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By Rose Hoban

Governor Roy Cooper rolled out his budget for the upcoming fiscal year Wednesday morning, presenting a $25.2 billion plan with one of the central provisions being extension of North Carolina’s Medicaid program to cover as many as half a million low-income residents of the state.

Cooper was firm about widening the program, which usually covers low income children, some of their parents, people with disabilities and low income seniors, to include many who make too much to be covered under present guidelines, but too little to qualify for subsidies to buy their own insurance on the federal health insurance marketplace.

He said that the policy would cover veterans, parents with children and low-income workers currently without health insurance.

“Thirty-seven states have expanded Medicaid. The time is now for us to do it the North Carolina way,” he said. “We’re ready to listen, talk and come to consensus.”

But Cooper ducked questions about whether he would veto a budget without expansion as one of the provisions.

“We may be up here a long time because we’ve got some differences,” with members of the General Assembly he said. “The sooner we can resolve those differences, the sooner we can go home.

“There are some issues that are critically important to our state and Medicaid is one of them.”

He noted that any measure to widen the program may appear in separate legislation that is not in the budget. Cooper also acknowledged the Carolina Cares bill which was introduced by Republican members of the House of Representatives in 2017. That bill included a work requirement with exceptions for caregivers, people with disabilities, students and those who are in substance abuse treatment. The sponsors of that bill are purportedly working on reintroducing the bill this spring.

“We’re going to leave all of the options on the table right now. It’s pretty clear we think that Medicaid expansion or whatever North Carolina solution that we come up with and whatever we’re going to call it, happens this session.”

Thirty-seven other states and the District of Columbia have already embraced Medicaid expansion.

Give and take

Cooper said that expanding Medicaid would add about 500,000 North Carolinians to the program, and he argued that the measure would “bring 30,000 to 40,000 good paying jobs.”

Cooper’s budget indicates that adding these new enrollees would require about $2.13 billion in FY 2019-20 and $4.17 billion in FY 2020-21, but most of that eye-popping number would be reimbursed by federal dollars.

“Medicaid expansion requires no State dollars, as the federal government pays 90% of the costs and the rest is paid by hospitals and health plans,” the budget document states.

The price tag for the state would be about $78.2 million over the biennium that would be paid for by assessments on hospitals and insurance providers, said Charlie Perusse, Cooper’s budget director.

To soften the blow to hospitals’ bottom lines, Cooper’s budget calls for a total of $76 million in one-time payments to hospitals over the biennium to “ensure financial stability for NC Hospitals during the transition of Medicaid to a managed care system.”

Click here to read our series on how European countries have successfully addressed their opioid problems.

The conversion of Medicaid from a fee-for-service system to a managed care system that pays providers a set price per month for each patient will start in November, a transition that has many hospitals worried about cash flow.

Cooper’s opening gambit in 2017 to push for expansion was thwarted by supermajorities that have since been eliminated, providing him with more negotiating power.

“I do think things are different now, with the balance,” said Cooper who said he’d spoken with leaders on both sides of the aisle. “We just started on the budget process, so we don’t know as they assemble their budget how much input we will have in the first go-round. At some point, we’re going to have to work together to come to consensus on this budget. There’s going to have to be give and take.”

Beyond Medicaid expansion

Transitioning Medicaid to managed care looms large in other parts of Cooper’s budget, however much of the funding for that changeover will come out of the Medicaid Transformation Reserve created by the General Assembly in the 2015 budget.

Charlie Perusse, Gov. Roy Cooper’s state budget director, takes reporters through details of Cooper’s proposed biennial budget on Wednesday. Photo credit: Rose Hoban

Perusse noted the rapidly increasing aging population in the state.

“This is something we’re paying very close attention to … Our 65-plus population is growing at a much faster rate than our under 18 population, and over the next 10 years you can see that 65-and-over population grow by 600,000 residents,” he said. “That has a lot of impacts as far as services in the health care area.”

Nonetheless, the governor’s budget keeps funding for aging priorities constant, allotting $969,549, the same amount from Home and Community Care Block Grant funds as last year. Advocates for aging services had been asking for $7 million to reduce the waiting lists for essential services such as Meals On Wheels, home visits and medication management.

The budget document highlights a million dollar investment in assistive technology to help people with disabilities. However, the budget only adds 150 additional slots for people with “lower acuity” disabilities to be added to the Innovations waiver program, which gets people with disabilities the services and supports to stay at home. Currently about 12,000 people with disabilities around the state are on a waiting list for those additional funds to support their care in the community.

The medical examiner’s office would receive a funding boost from Cooper’s budget though. Close to $800,000 will fund three Medicolegal Death Investigator positions and maintain an information system that was initially funded by the General Assembly in 2016 to track autopsy findings, toxicology results and electronic death records. The budget also makes a one-time investment in upgrading equipment for the state public health laboratory in Raleigh.

The governor’s budget provides $2.9 million in funding for family supports to reduce the number of children entering foster care and $914,790 in funds to improve training for child welfare workers around the state.

Around the budget

In other parts of the budget, Cooper calls for $40 million for additional school nurses, school counselors, psychologists and school social workers to “directly support student mental health.”

Cooper also calls for a large expansion of staff from the Department of Environmental Quality, adding a total of 47 new positions in that department, which has been whittled considerably since Republicans took control of the legislature in 2010.

Thirty-seven of the new positions would go toward efforts to detect and prevent air and water pollution from so-called emerging compounds such as GenX, which has befouled the Cape Fear River. Three of the positions would go towards overseeing farming and wastewater practices at animal feeding operations such as hog and poultry farms.

The governor also called for creating $300 million in bonds to cover the costs of relocating and building a new facility to house thousands of Department of Health and Human Services workers who need to leave the campus of Raleigh’s Dorothea Dix Hospital, which is being converted to a city park.

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“This would be a state project where we would hope it would be on state land,” Perusse said. “Those 2000 to 2500 people have to be off [the Dix campus] by 2025.”

Also included in that bond money would be a $30 million rehabilitation of the state environmental lab at Reedy Creek.

Finally, the governor wants to put a $3.9 billion bond before voters in 2020 that would include $800 million for water and sewer upgrades, particularly in smaller municipalities.

He noted that many sewer systems throughout the state are crumbling because of age, deferred maintenance and little investment in repairs or upgrades, as shown in a report by NC Health News last fall. According to Perusse, a 2015 study showed North Carolina’s sewer needs totaled as much as $17 billion.

“We want to ensure that these small municipal or decaying systems are in a good enough shape to where potentially larger towns and larger cities might take them over,” Perusse said. “The best key for long-term success for these small systems is to get a large system to want to incorporate them.

“The only way a bigger system would be willing to take on a smaller, rural decaying system, is to get it up to snuff.”

Rose Hoban

Rose Hoban is the founder and editor of NC Health News, as well as being the state government reporter. Hoban has been a registered nurse since 1992, but transitioned to journalism after earning degrees...

One reply on “Medicaid expansion looms large in Cooper’s budget bid”

  1. The huge reduction in psychiatric beds that marked deinstitutionalization may have been well intentioned but was also financially driven. The huge reductions in length of stay, begun in the managed care era, were entirely financially driven. From a Mom of Veteran with serious mental illness!
    The IMD exclusion needs to go away completely for those with SMI!

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