Medicaid Expansion Costs Are Negligible To States, Prof Says

North Carolina and the other 17 states that have not expanded their Medicaid program are running out of excuses from an analytical standpoint, according to a leading health-care law expert.

Mark Hall, a law and public health professor at Wake Forest University, released last week a study titled "Do states regret expanding Medicaid?"

Medicaid enrollment in N.C. has climbed from 1.75 million in July 2014 to a projected 2.14 million on June 30 - representing about 21 percent of the state population - according to the N.C. Department of Health and Human Services.

The increase was spurred in large part by applicants for the federal health insurance exchange being determined as eligible for Medicaid coverage.

Another 500,000 North Carolinians could become eligible with Medicaid expansion tied to federal funding initiatives.

Hall's latest work on the subject is in response, in part, to what he called increasing evidence that Medicaid expansion costs have proven to be negligible for the 31 expansion states.

In January 2016, Hall released a study that weighed the pros and cons of expanding the state Medicaid program. Hall and researcher Edwin Shoaf came down in favor of expansion, saying the time has come "for an honest dialogue about the costs and benefits of expanding Medicaid."

"With the Affordable Care Act is in its fifth year of full expansion, we now have an established track record in the expanding states to help estimate what the actual costs of expansion will be" to the 18 states, Hall said.

"This issue brief reviews that evidence, and evaluates continuing claims by Medicaid opponents that expansion is a 'proven disaster' for state budgets."

The main argument against Medicaid expansion, shared by several N.C. Republican legislators leaders including Speaker pro tem Phil Berger, R-Rockingham, is that the federal government may not fulfill its pledge of covering 90 percent of the administrative costs of expansion.

They say they don't want states to be unnecessarily vulnerable to picking up more than 10 percent of the costs.

"The strong balance of objective evidence indicates that actual costs to states so far from expanding Medicaid are negligible or minor, and that states across the political spectrum do not regret their decisions to expand Medicaid," Hall said.

For example, Hall cites reports that several red or purple states - Arkansas, Indiana, Kentucky, Louisiana, Michigan, Montana, New Mexico, Ohio and West Virginia - "have actually reduced, not increased, state spending as a result of expansion."

Part of the spending decrease comes from smaller-than-expected enrollment in recent years, particularly in Indiana, North Dakota and Ohio.

"None of those states that had legislative 'triggers,' allowing them to roll back expansion if projected costs turn out to be seriously wrong, have felt the need to pull the plug on expansion," Hall said.

Expansion

Expanding North Carolina's Medicaid program has been a hot-button issue since the possibility emerged in 2009.

State Medicaid expenditures have been about $14 billion annually in recent years, with the program projected to operate under budget for the fourth consecutive fiscal year.

A study by Avalere Health, released in November, determined that North Carolina will lose out on $13 billion in federal Medicaid funding over the next decade by not expanding.

Dr. Mandy Cohen, the state's health secretary, told legislators March 13 that North Carolina could learn within weeks whether it will gain Trump administration approval for its extensive Medicaid waiver reform request.

Some Republican legislative leaders consider expansion a non-starter even though Rep. Donny Lambeth, R-Forsyth, introduced in 2017 House Bill 662 that would expand the program with a work requirement for some recipients.

The Indiana and Kentucky legislatures recently approved expansion with that standard after the federal Centers for Medicare and Medicaid Services signed off on the change Jan. 11.

"Claims are not well founded that Medicaid expansion will cost states considerably more than what objective analysts project," Hall said.

"Instead, those claims are based on sources that are either incomplete, inaccurate, misleading, or out of date in various ways.

"The probable costs appear to be quite low in comparison with the economic and public health benefits of expansion," he said.

Waiver request

A federal Medicaid waiver request was submitted by the McCrory administration in June 2016, which was amended Nov. 20 by the Cooper administration.

"We are one of the few states in that category with a comprehensive Medicaid waiver application," Cohen said. "The other states that have had their waiver approved pursued a very narrow slice with the work requirement."

Lambeth said HB662, titled Carolina Cares, would work "more like an insurance product for those working who can pay a portion of the cost, and the benefits and coverage are built around preventive and wellness care."

For example, participants would have to follow protocols for routine physicals and screenings to improve their health if they have such conditions as diabetes, obesity, etc.

Even though Lambeth said HB 662 "does not require any state funds, but in fact saves the state money as demonstrated by fiscal staff in Raleigh," his bill has not emerged from committee.

Lambeth said last week it may take until 2019 for HB662 to get another thorough review given that the 2018 short session is expected to focus foremost on state budget adjustments.

Lambeth said Hall's study could be helpful for potential revisions to his bill.

"It is helpful to track results in other states, as well to learn from others," Lambeth said.

"This report helps me continue to frame the issues for my legislative colleagues and work to move it forward at the right time."

Sen. Joyce Krawiec, R-Forsyth, said she will take special interest in Hall's study since "there appears to be some conflicting reports on results from some states in prior studies."

"I'm anxious to examine it thoroughly. We certainly want to take every opportunity that we have to improve health care to our neediest population."