The Business Case for Medicaid Expansion

How can North Carolina energize its business climate with thousands of new jobs, millions in new consumer spending, and lowered health costs for all? Medicaid expansion.

As of 2019, 36 states have expanded Medicaid and the data shows promise for a successful expansion in our state with benefits to North Carolina businesses and the economy as a whole.

In March, Governor Cooper advocated for Medicaid expansion in his proposed budget. He faces an uphill battle: In 2013, the General Assembly passed a law forbidding Medicaid expansion in our state.  

North Carolina has about 500,000 citizens who would be eligible. These are people who make too much to qualify for traditional Medicaid, but earn too little to receive subsidies to purchase affordable insurance through the Affordable Care Act (ACA) marketplace.

One of the chief selling points of Medicaid expansion has been that the federal government pays the lion’s share with 90% of the costs covered in each state.* However, skeptics have expressed concern that this funding could be reduced, that enrollment numbers could be higher than projected, and that extending this benefit would disincentivize work.

As the number of states expanding Medicaid continues to rise and with NC taxpayers already paying for Medicaid expansions in other states, it’s time for North Carolina to consider it.

Here is a look at some of the ways expansion could benefit NC businesses and the economy:

  1. Gain Jobs: North Carolina could add as many as 40,000 jobs from Medicaid expansion.  Two states offer a good prediction of our state’s success: Michigan and Ohio each expanded Medicaid in 2014.  With similar populations and numbers of Medicaid expansion enrollees, they both saw significant employment gains. MIchigan gained 30,000 new jobs with 85% of those jobs in the private sector and Ohio gained 54,000 jobs.

  2. Lower Healthcare Costs: About 18% of NC residents are uninsured. Uncompensated care provided at hospitals across the state raises health care costs for all. With Medicaid expansion, we can reduce this burden and also benefit consumers who buy their insurance through the ACA marketplace. A study of adjacent counties in expansion and non-expansion states found about a 7% reduction in the premiums of those states that expanded Medicaid.

  3. Boost Consumer Spending: Montana, a state with a tenth of NC’s population, had $400 million injected into their economy after enacting its Medicaid expansion in 2016. With money freed up from healthcare spending, consumers have money to pay for other goods and services.

  4. Increased Employment and lowered dependence over time: Ohio has seen a 15% increase in employment among those who enrolled through their program. The most common reason for not re-enrolling has been that recipients landed a job offering health benefits. Governor Kasich has also touted the expansion’s role in addressing the opioid crisis and helping those affected to get treatment and get back to work.

  5. Use data and studies of other states’ implementations to our advantage: With four years of data and 36 states’ experiences to learn from, North Carolina can pick and choose the best strategies and avoid pitfalls.

Other states’ experiences will help us plan better and also offer ideas for points of compromise.

  1. Help employers who don’t provide medical benefits: For employers with less than 50 employees who are not required to provide medical benefits under ACA, they could see their employees benefit from this expansion.

  2. Improve employee performance: In Ohio, 84% of employed enrollees said that Medicaid expansion helped make working easier. With less stress from untreated health conditions and unpaid medical bills, employees are more productive and less prone to missing days of work.

With ACA continuing to be the law of the land and with almost 75% of states enacting Medicaid expansion, it is time for North Carolina to consider it anew. We encourage the General Assembly to take up this issue again and find points of compromise for the benefit of NC businesses and our communities.