UPDATE: House Bill 916 was pulled from the Committee hearing, at the request of the bill sponsor.
Today the North Carolina House Committee on the Rules, Calendar, and Operations of the House will consider House Bill 916 – North Carolina Health Plan. The bill’s primary sponsors are Representatives Cecil Brockman (D-Guilford) and Verla Insko (D-Guilford).
While the title itself is not particularly scary, the bill would create a monster that could swallow the North Carolina state budget.
The legislation says it is “an act to provide for the North Carolina Health Plan to cover all state residents with comprehensive benefit coverage.”
The bill goes on to say, “It is the intent of the General Assembly that the State shall offer the North Carolina Health Plan (“Health Plan”), a comprehensive health care plan for all residents of North Carolina, on January 1, 2019.”
In other words, this legislation is a bill to create a single-payer, universal health plan for every person in North Carolina. Note that it covers residents and not necessarily citizens of the state.
The bill goes on to direct the state Departments of Insurance and Health and Human Services to study the issue and recommend statutory changes to the General Assembly on how to implement this statewide single-payer health plan.
And it is a doozy of a plan. The coverage of this new plan would cover, but would not be limited to:
- Health care services currently offered by healthcare facilities, offices, and clinics;
- Preventive health care services;
- Medical and surgical supplies;
- Durable medical equipment;
- A prescription drug formulary;
- Long-term care services and personal assistance, including assisted and skilled care;
- Hospice care;
- Mental health treatment; and
- Dental services.
The coverage is very comprehensive, and the bill does not mention any cost recovery from the federal government for Medicaid, Medicare, Veterans Administration Benefits or other healthcare programs. Thus, a decent estimate for a comprehensive plan that would be fully funded by state dollars would be a projection of total healthcare expenditures for all of North Carolina.
According to the federal Center for Medicaid and Medicare Services (CMS), total healthcare expenditures in 2014 in North Carolina (public and private) were $72.16 billion[i] – the second highest total in the southeast. Unfortunately, that figure is for 2014 and does not tell us what the current cost may be.
However, CMS does provide the average growth of health care expenditures for the 23 years between 1991 and 2014 – 7% annual growth. While that growth is not applied uniformly year-to-year – sometimes it will be bigger, and sometimes smaller – it is a reasonable basis to project costs of the potential North Carolina Health Plan.
Beginning in 2014 with the reported $72.16 billion in total North Carolina healthcare expenditures and applying an average growth of 7% per year, the potential cost for the first year (2019) of the North Carolina Health Plan is $101.2 billion!
That would mean the North Carolina Health Plan would cost more than 4.2 times the entirety of state General Fund spending for the 2018-19 fiscal year – $23.9 billion.
Current state revenue streams are not going to be able to meet the demand of a budget explosion of this proportion. An income tax hike to cover the full cost of the North Carolina Health Plan would likely have to go above 10 percent. However, Article V, Section 2(6) of the North Carolina Constitution says tax rates on income cannot exceed 10 percent. Therefore, the state would have to seek other revenue streams such as a massive sales tax increase, increased alcohol and tobacco taxes, or perhaps a new state-levied property tax.
Regardless, it’s clear that this proposal is not fiscally sound for North Carolina. Furthermore, it appears it would likely apply an overwhelming tax burden on the very people it seeks to help. Instead of finding ways for the government to reach into people’s lives, it would be better if lawmakers found ways for North Carolinians to thrive by removing the nanny-state from everyday life. Otherwise, the tax burden will be stifling and destroy economic mobility for the working class.
House Bill 916 is not merely a bad bill. It is a catastrophic bill for North Carolina taxpayers.
[i] “Health Expenditures by State of Residence, 1991-2014.” Centers for Medicare & Medicaid Services. November 21, 2017. https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsStateHealthAccountsResidence.html