Medicaid proposals would harm North Carolina, NC Policy Watch

May 2011

Post Author

Medicaid proposals would harm North Carolina, NC Policy Watch (06.15.2011)

The budget plan passed in April by the U.S. House of Representatives could mean that half of Medicaid patients in North Carolina would lose their coverage, including the disabled and children. The plan would eliminate the protections that have helped bring the uninsured rate for children down to only 11 percent in North Carolina. If the plan goes into effect, we will see that encouraging progress start to unravel – and quickly.

The House-passed plan repeals the planned Medicaid expansion currently in law under the Affordable Care Act and makes Medicaid a “block grant,” limiting federal dollars to the states and preventing the Medicaid program from expanding – as it currently can – to cover more people during recessions. Because of the high rate of medical inflation, a block grant would quickly lose value, which would mean vulnerable populations would have to be dropped from coverage.

Experts have estimated the expected drop in funding and the impact on those currently served by Medicaid.

According to a recent report by the Kaiser Commission on Medicaid and the Uninsured, North Carolina would lose nearly 40 percent of its federal Medicaid funding over the next 10 years, if the U.S. House-passed plan went into effect. The $61 billion drop in funding would be the 11th highest percentage decrease in federal Medicaid funding in the nation. In the year 2021, North Carolina would receive only about half – 49 percent – of the federal spending on Medicaid that we can expect under current law.

Under the proposal, Medicaid enrollment in North Carolina would drop by 50 percent by 2021, assuming current spending per enrollee and cuts spread evenly across all groups. If you consider that the disabled and the elderly might be spared the cuts, then the burden would have to fall disproportionately on children and non-disabled adults.

Beyond eligibility cuts, Medicaid services for children could also be on the chopping block. Currently, children enrolled in Medicaid are guaranteed preventive care and necessary follow-up treatment and services. The proposed changes would eliminate these protections for children, in addition to repealing the “maintenance of effort” protections that currently prevent states from rolling back Medicaid eligibility for children, parents, the disabled and others. This would allow state policymakers to decide, for example, to allow preventive care visits for children but to eliminate coverage for follow-up treatment or specialized services.

The changes would also pertain to the Children’s Health Insurance Program (CHIP), which insures children in low-income families. North Carolina could choose to cut back or even completely eliminate its CHIP program.

Medicaid and Health Choice (North Carolina’s CHIP program) currently insure over one million children in North Carolina – nearly half the child population of the state. They are highly successful public programs that have together brought the uninsured rate for children down.

The decrease in federal Medicaid spending would also be a blow to North Carolina’s economy. An article in the North Carolina Medicaid Journal found that in 2003, Medicaid supported 182,000 jobs in North Carolina. Federal Medicaid spending has only grown since then.

North Carolina’s hospitals would also lose out. By 2021, federal and state Medicaid payments to hospitals in North Carolina would have fallen by 44 percent. North Carolina hospitals would lose $2.7 billion in 2021 alone.

The House plan is short-sighted and overly simplifies the complexities of the Medicaid issue. Changes are also in the air for other big entitlement programs – namely Medicare and Social Security – but both of those programs have large, vocal, voting constituencies. The populations served by Medicaid are not so politically active, and there is fear that they will end up bearing the brunt of the funding cuts.

Now it’s the U.S. Senate’s turn to consider the issue. We must call on them to be more reasonable.

The Kaiser report is available online at:

Mandy Ableidinger is the Director of Policy and Budget Analysis at Action for Children North Carolina.