After months of remaining on the daily House calendar, House Bill 655 was sent back to the House Health Committee last week for additional amendments. Bill sponsor Rep. Donny Lambeth (R- Forsyth) brought a new version of the bill, also known as Carolina Cares, to the hearing and amendments were considered, with a few adopted. Overall, though, the changes were relatively minor and technical.
Civitas has detailed why Medicaid expansion is a bad deal for North Carolina, but here are the main points:
- Adding half a million North Carolinians to an already-overcrowded system exacerbates the problem that current Medicaid enrollees have finding doctors.
- The expansion population is composed of working age, able-bodied adults, 78 percent of whom have no dependent children. Working full time at minimum wage, these individuals would be eligible for fully-subsidized, no-cost-to-them plans on the federal exchange.
- Medicaid expansion is a long-term financial risk for the state.
For more information about why Medicaid Expansion is a bad idea, check out our Medicaid Expansion resource page.
In this piece, I want to highlight some proposed “solutions” to the inherent problems of Medicaid expansion and why they do not provide a sufficient remedy to the negative consequences of the policy.
If North Carolina expands its Medicaid program under the Affordable Care Act, anyone who is newly-eligible under expansion will no longer be able to purchase their own insurance from the marketplace. Expansion will force approximately 146,000 North Carolinians off of their private plans and move them onto the state’s Medicaid rolls. It will also disqualify an additional 120,000 uninsured people from the fully-subsidized plans for which they are currently eligible, but of which they are not taking advantage.
Insurance status of expansion population, ages 19-64 under 137% of federal poverty line
Source: American Community Survey, table B27016
Other states have tried to circumvent this problem by limiting the expansion population to those who do not currently qualify for subsidies on the federal exchange. However, the Trump administration announced that it will not approve partial expansions of state Medicaid programs. In July, the administration rejected Utah’s partial expansion proposal, saying:
“A number of states have asked [the Centers for Medicare and Medicaid Services] for permission to cover only a portion of the adult expansion group and still access the enhanced federal funding available through ObamaCare. Unfortunately, this would invite continued reliance on a broken and unsustainable ObamaCare system,” a spokesperson for the Centers for Medicare and Medicaid Services (CMS) said.
Since the laws governing the federal exchange subsidies are decided by Congress, the General Assembly will likely have a hard time finding a loophole that will hold up in court.
Another problem inherent to expanding the state’s Medicaid program is the “welfare cliff.” Many government programs with income eligibility limits create a disincentive for recipients to try to better their economic situation. Earning more money can actually be a net-negative for someone’s financial situation if their increased earnings are less than their loss of government benefits.
Proponents of Medicaid expansion – both the Republican-proposed version and traditional expansion alike – claim that expansion will provide healthcare to people who are currently working. However, in states that expanded Medicaid prior to 2018, an average of 55 percent of new Medicaid enrollees under expansion reported no income at all. We also know that 78 percent of the newly eligible expansion population are without dependent children. Working full time at minimum wage, those individuals would qualify for fully subsidized plans on the federal exchange. In order to be below the 100 percent federal poverty line threshold for those subsidies, the individuals have to be working only part time hours, if at all.
The Medicaid expansion proposal backed by several Republicans includes a work requirement in order to try to avoid that problem. However, the work requirements are aligned with the work requirements for the federal Supplemental Nutrition Assistance Program for the same population. Those work requirements only mandate 80 hours of employment activities monthly; the equivalent of part-time work.
So, even though the plan supported by some Republicans may soften the steepness of the cliff, it still creates a disincentive to better oneself and leave the government program. With no qualifying disability and no dependent children, it is a far better option to encourage those individuals to maintain full-time working hours instead of trapping them in government dependency.
Medicaid expansion in any form is riddled with inherent problems, such as creating a welfare cliff and kicking people off of their private insurance plans. No amount of tinkering with the details of the plan can cure it of the overarching consequences associated with an expansion of the welfare state.