Why Are North Carolina Republicans Expanding Obamacare?

T he state legislative season is in full swing, following the status quo–like results of the 2022 elections.

Congress is divided and unlikely to accomplish much until at least 2025 or cut many deals with President Biden. From a national perspective, the prophesied “red wave” turned into a red ripple.

But election results for conservatives were not uniform across the country, especially if you dig into the state level. Bold, free-market-friendly leadership was vindicated and advanced once again in my home state of North Carolina. Republicans won both state-supreme-court races, regained a veto-proof supermajority in the state senate, and came within one vote of securing a three-fifths supermajority in the state house.

North Carolina has been a leader in enacting free-market reforms at the state level that are improving people’s lives. The past decade’s tax reforms have reduced the burden of government and simplified the filing process for millions of Tar Heel families. Expansion of school choice has created opportunities for thousands of students in the state, which has become particularly important in the wake of Covid-19.

With this record of policy success, large Republican majorities in the general assembly, and no pending elections, the March 2 announcement from state legislative leaders that they had reached an agreement on expanding Medicaid was quite a surprise around Raleigh. The state house passed Medicaid-expansion legislation with a 96–23 vote (all “no” votes were Republicans) on February 16. After the announcement of a deal, the senate endorsed new Medicaid-expansion language with a 43–2 vote (both nays were Republicans).

In addition to strong majorities in both legislative chambers. Republicans have leaders with long tenures — senate president pro tempore Phil Berger is the country’s longest-tenured state legislative leader, and house speaker Tim Moore is the longest-serving speaker in state history. So, with this amassed political power, why are these conservative Republicans approving Obamacare’s Medicaid expansion?

As President John Adams said, “Facts are stubborn things,” and the facts on the policy side of this discussion have not changed in the last decade.

The Obama administration promised states that Washington would pick up 100 percent of the expansion costs for the first three years and then 90 percent after that — but how reliable is this guarantee from a federal government that is $31 trillion in debt, a significant portion of which is due to Medicaid? Moreover, unforeseen costs have been a constant problem for Medicaid.

For example, Medicaid expansion in Louisiana was expected to cost about $1.4 billion per year. Instead, it has cost Louisiana taxpayers an estimated $3.1 billion per year — more than twice the Legislative Fiscal Office’s original estimates, according to the Pelican Institute for Public Policy.

A 2020 study by the John Locke Foundation found that Medicaid expansion in North Carolina would create a significant gap in the state budget. This funding gap of $119.3 million to $171.3 million in the first year alone would have to be made up through new state appropriations, increased taxes on managed-care plans, or higher taxes on providers.

Medicaid expansion would hurt the most vulnerable North Carolinians. Medicaid is a program meant for the most disadvantaged residents. However, because of Medicaid’s low doctor-reimbursement rates, patients already have a tough time getting a doctor’s appointment, contributing to the program’s shockingly poor health outcomes. The expansion would add thousands and thousands of able-bodied, childless, working-age adults to Medicaid, which would further exacerbate the problem of access to quality care for the neediest North Carolinians.

North Carolina’s health-care system is not Shangri-La. Our health-care sector has a nursing-labor shortage, and overregulation has caused severe problems with access to care. North Carolina is one of 39 states with Certificate of Need (CON) laws that prevent health-care providers from opening new facilities or expanding certain services without the approval of state regulators. While the Medicaid agreement between state legislative leaders changes CON laws, it repeals only four of 27 regulated items and provides regulatory relief on three more. According to the Mercatus Center, the Old North State has the second-highest number of CON laws, leaving North Carolina short of critical needs such as hospital beds and medical-imaging services.

In other words, North Carolina has a problem with access to care. Providing government insurance to an estimated 600,000 more residents, which they won’t be able to use, is unhelpful.

Medicaid-expansion supporters also point to the “infusion” of cash that will come to rural hospitals under consistent threat of closure. While this opinion is well-meaning, it ignores the fiscal irresponsibility of relying on federal (read: taxpayer) money and the more cogent fact that rural hospitals have continued to close in states that have already expanded Medicaid, such as Arkansas, Kentucky, and Pennsylvania. Rural-hospital closure has become such an issue in Pennsylvania that Governor Josh Shapiro, when he was a candidate, called it a “crisis of access.”

Facts are stubborn things. Medicaid expansion will not improve North Carolina’s health-care system. Medicaid will not save rural hospitals, and expansion will cause longer wait times for people already in the safety net. These facts have not changed since Obamacare was passed, but the political calculations, notably after congressional Republicans failed to repeal and replace Obamacare, have adjusted in state legislatures.

Now, state legislators are playing a risky game of Let’s Make A Deal with North Carolina’s Democratic governor, Roy Cooper.

Obamacare expansion via Medicaid is a shell game. It’s a bad deal for taxpayers and a bad deal for North Carolina’s economically disadvantaged families. I wish state lawmakers would remember that caring for the poor isn’t the same thing as taking money from the federal government to lock more people into Medicaid.