How much would it cost North Carolina to insure someone via Medicaid expansion?

To summarize yesterday’s post, if North Carolina undertook the Medicaid expansion, the impact on State expenditures from 2013-2022 would be (based on KFF/Urban Institute study):

  • Reduce State spending on uncompensated care by $1.350 Billion (cumulative savings over 10 years)
  • Increase State spending via North Carolina’s share of the expansion by $3.075 Billion (cumulative, 10 years).
  • This is a net increase in State spending of $1.725 Billion over the 10 years

A key policy question is always is the net increase in State spending worth it?

The most direct benefit is providing people with Medicaid who would otherwise be uninsured (not getting into economic multiplier effects, but someone else could look at this) and the study provides detailed analysis of this question for 2016. For North Carolina, the math of a full Medicaid expansion goes like this:

  • 2016 State expenditures would increase by $39 Million (Table 4)
  • Reduction in number of uninsured due solely to Medicaid expansion = 377,000 (Table 2)
  • The total Medicaid enrollment increase in 2016 is 478,000 under expansion (Table 1). This includes increases in enrollment that would take place regardless of expansion (a mix of aging which yields more dual eligibles, crowd in of Medicaid eligible not signed up but who were already eligible for Medicaid who sign up for Medicaid due to more attention on these issues, and crowd out from private insurance).
  • State cost per person covered by Medicaid who otherwise would be uninsured in 2016 is $103.45 ($39 Million divided by 377,000).
  • Note that this is not the total cost of insuring the person via Medicaid, because most of the cost is paid by the federal government. That is the point of this aspect of the ACA, to make it as financially easier for States as possible to cover people via Medicaid

$103.45 in extra State spending in 2016 per person who is newly covered so that 377,000 of our fellow citizens will be covered by Medicaid instead of being uninsured.

I get that many people don’t like President Obama, and they thought he would lose the last election and that the ACA would be repealed. That didn’t happen. And I get it is hard for Republicans who are now at the apex of their power in North Carolina to take the Medicaid expansion given the words they have spilled about it. However, they need to grow up, and govern our State in the practical tradition that has long defined North Carolina.

Nothing about taking the Medicaid expansion forestalls future reform efforts. I even wrote a book that suggests a long term strategy of buying low income persons who are not dual eligibles or disabled into private insurance, which makes my my liberal friends nuts. Expansion doesn’t forestall my brilliant ideas, nor yours, but it will start the process by which our State can develop a North Carolina specific health reform strategy. We will never be done with the job of health reform, but we need to get started.

About Don Taylor
Professor of Public Policy at Duke University (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute). I am one of the founding faculty of the Margolis Center for Health Policy, and currently serve as Chair of Duke's University Priorities Committee (UPC). My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

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