North Carolina’s state budget is already at the breaking point. In order to “balance” the current year’s spending plan, lawmakers grasped at a patchwork list of revenue, including more than $1 billion in state tax hikes, $1.4 billion in federal “stimulus” funds and nearly $100 million from various state “trust funds.”
Yet even as states such as North Carolina are struggling to cover their spending commitments, a central part of the federal health care “reform” effort is to further expand the second-largest state-funded program: Medicaid.
North Carolina’s Medicaid program covers about 20 percent of the entire state population. The program is funded by both state and federal appropriations, and North Carolina’s funding share is typically the largest state spending commitment behind only public education. Because of North Carolina’s budget woes, the federal stimulus plan gave the state $857 million this year to help close the budget gap for the Medicaid program – increasing federal matching funds from $2 to $3 for every state dollar spent. ARRA funds, however, are quickly running out and it appears inevitable that the state will need to find yet more money to fund the $10 billion dollar program.
Indeed, since state budget appropriations were approved by lawmakers earlier this summer, the state has overspent on Medicaid by $160 million, and that number is expected to climb beyond $200 million before the close of the fiscal year. Total expenditures are near 9 percent higher than they were in 2008.
The reason for the rise in health care spending can very well be attributed to higher unemployment rates – as people lose their jobs, they also lose their employer provided health insurance. Over 18,000 more patients than expected enrolled in Medicaid this year in North Carolina. So far the state has spent 4 percent more on the average enrollee than was expected. However, lawmakers were well aware that this recession would push unemployment to some of the highest levels seen in decades – why wasn’t this factored into the budget? And how does the situation demonstrate government’s ability to accurately project future cost?
In spite of North Carolina’s and other states’ difficulties meeting Medicaid liabilities, the proposal put forward by Senate Majority Leader Harry Reid, the “Patient Protection and Affordable Care Act,” further expands Medicaid eligibility up to 150% of the federal poverty level – adding more than 17 million people to the system nation wide. By some estimates, this move is expected to cost North Carolina taxpayers another $599 million.
For a nationwide program as large and expensive as Medicaid any unexpected increase in enrollment – however slight – could mean hundreds of millions of dollars in overspending, as has been seen on a smaller scale at the state level. Most of the cost analyses that have been coming out of agencies such as the Congressional Budget Office are based on trends and narrowly defined parameters. When factors such as real expected state contribution, adverse selection enrollment, and availability of care are factored, the result is half a trillion dollars more in federal taxes, an increase in the cost of health care by $234 billion in the next decade, and a $2,000 increase in annual insurance premiums for an average family.
The move to expand government health care programs already in place – Medicaid and Medicare – was pushed through by Democrats as a positive alternative for the public option. In reality, forcing such a dramatic expansion of programs such as Medicaid will do nothing more than make health care more costly and less accessible to the same people it aims to protect. Because Medicaid reimburses providers at a lower rate than private insurance companies, fewer doctors are accepting Medicaid patients. Piling millions more people into the Medicaid program reduces their access to care, as more Medicaid patients attempt to compete for the attention of fewer providers. Moreover, those providers still accepting Medicaid patients will attempt to compensate for the low Medicaid reimbursements by charging the private insurance companies higher rates – thus driving up premiums.
Senator Reid’s proposal to expand Medicaid will not only make medical care less accessible to our nation’s most needy citizens, it will impose an unaffordable burden upon already cash-strapped state budgets. North Carolina’s state budget is already in a multi-billion dollar hole. Where does Sen. Reid think we will come up with another $599 million?