Hood: Medicaid expansion issue now dead after federal court ruling

For many months now, Democratic Gov. Roy Cooper and the Republican-led General Assembly have been at an impasse.

The Legislature enacted a state budget plan for the 2019-20 fiscal year that included pay raises for teachers and state employees, more state funds for school construction, and money to implement cost-saving reforms of North Carolina's Medicaid program.

Cooper vetoed it, insisting that the teacher pay raise should have been greater, the state should borrow to build schools rather than relying on cash appropriations, and North Carolina should expand rather than just reform Medicaid.

Neither side has budged.

The good news is that, unlike the federal government, North Carolina's government has a fail-safe to avoid shutdowns. In the absence of a new budget, the 2018-19 spending plan is still in place, modified in some areas by "mini-budgets" Cooper was willing to sign.

And now we have another piece of good news, from the standpoint of getting a final budget deal done. Improbably, the news comes not from Raleigh but from the nation's capital. Also improbably, it involves a federal court decision regarding other states' Medicaid expansions.

A three-judge panel of appellate judges in Washington, D.C., found that the Affordable Care Act did NOT extend to states the option of making Medicaid eligibility conditional on work requirements. In several Republican-led states, work requirements proved critical to convincing conservative lawmakers to join with progressive ones to expand Medicaid.

Both the Obama and Trump administrations have been willing to accept work requirements for childless, non-disabled adults.

The appeals court proved unwilling. The "core objective of Medicaid" is to provide "medical coverage to the needy," the decision states. Whether work requirements encourage personal responsibility or even smooth the transition from public assistance to private coverage, such outcomes are not the proper goal of the program.

If you are a conservative who thinks work requirements for public assistance are necessary to reduce the fiscal and social costs of welfare, you won't like this decision much. And if you are a Democratic legislator or activist who's been trying for years to fashion a Medicaid expansion compromise that could pass the N.C. Legislature, you won't like the decision, either, because it made any such compromise impossible.

Let me state this more clearly: Medicaid expansion in North Carolina is now a dead issue. It cannot pass either chamber unless Democrats can win majorities in 2020 or some future election. For now, at least, the debate is over.

Cooper clearly thinks Medicaid expansion is such a popular idea that North Carolinians will punish Republican legislators and candidates for opposing it. Fine. He should take his case to the voters -- and make it clear to the General Assembly that Medicaid expansion is no longer any kind of impediment to striking a budget deal.

Teachers deserve raises. We need to fund the implementation plan for Medicaid managed care that Cooper's own administration has devised. We should move forward with high-priority infrastructure projects included in the Legislature's new budget.

I believe the teacher pay and school construction disputes can likely be resolved in a split-the-difference fashion. But whether to expand Medicaid has never been a "how much to spend" question. It's a yes-or-no question.

It was always going to be difficult territory to negotiate. Now, with work requirements struck down by the federal courts as impermissible, that territory is completely impassable.

Yes, I know that the governor, his aides and many North Carolina progressives remain unable to fathom why anyone would forgo "free" federal money for Medicaid expansion. I think conservative policymakers and analysts have explained their case well. But I also know there is a sort of political language barrier here.

If you don't share conservative assumptions about the proper role of government, the proper relationship between Washington and the states, and the corrosive effects of the welfare state, even a long explanation may leave you puzzled.

Doesn't matter. As a practical matter, expansion is now off the table. Time to "move on," one might say.

John Hood is chairman of the John Locke Foundation and appears on UNC-TV's "NC SPIN."

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