Health Care

N.C. governor signs Medicaid expansion

North Carolina becomes the 40th state to expand Medicaid coverage under the Affordable Care Act.
North Carolina Gov. Roy Cooper (D). (AP Photo/Gary D. Robertson)

North Carolina Gov. Roy Cooper (D) on Monday signed a bill expanding Medicaid coverage to about 600,000 state residents, just over 13 years after then-President Barack Obama’s Affordable Care Act became law.

The state will become the 40th state to expand Medicaid coverage to low-income residents after Republicans executed a rare about-face on a proposal they had blocked for over a decade.

“Medicaid expansion is a once-in-a-generation investment that will strengthen our mental health system, boost our rural hospitals, support working families and so much more,” Cooper said as he signed the legislation. “This is a historic step toward a healthier North Carolina that will bring people the opportunity of better health and a better life.”

The measure passed the House by a 94-22 margin last week, after the Senate approved the same bill 44-2 earlier in the month. 

The measure will not go into effect until the state passes its next budget, which is expected to happen sometime next summer. It would take advantage of federal incentives to expand the Medicaid program to cover those who make up to 138% of the federal poverty limit, which is $20,000 for an individual and $34,000 for a family of three. 

Advocates said raising the threshold would go a long way toward closing the so-called coverage gap, the percentage of the population that is ineligible for Medicaid but too poor to qualify for tax credits to buy health insurance through the Affordable Care Act Marketplace. 

Currently, to qualify for Medicaid in North Carolina, parents must earn less than 39% of the federal poverty line – less than $8,982 for a family of three annually. Adults without dependent children are not eligible for Medicaid at all.

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 which can support behavioral health, public safety support, rural health care, and other needs. 

It would also create more than 37,000 new jobs and increase business activity by close to $12 billion, according to a 2019 analysis by The George Washington University with funding from Cone Health Foundation and the Kate B. Reynolds Charitable Trust.

Critics warned against expanding the number of people dependent on the government for their health care, which they said risked overwhelming the state’s hospitals and ballooning its bureaucracy. 

“Medicaid expansion is a budget black hole that would crowd out important spending,” state Rep. Ben Moss (R) told the Carolina Journal. Moss, who voted for expansion in a previous iteration before opposing final passage, is running for Labor Commissioner, a statewide office.

Ten states have not yet expanded Medicaid under the Affordable Care Act. None are likely to join North Carolina in reversing course this year.

Supporters of Medicaid expansion point to numerous studies that show states that have expanded Medicaid have seen positive economic effects, improved health outcomes and improved operating margins and financial performances for hospitals and other health care providers. 

“We are grateful for the broad support and continued advocacy of legislators, and we look forward to the governor’s signature on this milestone legislation,” Abby Emanuelson, Executive Director, of Care4Carolina, a 175-member coalition of groups that advocated for Medicaid expansion. “Our work will not be complete until North Carolina’s Medicaid Expansion program is approved by the Centers for Medicare and Medicaid Services and then implementation and enrollment are in full swing. Care4Carolina will continue to work to ensure expansion will happen as soon as possible — people’s lives continue to be at stake.”

North Carolina was one of 20 states that initially opted out of expanded Medicaid Coverage under the ACA. That number has dwindled over the years; voters in seven states –  Idaho, Maine, Missouri, Nebraska, Oklahoma, and Utah, Missouri, Oklahoma’s and South Dakota – approved ballot measures that expanded the program.

North Carolina is one of the few states where the change has been driven by lawmakers, including many who had counted themselves among the programs’ staunchest critics. Senate President Phil Berger (R) and House Speaker Tim Moore (R), the state’s two most powerful Republicans, had long been the bulwarks against expansion.

“If there’s somebody who’s spoken against expansion more than I, more publicly than I, I just don’t know who that would be,” Berger told Pluribus News in a January interview.

But opposition to expansion began to soften in part because of an incentive included in the 2021 American Rescue Plan meant to encourage holdout states to adopt the program. 

In addition to the 90% federal matching funds available under the Affordable Care Act for the expansion population, states also can receive a 5 percentage point increase in their regular federal matching rate for two years after expansion takes effect. 

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