5 trillion reconciliation bill contains a provision that would end-run non-expansion states to cover the population who would otherwise be covered had their state opted for expansion.
Although Congress has yet to pass the bill, this new development has led some in North Carolina to question whether the time has come to expand Medicaid as offered by Obamacare. One cannot ignore the systemic issues that plague our health-care system and leave some without access to care. But despite these shortfalls, policy-makers need to look for private market solutions — such as alternative coverage plans and supply-side reforms — rather than doubling down on government-run health programs.
Medicaid expansion was bad policy then, and it’s bad policy now.
If the state opted for expansion, upwards of 600,000 additional North Carolinians would be added to the rolls — even if they already had private health-care coverage. Adding hundreds of thousands of individuals to this open-ended entitlement would threaten the fiscal policy and budgeting decisions that have led to steady economic growth in our state over the past decade. It could also trigger a health-care shortage, as an increasing number of providers have opted to no longer accept Medicaid.
State leaders continue to clash over how to fund the 10 percent share of the expansion population for which the state is responsible. Governor Cooper and expansion advocates claim that the program will come at no cost to North Carolina taxpayers, because of proposed taxes on hospitals and health plans. While this is merely sleight of hand, used to draw down more federal funds, the John Locke Foundation has actually run the numbers. In a recent report, we found that even with the hospital tax, the state would be left with the costs of anywhere between $119 million and $171 million in just the first year.
In addition to budgetary strain, the state would also face provider-capacity problems. North Carolina’s Medicaid program already serves over one-fifth of our state’s most in-need residents. The hundreds of thousands of new Medicaid enrollees made eligible through expansion would add to the hundreds of thousands who have recently joined the rolls since the beginning of the pandemic. But it gets even worse. Due to a provision in the Families First Coronavirus Response Act, no Medicaid enrollees — not even those who are ineligible — can be removed from the Medicaid rolls. The demand for Medicaid services increases while the supply of providers does not.
There are already shortcomings in delivering care for those currently enrolled in the program; adding more than half a million more would only further strain a system suffering from severe provider shortfalls. Studies have shown that states that have chosen to expand their programs have not seen any reduction in enrollees relying on emergency rooms for care, one of the most expensive venues available. In some cases, there was even an increase in usage. Without addressing these critical supply problems, a similar fate could await North Carolina.
Remember this undeniable fact: Coverage does not equal care.
Lawmakers need to focus on reforms that expand the supply of health care in our state and in others. Thankfully, there are three simple reforms that can boost the health-care supply in North Carolina, resulting in downward pressure on prices and increased access. First, substantially reform certificate-of-need laws that have shown through decades of research to limit supply and drive up health-care costs. Second, expand full practice authority to highly trained advanced-practice nurses in the state, so they are free to practice without unnecessary supervisory requirements. Third, expand the pool of providers available to North Carolinians by knocking down artificial barriers to telehealth such as state licensure laws.
Those in favor of expansion tirelessly focus on “health coverage” gains while ignoring the supply problems that many states face. Expanding Medicaid to cover more than half a million more individuals, the vast majority of whom are able-bodied adults without children, will do nothing to address the inadequate supply of health care in North Carolina.
Despite the Biden administration’s plan to push us closer to a single-payer system by creating a new federal Medicaid program to bypass state authority, North Carolina and other non-expansion states need to hold firm and resist. In so doing, they should also focus their attention on addressing supply issues in order to meet increased demand. Without an adequate health-care supply, any government expansion of “coverage” is bad health policy, threatening sound fiscal budgets and the health of Americans.
Something to Consider
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