Medicaid expansion moving in NC House, but more negotiations expected

A bill to expand Medicaid in North Carolina, providing hundreds of thousands of the state’s working poor with insurance and pouring billions of taxpayer dollars into the state’s healthcare systems, moved forward Tuesday at the General Assembly. But crucial negotiations remain in the Senate.

House lawmakers moved House Bill 76 through two committees Tuesday with no debate and no public criticism beyond a handful of audible “no” votes during one of the two committee stops. The bill is expected to head to the House floor for a pair of required votes Wednesday and Thursday.

Sponsoring state Rep. Donny Lambeth said he expects lopsided votes and support from most House Republicans, including many who have opposed expansion for years.

The sticking point: The House’s bill deals only with Medicaid expansion and Healthcare Access and Stabilization Program (HASP) payments, a relatively new federal program that promises billions per year for hospitals, on top of the billions in federal payments that expansion would bring.

Senate leadership, however, wants major healthcare industry reforms rolled into the bill, arguing the state must loosen regulations to boost the industry’s capacity and absorb the newly insured patients that Medicaid expansion would bring. They want to roll back state certificate-of-need rules that limit hospital expansion and competition, as well as free advanced practice nurses to handle more issues without doctor supervision in order

Senate Republican Leader Phil Berger has said repeatedly that, without those provisions, the House’s proposal won’t move forward in the Senate. Lambeth, a retired hospital executive, said Tuesday that he’s OK with rolling back at least some certificate-of-need regulations.

“We’re one of the most restrictive states, and it is time that we make some changes,” said Lambeth, R-Forsyth. “I don’t particularly like coupling it with the expansion bill … but if that’s what it takes … wrap it in there, what we can agree on.”

The N.C. Healthcare Association, which lobbies for hospitals, has fought the Senate’s certificate of need reforms for years, and House Republicans generally have backed the association’s position. What happens next is unclear, but there are clocks ticking with billions at stake, and Republican leaders seem optimistic that the logjam will be broken.

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Expansion has been a priority for North Carolina Democrats for more than a decade, with a majority of Republicans coming on board just in the last year. The state is one of about a dozen in the country that hasn’t expanded Medicaid, and Gov. Roy Cooper called this week for quick action.

Cooper has said repeatedly that the state foregoes more than $500 million a month in federal funding by not expanding. “We know people agree on Medicaid expansion,” he said Monday. “Let's just make sure that we can get the final solution, whatever that might be.”

The HASP payments can be retroactive, and the total payout is tied to the number of North Carolinians on Medicaid. Cooper said Monday that to get the full amount, the state needs to expand Medicaid in March.

There’s also a looming bureaucratic nightmare for Medicaid. At the height of the COVID-19 pandemic more people qualified for Medicaid under the state’s existing rules, and the federal government forbade states from kicking people off the program. That ends in May, so county social services offices across the state will need to recertify Medicaid recipients — examining their financial situation to make sure they qualify under the state’s restrictive rules and removing people who don’t.

The plan is to split that work up over 12 months, starting in April. The state’s Department of Health and Human Services says as many as 300,000 people could lose coverage through this process, and that many of them would be eligible under expansion. That means they’d be dropped until expansion is implemented, then added back in what Lambeth called a logistical “nightmare.”

The money involved is huge. HASP payments vary based on Medicaid enrollments, but Cooper’s administration has estimated they’ll grow to $3 billion a year. The retroactive HASP payment on offer now is about $1.8 billion.

The federal government also has offered another $1.8 billion in what is essentially a signing bonus to hold-out states that haven’t yet expanded.

Altogether, Cooper’s DHHS has put the healthcare system infusion from expanding Medicaid and accepting the HASP payments at about $8 billion a year.

Advocates worked the issue Tuesday, distributing Valentine’s cards to lawmakers with a pro-expansion message. Lambeth got one that said, “Roses are red, violets are blue, our neighbors need affordable healthcare, and that’s counting on you.”

Committee meetings on the bill were packed. A line formed outside the door for both hearings, which is unusual at the statehouse.

A number of advocates had personal stories to share. Ricky Clay, of Wilmington, said he makes too much money to qualify for Medicaid health insurance, but not enough to be able to afford insurance on his own.. This is the “coverage gap” that expansion is meant to fill, and Clay stressed that people who need expansion aren’t lazy, they just need help.

“Some of us still work and try hard,” he said. “I have $110,000 in medical bills.”

Clay, 44, said he has a spinal condition and that, when he lost his insurance years ago, he turned to illegal drugs to dull the pain. He said he’s been in and out of prison because of that.

“We need a better chance to get healthcare,” he said. “I believe it will keep people out of the system.”

The federal government would pay for 90% of expansion costs, with hospitals and insurance companies covering the rest. Much of the money to cover that last 10% would come from the federal HASP payments tied into the House’s bill.

That bill would sunset expansion in North Carolina if the federal share dips below 90% or if funds that cover the state’s 10% match fail to do so. And the bill wouldn't expand Medicaid until a new state budget becomes law — an incentive for lawmakers and the governor to come to agreement on the annual spending plan that often generates a prolonged fight over spending.

Lambeth, a lead budget writer in the House, said he’s also working on legislation to spend the signing bonus, targeting mental health care and job training programs. Among other things, Lambeth said the state needs to increase the number of people going into the healthcare field to address shortages and plan for the state’s aging population.

He also told reporters that he’d like to see loan forgiveness or scholarships to incentivize doctors to practice in rural areas.

Lambeth said the one-time federal signing bonus could kick-start some of these programs, and that he’s hoping for recurring funding after that around $200 million a year.