Health Care

How N.C. got to yes on Medicaid expansion

Advocates see reason for optimism that it won’t be the last red state to do so.
North Carolina Republican Senate leader Phil Berger, left, and Democratic Gov. Roy Cooper shake hands at a ceremony celebrating Medicaid expansion Monday, March 27, 2023, at the Executive Mansion in Raleigh, N.C. (AP Photo/Hannah Schoenbaum)

Phil Berger is no one’s idea of a liberal. But after spending a decade working to quash Medicaid expansion in his state, there was the North Carolina senator last week standing on a podium with a wide grin on his face as Gov. Roy Cooper (D) signed a bill that would make the state the 40th to adopt the signature provision in the law known as Obamacare.

It is such a dramatic shift that Berger, the leader of the Republican-controlled Senate, said in a recent interview that he would not have believed anyone who predicted it a decade ago.

“I would have tried to figure out what planet you had come from, because you had not paid any attention to anything that I said,” he told Pluribus News.

Berger’s politics have not changed. He keeps a stuffed possum on the wall of his statehouse office — adorned with bunny ears or mardi gras beads, depending on the holiday — in a jab at animal rights groups that objected to a New Year’s Eve marsupial drop in Brasstown, N.C. (Thom Tillis, who was once Berger’s counterpart in the state House, took a matching one with him to Capitol Hill when he was elected to the U.S. Senate, Berger said.)

But his thinking on the issue once considered a third-rail of Republican politics flipped in recent years. After warning in 2017 about “massive, budget-busting Obamacare expansion,” he now sees the 2010 Affordable Care Act provision as a fiscally responsible way to support struggling hospitals, rural communities and the working poor. The plan, which increases the income threshold to qualify for the government health care plan to those who make up to 138% of the federal poverty limit, is expected to cover an additional 600,000 people.

“It’s a good day for North Carolina,” Berger said during the interview, just before the state House took its final vote on the expansion bill. “It’s a very positive day, I think, for our effort to address some of the very real problems that exist for everyday people in having access to care.” The measure cleared the House by a 94-22 margin after the Senate passed it 44-2.

Berger’s ability to change his mind — and to bring a solid majority of the Republicans in the legislature along with him — has energized supporters of Medicaid expansion in the 10 remaining holdout states, where fears of big government are colliding with a rural hospital economic crisis and a staggering growth in maternal mortality.

“We are so excited about North Carolina,” said Ana Marchese, director of Healthy Wyoming, a coalition of more than 25 groups advocating for Medicaid expansion in the Cowboy State. The state House passed a Medicaid expansion bill in 2021 but failed to get a Senate floor vote. Marchese predicted that an expansion bill in Wyoming could pass as early as 2025.

Such optimism, once unthinkable in states that initially resisted Medicaid expansion, is growing in recent years as the program’s association with the Obama administration fades and lawmakers accept that it is here to stay.

To be sure, expansion bills continue to face steep opposition in non-expansion states, driven by powerful groups including Americans for Prosperity and the American Legislative Exchange Council (ALEC), which have mobilized pressure campaigns against all aspects of the Affordable Care Act.

But after years of rallying behind repealing and replacing Obamacare, conservatives are no longer in lockstep on the issue.

Expansion proposals, including a 2020 measure in Tennessee and a bill before the Wyoming legislature this year, have attracted Republican sponsors. They also received support from farmers, business leaders, hospital executives and clergy, core elements of the GOP base.

Even states that have seen the most resistance to a full Medicaid expansion have proved willing in recent years to grow the program’s reach.

In Florida, the state House set aside $76 million in its proposed budget to incentivize pediatricians to treat children on Medicaid. A bill that would increase the number of children covered by Florida KidCare — the umbrella brand for Medicaid and three other government-sponsored health insurance programs — is a top priority of Speaker Paul Renner (R) and has been making its way through the House.

Georgia Gov. Brian Kemp (R) has embraced a limited expansion of Medicaid tied to workforce, education and other eligibility requirements. While the legislature ended its session last week, House Speaker Jon Burns (R) told reporters that state leaders were considering ways to add to the rolls.

Leaders in those states have taken pains to distinguish such incremental changes from a full embrace of Medicaid expansion.

“The better way to go is to bring down the cost of care, private insurance and other insurance and to increase access while still maintaining quality,” Renner said during a March news conference when asked about Medicaid expansion.

“I’m not sure that it’s traditional as we think of Medicaid expansion,” Burns said in March of Georgia leaders’ plans. “But I want to tell you the ground is always shifting when it comes to what government is involved in.”

Still, Marchese, from Healthy Families Wyoming, said her calculation of the chances for a full Medicaid expansion changed when the postpartum extension — dubbed “Medicaid for Moms” in the state — was signed by the governor last month.

“If that bill didn’t pass I would be less optimistic,” she said. “The support we saw for Medicaid for moms this session has really ignited, and given us much more hope for when — sooner rather than later.”

North Carolina was one of 11 states where Republicans took over the legislature in 2010 on a promise to block Obama’s health care overhaul from taking hold in the states.

After the 2012 Supreme Court ruling that struck down an Affordable Care Act requirement that states expand Medicaid eligibility to adults with incomes up to 133% of the federal poverty level, 20 states opted out, arguing that they could not rely on the promised federal assistance to maintain the program.

Then-North Carolina Gov. Pat McCrory (R) was still tempted by the incentives in place at the time. The federal government promised to cover 100% of expansion costs through 2016 and 90% afterward.

But McCrory signed a law in 2013 that made North Carolina one of a handful of states that prohibited expanding Medicaid without legislative consent. That halted it, as Beger and his House counterparts — Tillis, who resigned to run for the U.S. Senate in 2014 and his successor, current Speaker Tim Moore (R) — were not interested.

“The message was … ‘We are not talking about Medicaid expansion, we are never talking about Medicaid expansion. Stop talking about it,’” said Peg O’Connell, chair of Care4Carolina, a coalition created to advocate for Medicaid expansion in the state.

O’Connell said everything about the atmosphere at the time felt toxic. Protestors drew crowds in the thousands at weekly “Moral Monday” gatherings outside the statehouse. The legislature approved a constitutional amendment banning same-sex marriage, persued voting restrictions that critics said were crafted to weaken Black electoral power, and passed the notorious 2016 “bathroom bill” — the precursor to a wave of transgender-related legislation currently sweeping through conservative states.

“It was an unproductive time for political dialogue in North Carolina,” O’Connell said. “Both sides were getting more and more dug in.”

It took years for advocates to feel they could broach the topic again, O’Connell said. When they did, they made a strategic decision: They would never use the term “Medicaid expansion.”

Instead, they talked about the “coverage gap,” the thousands of working people whose income was too high to qualify for Medicaid — which was cut off at 39% of the federal poverty level, or less than $8,982 for a family of three annually — but too low to get tax credits to buy health insurance through the Affordable Care Act Marketplace.

The movement began to pick up important allies. Rep. Donny Lambeth (R), a former hospital administrator, has supported Medicaid expansion since he was first elected in 2013. Business leaders formed an advisory council to approach the legislature. The North Carolina Rural Center signed on, arguing that expanding Medicaid would help stabilize the rural health care system and bring money and jobs to rural areas.

A report from the Center for Health Policy Research at George Washington University, released in 2014 and updated in 2019, found that Medicaid expansion would be an economic boon to the state, spurring business activity, creating new jobs and triggering an increase in economic activity that would result in hundreds of millions of dollars in new tax revenue.

Another report, from Wake Forest University, found that the costs to states that had expanded Medicaid were “negligible or minor,” and that states across the political spectrum did not regret their decision.

Kevin Corbin, an insurance agent from the mountains in the western part of the state who served in the state House before being elected to the Senate in 2021, brought together rural county commissioners who argued that the lack of access to affordable health insurance was hurting their communities that were reeling from the opioid epidemic.

“I think one of the fears among my colleagues is that their base of support might not support this,” Corbin said in 2021. He said that he won a landslide Senate victory the previous year in “one of the most conservative districts in the state” while openly advocating for Medicaid expansion.

The biggest shift, O’Connell and other advocates said, came when Berger called a press conference in 2022 to announce that he had completely changed his mind — a moment O’Connell likened to former President Richard Nixon’s 1972 trip that ended 25 years of isolation between the U.S. and China.

“It was almost comical,” O’Connell said. “He said, ‘There was no person who said no to Medicaid expansion more than I have,’ and these other leaders came out behind it and said, ‘Oh, Sen. Berger, I may have said no to Medicaid expansion more times than you did.’”

Berger told Pluribus News that by then the program had been around long enough to convince him that the federal government wasn’t going to back out of its promise to cover the majority of the costs.

The state had transitioned from a fee-for-service Medicaid program to a risk-based managed care approach in 2021, a model many states favor because it is easier to predict the budget and control spending. “We now have a system where, if we’re going to expand, we have a good deal of confidence that we can do that without busting the bank,” Berger said.

With time, he said, it became increasingly clear that most of the people in the expansion population would be full-time workers — people in the “coverage gap” — rather than able-bodied unemployed people.

He was also enticed by new sweeteners from the federal government.

An incentive included in the 2021 American Rescue Plan meant to encourage holdout states to adopt the program offered a 5-percentage-point increase in states’ regular federal matching rate for two years after expansion takes effect, in addition to the 90% federal matching funds available under the Affordable Care Act for the expansion population.

The North Carolina Department of Health and Human Services estimates that Medicaid expansion, along with a provision in the bill that would allow hospitals to get higher reimbursement rates from the federal government, would bring $8 billion annually to North Carolina with no additional cost to the state, along with $1.8 billion that can support behavioral health, public safety support, rural health care, and other needs.

“From a state budget standpoint, it really became clear that it made no sense not to say yes,” Berger said.

The North Carolina program will require hospitals to contribute to the state’s 10% share and eliminate requirements that health care providers obtain regulatory approval through the so-called Certificate of Need process for certain health care services, which was a sticking point in previous versions of the measure.

Once he made up his mind, Berger said, he called together the state Republican caucus to explain his reasoning. He did it again at a Saturday morning meeting with his county Republican committee. He said he has not experienced “any blowback whatsoever.”

“I think it’s critically important that if, if I take a stand on something or I announce a position on something, that that’s not the last word on that,” he said. “I think you’ve got to make sure that the reasons you have come to a conclusion continue to be supportive of the conclusion that you’ve come to. And if the foundation that you based your opinion on changes, shifts, moves away, dissipates, I think you’ve got to reassess.

“And this just happens to be on a really big issue, but I think it’s important that you do it on your own any kind of decision that you make.”

Most of the states that have adopted Medicaid expansion over the past decade did so after successful voter-initiated ballot measures, under opposition from state leaders.

That avenue seemed to have dried up in November, after 56% of South Dakota voters approved such a measure in the November elections. In Florida and Wyoming, the only non-expansion states where a ballot measure is an option, advocates have been dissuaded from trying by high costs and other hurdles.

That makes North Carolina’s about-face even more intriguing to expansion advocates. Jill Birnbaum, senior vice president of field advocacy at the American Heart Association, which supports expansion, has been presenting lessons learned in the Tar Heel State to organizers in other states who feel discouraged by legislative leader stonewalling.

“Well, that’s where they were in North Carolina and yet, look at where they are today,” she said in a recent interview. “Here is what comes out of North Carolina: It’s not just the success. It’s also hearing these leaders talk about Medicaid expansion in ways that they’re not hearing in their states right now and that provides hope that, if you do this organizing work over time, you can change hearts and minds.”

Advocates said they see potential for change in Mississippi, where Gov. Tate Reeves (R) has been criticized by some on both sides of the aisle for his expansion opposition and is facing a potentially competitive re-election bid against a Democrat who has made the issue central to his campaign.

Kansas Gov. Laura Kelly (D) was re-elected in November on a promise to finally pass Medicaid expansion. But her proposal, the fifth she has introduced in the legislature, was blocked by Republicans in the legislature who have called it a “budget buster” and a “non-starter.”

Former Tennessee Rep. Craig Fitzhugh (D), who sponsored failed Medicaid expansion bills for years while in the state House, said he has his doubts that the political forces will align in his state anytime soon, and that if it did happen, it would take a situation like in North Carolina, with a prominent member of the House or Senate flipping his position.

“Under the current leadership, I just don’t think that’s likely,” he said.

O’Connell, the North Carolina expansion advocate, said she is still surprised by how drastically the ground there shifted. The legislature still veers to the right on cultural issues — it just overrode a veto from the governor to allow handgun purchases without a permit, and the Senate in February passed a bill that would prohibit instruction about gender identity and sexuality in K-4 classrooms, modeled after what critics dubbed the “don’t say gay bill” in Florida.

The Medicaid expansion vote, by comparison, was drama-free. The measure will not go into effect until Cooper signs the budget, expected sometime this summer, but no one expects any hiccups between now and then.

“A lobbying colleague actually said to me, ‘You’re so lucky, you don’t have a controversial issue,’” O’Connell said, laughing. “That means we have done our job.”