On March 23, 2010, President Obama signed into law the Affordable Care Act (ACA). On June 28, 2012, the United States Supreme Court ruled 5 to 4 that the law was constitutional, “permissible under Congress’s taxing authority.” In that ruling, the Supreme Court struck down the ability of the federal government to withhold Medicaid funds from states choosing not to participate in the ACA.
The most important element of the ACA is the individual requirement to obtain health care coverage which does not take full effect until 2014. In preparation to implement that requirement, states all across the country have begun choosing to participate or not participate in the ACA by setting up health care exchanges and expanding Medicaid funding to the uninsured.
As of February 26, 2013, 23 states and the District of Columbia have chosen to participate, three states are leaning towards participation, 13 states have decided to not participate, five states are leaning in the direction of not participating, and eight states are undecided. The map below indicates where the states stand at that date.
On February 12, 2013, Governor McCrory announced that the North Carolina Medicaid program was broken and that North Carolina was not prepared to participate in an expansion of Medicaid. He indicated that more study was necessary before any actions would be taken. In stating his opposition to the expansion of Medicaid, one of the factors Governor McCrory cited was a projected increase of $830 million in costs associated with that expansion over six years.
While that projected estimate may be accurate, there is ample evidence that those costs would be outpaced by cost savings from the reduction of uncompensated medical care that has been projected to reach between $1 and $2 billion between 2014 and 2019. Furthermore, having fewer uninsured residents and an overall healthier population will also affect costs.
Had North Carolina chosen to participate in the ACA, it was estimated by the Budget and Tax Center that the expansion of Medicaid alone would extend coverage to 488,867 uninsured citizens in 2014, out of the approximately 1,300,000 uninsured in this state.
Current law provides that states provide roughly 35 percent of the cost of those covered under Medicaid. Under the Affordable Care Act, the federal government will pay for 100 percent of newly eligible beneficiaries through 2019 and 90 percent thereafter. The additional cost to North Carolina is likely to be about $70.5 million in 2014 due to greater enrollment by those who are currently eligible under existing programs.
Fully $5.1 billion in new federal spending on health care would follow the Medicaid expansion under the ACA to North Carolina. Most of that funding would go directly to health care providers to pay for medical care. Over the six years from 2014 to 2019, the expansion of Medicaid would cost $16.3 billion with $15.5 billion coming from the federal government or 94.9 percent, while the state would contribute 5.1 percent or the $830 million.
It is important to know that people go to our health care system every day and they get care, and if they can’t afford it, they still get care but it is uncompensated care. Uncompensated care actually gets passed along to those who can pay. It’s called cost shifting and it’s been happening for a very long time...over 30 years.
This cost shifting has found its way into the base rates of health insurance for small businesses all across the country. That cost is shifted to a shrinking group of people (business owners) who struggle to pay for their own health insurance coverage.
As the Budget and Tax Center points out, “Having roughly one in five Americans uninsured is a drain on the American workforce and the American economy. The Medicaid expansion directly addresses this problem by extending insurance coverage to nearly 17 million Americans, more than half a million of whom live in North Carolina.”
Implementing the Medicaid expansion quickly, effectively and responsibly will not only improve the lives of hundreds of thousands of struggling North Carolinians through greater access to coordinated care, it will also save the state, and its taxpayers—including business owners, millions of dollars in the process.