- Republican sponsors of the “Carolina Cares” legislation claim that the program is mischaracterized as Medicaid expansion.
- While Carolina Cares has some differences from the state’s current Medicaid program, it offers similar coverage and has similar federal approval and funding mechanisms.
- Carolina Cares has many of the inherent flaws of a traditional Medicaid expansion and lawmakers should reject this expansion of the welfare state in North Carolina.
It is no secret that Medicaid expansion is at the top of the policy priority lists for Governor Cooper and his Democratic allies in the North Carolina General Assembly. Democrats have filed Medicaid expansion bills in both chambers.
There have also been a few vocal Republican supporters of expansion in the North Carolina House. In the last legislative session, Representatives Donny Lambeth (Forsyth), Greg Murphy (Pitt), Josh Dobson (Avery), and Donna White (Johnston) sponsored House Bill 662 to create a government-run health insurance program for the poor called Carolina Cares.
Like the Democrat-proposed Medicaid expansion plans, Carolina Cares would provide government health insurance to anyone below 133 percent of the federal poverty line who does not currently qualify for Medicaid.
Unlike the current Medicaid program, Carolina Cares coverage would require recipients to pay an annual premium, take prescribed “preventative care” measures, and meet work requirements. The proposal is similar to Indiana’s Healthy Indiana Plan 2.0.
Since its introduction, Carolina Cares has been treated as the “Republican version” of Medicaid expansion. But one of the bill’s primary sponsors, Rep. Greg Murphy, a practicing physician, is pushing back against that characterization. Murphy says that Carolina Cares is not Medicaid expansion, but instead a separate program. In a recent opinion editorial to the Daily Reflector, Murphy claimed:
“Contrary to what has been reported in various media outlets, this is not an expansion of the fiscally uncertain Federal Medicaid program. Carolina Cares is a conservative and fiscally responsible alternative to Medicaid expansion that would not add a single person to the already 2 million North Carolinians on the Medicaid rolls. It is an entirely different insurance product.”
With all due respect to the representative, Carolina Cares is – for all intents and purposes – a version of Medicaid expansion. (Note: Murphy and his colleagues have not filed Carolina Cares legislation for the new session, so this analysis is based on the 2017 proposal.)
Due to the additional requirements and premiums required under Carolina Cares, Murphy can legitimately claim the insurance product is slightly different than North Carolina’s current Medicaid program and the Democrat-proposed expansion.
However, the similarities between Carolina Cares and traditional Medicaid expansion become clear when you examine the program’s relationship to the federal government.
The proposal requires that the state Department of Health and Human Services (DHHS) get approval for the program through a 1115 waiver. This refers to Section 1115 of the Social Security Act. According to the Kaiser Family Foundation, Section 1115 waivers are submitted by states to the federal government in order to, “waive provisions of major health and welfare programs authorized under the Act, including certain Medicaid requirements, and to allow a state to use federal Medicaid funds in ways that are not otherwise allowed under federal rules.”
The federal government would have to approve Carolina Cares under a Section 1115 waiver, which is used to modify state Medicaid programs. Federal funding for Carolina Cares would also be considered “federal Medicaid funds” according to the waiver.
In Section 7 of the Carolina Cares proposal, it directs the state DHHS to “seek the highest federal financial participation percentage available” through a federal medical assistance percentage (FMAP). FMAPs are used by the federal government as a matching percentage for certain social programs, with the primary one being – you guessed it – Medicaid.
North Carolina’s FMAP for 2017 was 66.88 percent for the traditional Medicaid program. However, the FMAPs are higher for individuals covered under Medicaid expansion. In 2020, the federal government will match 90 percent of the costs of the newly eligible population under a traditional Medicaid expansion.
So, would Carolina Cares qualify for the 90 percent match? The bill describes a negotiation process between DHHS and the federal government, implying that the 90 percent may not be guaranteed. This would support Murphy’s case that Carolina Cares is not a true expansion.
However, other states have expanded their Medicaid programs through 1115 waivers and have been granted the 90 percent match. For example, Indiana’s Health Indiana Plan 2.0, which is the most comparable to Carolina Cares, received the enhanced federal match for its expansion population.
It seems that Carolina Cares would have to be approved and funded under the federal Medicaid program. At the state level, it is not clear whether the program would be administered through the existing NC Medicaid Division of DHHS. The proposal does not specify, presumably leaving the decision to the state agency. However, there is no mention of the creation or funding of a new division that would be responsible for Carolina Cares.
In his op-ed, Murphy made a bold claim that Carolina Cares is an “entirely different insurance product.” This implies that coverage under Carolina Cares would be significantly different from the coverage provided under traditional expansion. The 2017 version of the Carolina Cares legislation directs DHHS to design a plan similar to the state’s current Medicaid Essential Health Benefits Benchmark Plan. This is the plan that is administered to current Medicaid recipients. In North Carolina, that plan is known as Blue Cross Blue Shield North Carolina Blue Options plans, a term specifically referenced in the Carolina Cares proposal.
House Bill 662, the legislation that laid out the plans for Carolina Cares, also specifies that Carolina Cares insurance “shall comply with applicable federal requirements governing Alternative Benefit Plans.” This suggests that the insurance product is or will essentially be treated as an Alternative Benefit Plan.
According to research group Health Management Associates, Alternative Benefit Plans are the type of plans offered under ACA Medicaid Expansion. This point is clearly demonstrated in the 2019 Medicaid expansion bill filed by legislative Democrats. Section 2(a) of House Bill 5 says that “beneficiaries eligible for the Medicaid program under this section shall receive benefits through an Alternative Benefit Plan that is established by the Department consistent with federal requirements” (emphasis added).
So, is Carolina Cares a version Medicaid expansion?
It depends on which part of the plan you consider the defining element. Carolina Cares could theoretically be administered outside of the state’s current Medicaid office. The program could plausibly be structured to provide different coverage than Medicaid. However, the current proposal aligns the programs and there is no mention of differing administering divisions. Also, federal approval and funding would come from a Medicaid Section 1115 waiver. At a minimum, Carolina Cares is a Medicaid expansion substitute, designed with the same purpose and many of the flaws inherent in the original proposal.
Even if the differences between Carolina Cares and traditional Medicaid is enough to convince you that it’s not Medicaid expansion, there is still a question that must be answered: Should the government be involved in providing insurance for able-bodied, working age adults?
We know that 77.7 percent of those eligible under expansion – or Carolina Cares – would fit into that category. This is because people with disabilities and other vulnerable populations are already covered by the state’s Medicaid program.
Carolina Cares is fundamentally an expansion of the welfare state in North Carolina, whether one calls it Medicaid expansion or not. It shifts Medicaid away from its intended purpose of helping certain vulnerable populations.
Why is North Carolina even having a conversation about expanding government welfare in an era of extraordinary economic growth and prosperity? Conservative tax and regulatory reforms over the past decade have distinguished North Carolina as a leader in the region and the nation for the power of limited government in spurring economic growth.
North Carolina should not jeopardize that progress by getting more people trapped in government dependency.