NC leaders worry about future of Medicaid expansion NC leaders worry about future of Medicaid expansion after Trump takes office

The incoming Trump administration and the Republican-controlled Congress are casting an ominous shadow over North Carolina's Medicaid expansion program and its nearly 610,000 recent enrollees.

That's because the fate of the long-sought, hard-fought-for program may be in jeopardy if Congress approves and President Donald Trump signs legislation that reduces below 90% the federal Centers for Medicare and Medicare Services' share of Medicaid expansion administration expenses.

Kaiser Family Foundation reported in a November analysis of Medicaid expansion that lowering the CMS match below 90% would serve as a means for congressional Republicans to significantly weaken the Affordable Care Act, also known as Obamacare, rather than undertake a potentially unpopular outright repeal effort.

According to the Medicaid expansion law in North Carolina, as well as 11 other red, blue and purple states, a CMS commitment below 90% would trigger the dissolution of their respective expansion initiatives unless alternative funding sources can be secured.

North Carolina's healthcare systems and 99 hospitals are paying the remaining 10% through an assessment estimated at a combined $550 million for 2024.

House Bill 76 includes language that says if the CMS commitment falls below 90%, Medicaid expansion coverage "shall be discontinued as expeditiously as possible, but no earlier than the date the lower federal medical assistance percentage takes effect."

To secure support for HB76 from Republicans, legislative leaders, particularly Senate leader Phil Berger, R-Rockingham, insisted no state taxpayer money could be used to pay for expansion administrative expenses.

"If CMS reduces it below 90%, I will be the first to push to eliminate, as that was not the deal we made," said Rep. Donny Lambeth of Forsyth County, a Republican legislator who pushed for expansion.

"The current plan was passed with no state funding or new liability commitment. The Republican caucus would expect no additional funding" to keep expansion going.

NC Healthcare Association response

Every 10% drop in CMS funding commitment represents a $550 million shortfall. If the percentage falls to 60% support, the funding gap would be $1.65 billion annually.

The N.C. Healthcare Association said Friday that even a modest drop in CMS' 90% commitment could be enough to end its support for expansion.

NCHA said members "have been unwavering in their efforts to expand Medicaid and remain grateful to our state elected leaders for making Medicaid Expansion a reality in 2023"

"All of us - state elected and appointed leaders and healthcare partners - worked hard to ensure expansion was done the North Carolina way by tailoring the program to our state's needs and not putting any additional burden on North Carolina taxpayers."

NCHA said the current 10% assessment already "is a significant cost to fund expansion."

"If Congress shifts more of the cost to the states, even by just a few percentage points, North Carolina hospitals will financially be unable to cover the additional cost."

Lambeth said he was not surprised that NCHA said there would be little, if any, willingness for its members to cover up a funding gap.

"If they determine it is still financially feasible at a lower federal percent, and they would fund more, expansion could continue," Lambeth said. "We would need to reevaluate the benefits and merits.

"Yet, I doubt hospitals will agree to pay more than 10%, so I would be the first to advocate termination."

90% floor essential

Medicaid covers about 3.04 million North Carolinians - about 27.5% of the state's 11.05 million residents - and that includes the 609,811 enrollees since Medicaid expansion debuted in December 2023.

As of Jan. 3, there are 115,022 Medicaid expansion enrollees in the 14-county Triad and northwest N.C region, including 36,762 in Guilford County, 23,240 in Forsyth County and 11,102 in Davidson County.

Medicaid expansion is perhaps the most significant accomplishment of former Democratic Gov. Roy Cooper's second term.

"From Day 1, we set out to get people covered and get them care," Cooper said. "Now, more than 600,000 people have the peace of mind that they can go to the doctor, get needed medications and manage their chronic health conditions - that's life-changing.

"This is a monumental achievement for North Carolina."

Meanwhile, N.C. is the latest of the 40 Medicaid expansion states, along with the District of Columbia.

The 10 holdouts are red states Alabama, Florida, Kansas, Mississippi, South Carolina, Tennessee, Texas and Wyoming, along with purple states Georgia and Wisconsin.

For the second consecutive year, more than 1 million North Carolinians were expected to have enrolled through the federal marketplace for 2025 coverage.

Retired Sen. Joyce Krawiec, R-Forsyth, said in March 2023 in announcing a legislative compromise on Medicaid expansion that "finally, the citizens in North Carolina, hard-working folks who make this state great, will be able to get the health care access they need."

To get HB76 to through the legislature, House Republican leadership agreed to Senate Republicans' demands for several changes to the state's certificate-of-need program that determine and authorize healthcare facility and infrastructure construction and expansions, as well as new equipment.

"This is a very carefully crafted and balanced way to approach (expansion) for North Carolina," said House Speaker Tim Moore, R-Cleveland, who is now a U.S. House representative. "This is something we can all be very proud of."

Eleven other Medicaid expansion states have a similar trigger to end their expanded programs: blue states (Illinois, New Mexico), purple states (Arizona, New Hampshire, Virginia), and red states (Arkansas, Idaho, Indiana, Iowa, Montana, Utah).

The 12 states have about 4.3 million Medicaid expansion enrollees, according to Kaiser Family Foundation.

"I cannot see how the Medicaid expansion will go forward if the cost share decreases by that much (from 90% to 60%)," said Zagros Madjd-Sadjadi, an economics professor at Winston-Salem State University. "If the legislature wants to be able to reduce (individual and corporate) taxes per their plan, they cannot afford to have to be on the hook for that much of the Medicaid funding."

Blue and red states affected

The Congressional Budget Office estimated in 2022 that reducing the match rate for the expansion group would save the federal government $631 billion over 10 years.

"Any changes to the Medicaid expansion authority or financing structure will affect both red and blue states," the foundation said. "Medicaid expansion enrollment totaled 7.6 million in states that voted for Trump and 13.7 million in states that voted for (Vice President Kamala) Harris.

"Given the challenges states would face replacing substantial lost federal funds, the health coverage implications would likely be significant and could reverse gains in financial security, access to care and health outcomes."

Lambeth said that "I think it will be very hard for Congress to take away a benefit that has helped so many people."

"I have talked with people in South Carolina, Mississippi, Texas and Kansas. They are all moving forward in a more aggressive approach to expansion."

When it comes to Mississippi, the dynamic is Republican legislative leaders favoring and Republican Gov. Tate Reeves in opposition.

HASP component

The key to the state's healthcare systems and hospitals providing the 10% assessment is receiving funds from the federal Healthcare Access and Stabilization Program (HASP).

HASP payments are calculated based on in-network Medicaid managed care payments to acute care hospitals, critical access hospitals, hospitals owned or controlled by the UNC Health Care System and ECU Health Medical Center.

The N.C. Department of Health and Human Services projects North Carolina will draw more than $8 billion in federal funds annually,

"These (HASP) funds are critical, as they will not only help provide much needed support to our state's healthcare safety net," DHHS said. "They also enable hospitals to pay for the non-federal share costs of expansion."

The N.C. Hospital Association said that if the Trump administration "only cuts back funding for Medicaid expansion - and not other Medicaid items - it would not impact HASP and the associated medical debt relief agreement.

The unprecedented medical debt relief plan shepherded by former Gov. Roy Cooper and former state Health Secretary Kody Kinsley is in conjunction with the state's 99 hospitals.

The key is the hospitals agreeing to eliminate $4 billion in medical debt owed by an estimated 2 million low- and middle-income households.

Hospitals would forgive more than a decade of existing medical debt for eligible North Carolinians and prevent the accumulation of new debt going forward. Past medical debt that exceeds 5% of a person's annual income will be relieved.

In exchange, hospitals receive higher levels of Medicaid reimbursement under HASP.

Rep. Pricy Harrison, D-Guilford, said she hopes Medicaid expansion, which debuted in December 2023, has been entrenched enough statewide, including in rural counties in the eastern and western sections.

According to the latest DHHS Medicaid expansion dashboard update of Jan. 3, about 36.7% of enrollees, or 223,557, live in rural N.C.

A major factor in gaining Republican legislative support for expansion were rural elected officials, including sheriffs, wanting to offset county healthcare spending on lower-income residents and jail inmates without insurance with federal funding.

"I think it is highly unlikely that the General Assembly will be comfortable taking away healthcare from 609,811 North Carolinians, as well as the economic impact it has brought to our state," Harrison said.

'Poison pill'

John Quinterno, principal with South by North Strategies Ltd., a Chapel Hill research company specializing in economic and social policy, considers the below 90% trigger in HB76 as a "poison pill."

"A reduction in the federal Medicaid match rate also will negatively affect groups traditionally eligible for Medicaid," Quinterno said. "A reduction in federal funding would create a funding gap and shift costs to the state.

"The state would then have to fill that gap by cutting services, directing more tax revenue into the program, or some combination of the two," Quinterno said.

Combined, Quinterno said, "the most likely result would be reductions in coverage and higher costs for people, resulting in more going without care or receiving less care than they need. "

"Increase in the uninsured rate also would negatively impact providers, as would reductions in the amounts paid for covered services."

Quinterno said the potential dissolving of Medicaid expansion is an example of Republican proponents ignoring the popularity of the program during a time when high healthcare costs and denials of coverage by health insurance companies have stirred frustration and anger among many consumers

"Americans long have said that health care costs and coverage are a major concern that they want policymakers in Washington to address," Quinterno said.

"President-elect Trump didn't run openly on eliminating health insurance coverage, but these policies would do exactly that.

"If candidates had been open about this, people might have voted differently."

Triad US representatives silent

The Journal and News & Record reached out about the potential CMS percentage commitment cut to Republican U.S. Sens. Ted Budd and Thom Tillis, as well as Republican U.S. House Reps. Virginia Foxx, Pat Harrigan and Addison McDowell.

None of the Congress members, nor their offices, responded.

"The perverse beauty of this approach is that a seemingly bland, technical change to a reimbursement formula would take away insurance coverage, or result in worse coverage for millions of Americans," Quinterno said.

"It would occur in a manner that would allow elected officials in Washington (and Raleigh) to deny that they actually did anything to make anyone worse off."

NCDHHS addressed the potential reduction in the CMS contribution mostly by touting the expansion's supports "for medically fragile children, people with serious mental illness and people in adult care and nursing homes."

"Medicaid is a major part of North Carolina's health care system, and public opinion polling shows Medicaid has broad support.

"In 2023, Medicaid expansion was enacted in North Carolina with support from both political parties - that support continues today as more North Carolinians are getting enrolled and getting care, particularly in rural communities."

Republican legislative leaders "clearly did not want state taxpayers left holding the bag if the federal government ever backed away from its commitment to fund the vast majority of Medicaid expansion," said Mitch Kokai, senior policy analyst with conservative think tank John Locke Foundation.

"That said, it's not clear if lawmakers will stick to that pledge."

Kokai said Democratic Gov. Josh Stein has limited options if the Medicaid expansion trigger is pulled.

"It's almost certain that the Stein administration would push for some arrangement that would continue taxpayer-funded coverage for the expansion population," Kokai said.

"If so, it's hard to predict how Stein would propose funding that continued coverage without raising taxes or gutting other top state government funding priorities."

[email protected]@rcraverWSJ