North Carolina set to become 40th state to expand Medicaid after yearslong battle in GOP-led statehouse

By Tami Luhby, CNN

North Carolina is set to become the 40th state to expand Medicaid to low-income adults after the GOP-led state legislature dropped its long-standing opposition to the Obamacare provision.

The expansion bill, which also includes benefits to the state’s hospitals, received final legislative approval on Thursday. Gov. Roy Cooper, a Democrat who has fought to broaden Medicaid for years, said he will sign the bill soon.

“Medicaid expansion is a once-in-a-generation investment that will make all North Carolina families healthier, while strengthening our economy,” Cooper said in a statement.

Roughly 600,000 North Carolina residents may become eligible for Medicaid coverage. Some 15.2% of state residents between the ages of 19 and 64 were uninsured in 2021, according to a Kaiser Family Foundation review of Census Bureau data.

One of the largest states that has yet to expand, North Carolina is also the first state since 2018 to broaden Medicaid through the legislative process. Since 2017, voters have approved expansion at the ballot box in seven GOP-led states, most recently South Dakota last year.

The final vote in North Carolina’s House took place on the 13th anniversary of the passage of the Affordable Care Act, which created Medicaid expansion.

Multiple factors prompted Republican state lawmakers to approve the measure this year, including an extra federal incentive to expand, the precarious financial condition of many rural hospitals, the increased certainty that Obamacare would not be repealed and the coming unwinding of a Covid-19 pandemic Medicaid provision that will result in millions losing coverage nationwide.

Also, the Covid-19 pandemic heightened awareness of the need for health insurance.

“The economic and the health benefits (of Medicaid expansion) are undeniable,” said Karen Knudsen, CEO of the American Cancer Society Cancer Action Network, noting that cancer is the leading cause of death in the state. “But I do believe that Covid played a role. There’s a recognition that people need health care that they can rely on.”

Those covered through Medicaid expansion are more likely to see doctors and get care for chronic conditions and less likely to screen positive for depression, said Sarah Lueck, vice president for health policy at the Center on Budget and Policy Priorities. Expansion is linked to fewer premature deaths among older folks, more early-stage cancer diagnoses and lower maternal and infant mortality rates. It also helps reduce enrollees’ medical debt.

In addition, expansion is important in improving health equity since the majority of people who fall into the coverage gap in non-expansion states are people of color, Lueck said.

What hospitals get

North Carolina’s hospitals, many of which are struggling financially, would also benefit from expansion.

“This landmark legislation will have lasting benefits for our state by helping hardworking North Carolina families, stabilizing rural health providers, and improving the overall health of our communities,” said Steve Lawler, CEO of the North Carolina Healthcare Association, which advocated for the bill.

The state would not have to shell out anything from its general fund for Medicaid expansion. The bulk of the cost for the newly eligible enrollees would be covered by the federal government, which provides a 90% matching rate. That’s expected to equate to least $5 billion annually, depending on enrollment.

Hospitals would foot most of the state’s share of the bill — estimated at $500 million to $600 million a year — through higher provider taxes. In return, the legislature approved the state participating in a federal program that would provide additional federal funds to cover more of the cost of Medicaid beneficiaries’ care. That extra money, estimated at $2.5 billion for the current year, would go to hospitals.

The state would also benefit from an American Rescue Plan provision that sends additional federal funding to states that expand Medicaid within a certain time frame. That measure would provide the state with about $1.6 billion over two years.

In addition, the legislature loosened the state’s certificate of need requirements, which would make it easier for health care providers to add facilities and services for drug treatment and psychiatric care, open ambulatory surgical centers and purchase MRI machines.

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