How NC's multibillion-dollar Medicaid deal was reached -- and who it benefits

For most of the past decade North Carolina Senate leader Phil Berger was maybe the state’s biggest opponent of Medicaid expansion. Now, however, he’s arguably the main reason expansion appears just a few months from becoming reality.

The multibillion-dollar reversal would give health insurance to hundreds of thousands of the state’s working poor, with the federal government picking up nearly all the cost.

They plan to tie expansion to the state budget, which is expected to become law this summer or fall. If all goes according to plan, about 600,000 North Carolinians will be able to finally get health insurance by the end of this calendar year.

The reaction was immediate, from all corners of the state.

“It’s really going to be a game-changer for communities, especially in our 80 rural counties in this state,” Dr. Roxie Wells, a hospital president in rural Hoke County, outside Fayetteville, said in an interview Thursday. “... We want to provide exceptional care for our communities, and this just further helps us.”

In their words: NC leaders react to Medicaid expansion deal

Wells is also the past president of the board of trustees for the state’s biggest hospital lobbying group, the North Carolina Healthcare Association, which lobbied for Medicaid expansion. Hospitals in rural areas have struggled in recent years, in part because so many rural North Carolinians don’t have health insurance. She said Medicaid expansion will make things better from the moment it becomes law.

“It will be an immediate shot in the arm,” Wells said.

Democratic lawmakers have long been likely to support any deal to expand Medicaid. Democratic Gov. Roy Cooper and other party leaders have been pushing for this moment for years.

But what changed for Republicans? A lot.

Nationally, the conservative political backlash to Obamacare subsided.

Locally, many rural leaders — in politics, health care and law enforcement — also changed their minds and started pushing for Medicaid expansion.

And then the federal government offered North Carolina an extra $1.8 billion, on top of the many billions of dollars more that will flow into local hospitals, once expansion goes through.

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Hospitals and insurance companies agreed to pick up the 10% of costs that won’t be covered by the federal government — so that in the end there’ll be no cost to the state government.

In addition to Berger, those details helped sway many other Republicans.

“Not very many people really understand how this bill is going to work,” said Rep. Donny Lambeth, the Winston-Salem Republican who wrote the Medicaid expansion bill. He’s also a former hospital executive. “They perceive that there’s a new cost to the state and to taxpayers, but that is just not true.

Even with top leaders on board, other Republicans remain skeptical.

When the state House passed its own preferred version of an expansion bill earlier this year, the final vote was 96-23 — in the end, about one-third of Republican lawmakers voted against it.

The John Locke Foundation, a conservative think tank in Raleigh, opposes expansion. So does the group Americans for Prosperity, a project of the libertarian Koch brothers.

“Studies have shown little benefit to other states that expanded Medicaid — but longer wait times for medical services, budget-busting cost increases, and no difference in health care outcomes,” Americans for Prosperity’s North Carolina chapter said in a statement Thursday.

That’s simply false, the state’s top-ranking health care official says. Not only do health outcomes improve when more people have health insurance, but the economy does better, too, said Kody Kinsley, secretary of the state Department of Health and Human Services.

“We’ve had over 10 hospitals close in the last decade in rural communities here in NC,” Kinsley said during an interview on WRAL’s “On the Record” program. “It is consistent that, in states that have expanded Medicaid, those rural hospitals are able to function and stay in business.”

From a political perspective, Census data also show why Republicans may have come around on expansion: The urban, more liberal areas tend to have relatively few uninsured people. But in more rural and conservative parts of the state, as many as one in every five adults are uninsured — particularly in the western mountains and in the southeastern Sandhills region.

Sen. Kevin Corbin, a Republican who represents a rural part of North Carolina west of Asheville, sees Medicaid expansion as a fiscally conservative decision, even if some conservative groups oppose it. He said it will decrease expenses for local hospitals, for local governments and for people who do have insurance.

“Because of folks that are uninsured, those of us who do have insurance are paying an estimated 10% more for our insurance,” Corbin said in an interview.

Uninsured people aren’t banned from getting medical care. They typically just end up receiving it in a hospital emergency room or — in a rising number of cases related to mental health and substance abuse issues — behind bars at their county jail.

Lawmakers such as Corbin say treating people in emergency rooms, or in jail, is far more expensive than the options open to people with insurance. They can make an appointment to go see a doctor, and get help from insurance paying for medications.

Giving hundreds of thousands of people more opportunities to get treatment before it becomes an emergency will only lead to better outcomes, said Steve Lawler, chief executive of the state Healthcare Association. The domino effect, he said, could include lower costs and shorter hospital wait times.

“These individuals will have the opportunity to access care in a different setting — and not in the most expensive setting, which is the emergency department,” Lawler said. “It should actually free up capacity in hospitals to take care of individuals who really need to be there.”

One complicating factor for the hospitals Lawler represents is a contentious policy change that the new Medicaid deal attaches to expansion — a partial repeal of certificate-of-need laws, which are intended to protect hospitals from facing too much competition.

Opponents say those laws violate free-market principles and allow health care providers to charge high costs.

A leading critic is Sen. Ralph Hise, a Mitchell County Republican who co-chairs the Senate’s health committee and has tried for years to repeal those certificate-of-need, or CON, laws. He was one of the small number of lawmakers in the room when the Medicaid expansion deal was being written.

“I’ve been here 13 years, and we were trying to do this 13 years ago, before I even got on the health care committee,” Hise said in an interview. “So I’m glad to finally come to a conclusion. I’m excited we finally made some changes to CON provisions.”

Supporters, however, say the CON protections actually keep people’s costs down by letting hospitals stay out of costly arms races with one another for new facilities and equipment.

Lawler’s group, the Healthcare Association, is one of the biggest supporters of CON laws. A spokeswoman for the group said it’s impossible to know exactly what the ramifications will be, since the details still aren’t public. But the cost to hospitals could be hundreds of millions of dollars a year.

In the end, though, that pales in comparison to the billions of dollars that Medicaid expansion is expected to bring in each year.

Lawler said on “On The Record” that especially after the tough times of the COVID-19 pandemic, expansion is welcome news.

“The past three years for North Carolina hospitals have probably been the most difficult times in the history of North Carolina,” he said. “We led the state through a pandemic. We dealt with economic pressures that have not been seen before. We’re grateful for this bill.”