Is Medicaid Expansion Inevitable?

For the past several years, Medicaid expansion has been the number one priority for Democratic Governor Roy Cooper in budget negotiations with Republican leaders who control both chambers of the North Carolina General Assembly.

Cooper has been a strong proponent of the benefits of expansion, while Republican legislators have raised concerns over the proposal’s costs. North Carolina is one of 12 states nationally that has not expanded Medicaid under the Affordable Care Act (ACA).

The yearly back-and-forth, however, could soon be moot as the federal government looks more and more likely to force Medicaid expansion onto the states that have not already chosen to expand themselves.

Under the current law adopted in the American Rescue Plan Act earlier this year, the Biden administration offered bonus payments to states that chose to expand Medicaid this fiscal year.  For North Carolina, these payments would amount to between $1.5 and $2 billion that the state could spend at its discretion.

If the “carrot” approach fails, the Biden administration has included a “stick” proposal in the reconciliation bill currently being negotiated in congress. The bill would implement a federal program through the U.S. Department of Health and Human Services (HHS) that would establish a new federal Medicaid program that would operate in states without expansion.

Individuals who don’t qualify for Medicaid now, but also make too little to get ACA marketplace subsidies, would be able to access Medicaid plans through the federal program.

In each non-expansion state, HHS would enter into contracts with managed care companies, such as insurers, and people would then qualify for Medicaid plans offered by the managed care entities. States with the federal Medicaid expansion program would also be subject to penalties for changing benefits or reducing payments in their existing Medicaid plans.

While Medicaid expansion is still part of the state’s ongoing budget negotiations, reports are that it is not included in the most recent proposal sent by the General Assembly to Cooper.

Talks continue, but soon any incentive to make a deal that expands Medicaid at the state level may be replaced with a federal Medicaid expansion mandate.