The federal pandemic relief bill contains a big carrot to expand Medicaid. Will North Carolina bite? - North Carolina Health News

By Rose Hoban

For the third year in a row, leaders from rural parts of North Carolina came out to say that they believe the state should move to close the health care coverage gap that’s only widened since the start of the pandemic.

In a statement released on March 4, the five rural members of Gov. Roy Cooper’s Council on Health Care Coverage, which met throughout the winter, said they believed the answer was “obvious.”

That answer was to expand Medicaid.

Since 2013, the option to add more than 500,000 low-income North Carolinians to Medicaid has been on the table. But Republicans in the legislature have firmly resisted this policy, one of the most significant aspects of President Barack Obama’s landmark law, the Affordable Care Act (often called Obamacare). In the past year, countless numbers of North Carolina workers have lost their jobs, and their health coverage with it, because of the pandemic. That’s made the issue of expansion that much more urgent, as the probable number of people who would benefit from the policy has climbed.

By now, 38 other states have made the move to expand Medicaid, including a number of Republican-led states, including Montana, Oklahoma, Idaho and Ohio.

Now, another landmark piece of legislation, the American Rescue Plan (ARP), signed into law by President Joe Biden last week, provides substantial incentives for the holdout states to finally expand. The question is, will North Carolina legislators, who have firmly resisted expansion in the past, take the plunge?

Cooper has said he’s hopeful. In an interview with Politico, he said he’s been meeting with Republican leaders of the General Assembly hopes he can make a “grand bargain” with them.

NC Health News asked for comment from the offices of Senate leader Phil Berger (R-Eden) and House of Representatives Speaker Tim Moore (R-Kings Mountain) but has not received a response.

Mo’ money

The ARP amps up the incentives to Medicaid expansion in several ways, most of which include providing states with a lot more money, more flexibility or both.

The biggest chunk of change could come if North Carolina decided to allow those extra people onto the program.

For the past few years, states that expanded Medicaid have had the federal government pick up 90 percent of the costs for people earning up to 138 percent of the federal poverty line, which comes out to about $26,500 in annual income for a family of four. States that acted earlier had an even higher percentage paid by federal dollars for the first few years.

The incentive for states to add people onto their Medicaid rolls doesn’t come with adding extra dollars to pay for the expansion population, many of whom are low-income workers who are likely healthier than many of the traditional Medicaid adults – people with disabilities, low-income seniors, people who are blind. Instead, the ARP’s incentive is to pay more for those more expensive people.

“Which, actually, is more money in many states,” said Hemi Tewarson, a visiting policy fellow at the Duke Margolis Center for Health Policy. “It’s some of the other populations that are covered by Medicaid that can be more costly.”

Usually, the federal government pays the lion’s share for these “regular” Medicaid beneficiaries. In North Carolina, the federal government usually pays 67.62 percent out of every dollar spent on care. Since the passage of the Families First Coronavirus Response Act in early 2020, that percentage was bumped up for every state through the end of the federal emergency declaration, meaning that right now, the feds pick up close to 74 percent of each Medicaid dollar spent in North Carolina.

The American Rescue Plan would increase that even more, adding another 5 percent of federal matching dollars for two years after initiation of the policy. An estimate by the Kaiser Family Foundation found that for North Carolina, that boost to the bottom line would be about $1.7 billion overall, while the cost to the state would be about a half-billion dollars a year, a net gain of as much as $1.2 billion for the state.

State Medicaid director Dave Richard said his office’s estimate of the costs to the state is higher, in the neighborhood of $700 million, before any offsets that could take the form of a tax on insurers or hospital assessments, both of which were proposed in recent years.

Either way, there’s a lot of money on the table.

“There’s 1.2 million people uninsured in North Carolina, that’s a lot of people,” Tewarson said. “I think there’s a sincere interest in sort of doing something to address that. And, you know, this gives them some more money.”

“States already have a very good incentive to expand the 90 percent match,” said Edwin Park, a researcher at the Georgetown University Center for Children and Families. “This is an additional incentive to entice states to expand to finally get them over the line.”

Park said that any argument made against this incentive by state lawmakers, at this point, is not about finances.

“This is something else, you know, an ideological opposition that can’t be swayed by the numbers one way or the other because this is clearly going to be a big net win for the state in terms of its budget,” he said.

Resistance cracks in other states

Tewarson came to the Duke Margolis Center from the National Governors Association, where she was a health policy analyst. She said that of the 38 states that had already expanded, all of those governors felt they were able to continue paying for the expansion programs once any incentives expired, politics notwithstanding.

“[In] Montana, in Ohio, in Arizona, that have expanded earlier, I think they found that these investments have led to some really good coverage options for people in their states,” she said.

“Providers were able to expand operations and things like behavioral health, they were able to redirect state funding that had been focused on paying for some of those programs into other programs, which is helpful to make broader investments in healthcare and beyond health care.”

Park said that in some states the numbers had already become too compelling to ignore, even before the ARP dangled this new carrot in front of governors and legislatures in the holdout states.

“Wyoming, for example, reported out a Medicaid expansion bill out of committee, and obviously a very Republican legislature,” he said. “It’s headed toward the floor of one of their houses.”

He said there’s also a movement toward expansion in Alabama, which, like most other southern states, has resisted enacting the policy.

“The governor, unlike some other Republican governors hasn’t rejected it out of hand,” he said, noting that one or two states per year have opted into the policy.

“Hopefully this will, sort of, grease the wheels a little bit, overcome some opposition, because it’s such a good deal for states,” he said. “It was already a good deal. But this is an unequivocably great deal for states.”

“Medicaid expansion is extremely popular in North Carolina. And we’ve seen other red states pass it and pass it through referendum, we know people understand it, and why it’s important,” Cooper told Politico.

Extra coverage for new moms

Also included in the American Rescue Plan is an incentive targeted at helping address issues of maternal mortality in the U.S. About 700 women die after giving birth annually in this country, and the maternal death rate in the U.S. easily dwarfs the rate in other developed countries.

A paper prepared by the Commonwealth Fund last fall details how only fewer than half of maternal deaths happen during pregnancy or on the day a woman gives birth.

“The vast majority of pregnancy-related deaths occur after delivery,” said Mara Youdelman, an attorney with the National Health Law Program. “While about 21 percent [of deaths] occur between one and six weeks postpartum, 12 percent occur after that time.”

In North Carolina, the maternal mortality rate is around 27 women per 100,000 live births, according to America’s Health Rankings. For Black women, that number jumps to an eye-popping 56.8 per 100,000.

Federal rules currently allow states to use Medicaid to cover pregnant women up to birth and for 60 days afterward. That’s what North Carolina does, providing the benefit for women earning up to about twice the national poverty level, an annual income of $25,760 for a single woman.

In states that have expanded Medicaid already, women don’t need to be pregnant to get coverage, and so can continue with extended postpartum care.

“In Medicaid non-expansion states, like North Carolina, after the postpartum period, the person could lose Medicaid and may not understand that they could go to the marketplace and get coverage,” Youdelman explained.

But the COVID relief bill allows for states to extend that time period for up to a year, starting in April 2022.

This new ability to cover for the entire first year after pregnancy could go a long way to reducing complications that can lead to death in new mothers, Youdelman said.

Richard, the state Medicaid head, said he heard support for this kind of move during the governor’s health care council meetings this winter.

“I think that one probably has broad support across, you know, both Republican and Democrat legislators,” he said. “Certainly, we believe that’s absolutely an appropriate change in Medicaid to go forward.”

Richard said he’s cautiously optimistic that North Carolina will take advantage of this provision in the federal bill. He said that during the health care council meetings getting more coverage for postpartum women was one of the places for consensus.

The catch in the ARP is that this extended pregnancy benefit would expire after five years.

By then“a couple years of data will show that maybe it’s chipping away at the maternal mortality issue,” Youdelman said. “Then states will be induced to say, ‘Hey, it doesn’t cost too much, because most of these women are relatively healthy.’”