Raleigh, N.C. — Advocates for the mentally ill say lawmakers might want to give Medicaid expansion another look, despite the push to block future expansion of the joint state-federal insurance program for the poor and disabled. 

"We want to urge folks to step back from the national politics of it," said Corye Dunn, director of public policy for Disability Rights North Carolina.

Throughout the country, Republican-lead legislatures and governors are turning down Medicaid expansion, generally seen as push-back against the national health care law championed by Democrats. 

Dunn said that despite this partisan dynamic, Republican lawmakers should look at expansion as a way to help pay for a settlement with the U.S. Justice Department over how the state cares for certain mentally ill patients.

Right now, thousands of patients are in state psychiatric hospitals or adult care homes not because they need intense supervision, Dunn said, but because it's the only place they can get key services. In particular, many of these patients need help remembering to take their medication.

"Medication management is a major reason why people have accepted a more institutional level of care than they really need," Dunn said.

The Justice Department has said the state needs to move away from this preference toward putting people in institutional settings rather than in less restrictive community settings.  

In order to move people out of these institutional settings, the state will need to create a network of community providers. Expanding Medicaid would help because it would narrow a gap in what Medicaid pays for people in institutions versus those who live in the community.

Under the current Medicaid program, those who live at home are only eligible for Medicaid if they have earnings up to 100 percent of poverty, $18,530 for a family of three in 2011. People in institutional settings are eligible to receive Medicaid even if they make up to 150 percent of the federal poverty threshold.

In January of 2014, the federal Affordable Care Act would allow states to expand Medicaid eligibility to adults with incomes up to 138% of the federal poverty level. While that doesn't fully close the gap between those in institutional and community settings, it would allow more people who move out of hospitals and adult care homes to keep Medicaid. That, in turn, Dunn said, would help the state pay for the transition and provide a steady source of funding for newly created community mental health providers.

"It's not a perfect alignment, but it would capture a large number of the people we're talking about," Dunn said. "Medicaid expansion would be a tool to help us meet the commitment we've already made."

The state Senate is scheduled to vote on the bill blocking Medicaid expansion tonight.