North Carolina stakes its own course on Medicaid

By Scott Mooneyham | Mar 11, 2013

RALEIGH — Gov. Pat McCrory followed through on his promise, recently signing  legislation that has North Carolina opting out of federal Medicaid expansion.

McCrory again backed up the decision by saying that he could not justify expanding a health insurance program that is already beset with waste and other problems.

The signing prompted more of the same from the left and right — dire predictions and hardy applause, respectively.

Those dire predictions focused not only on the uninsured, but on a health care economy dependent on the billions of dollars that flow through government programs Medicaid and Medicare.

The predictions include one from a N.C. Institute of Medicine study that the state will not see 25,000 jobs that otherwise would have been created.

The truth is that no one knows exactly what the effects will be. Claims, from either left or right, that some specific outcome will result ought to be discounted.

The health care economy, with its strange brew of public and private actors and revenue sources, is simply too complex to come to definitive conclusions about how the decision might play out.

Still, North Carolina political leaders, by staking out a course different from most states, are taking a substantial risk that could have negative effects on the economy.

Conservatives want to discount that risk, citing their own academic experts who either skip over relevant information or want to turn the topic into a larger ideological battle about taxes and government growth.

There is nothing wrong with believing in market-based health care reform.

But academics with a long record of wanting to see Medicaid and Medicare completely unraveled in favor of  a system where there are no third-party payers, either government or employers, can hardly be credited as unbiased observers on whether Medicaid expansion will produce immediate positive or negative effects on the economy.

Right now, none of those champions of market-based reform, with an honest accounting of their ideas, could win an election as dog catcher.

Their notions about insurance "crowd out," that large portions of Medicaid expansion would go to cover people already privately insured, or that new federal health care subsidies will make up for the decision not to expand Medicaid, need to be considered in that context.

A more independent look at the issue, from the American Academy of Actuaries, concluded last fall that states which block  Medicaid expansion will see significant numbers of people who otherwise would have been covered fail to qualify for the subsidies.

The group also found that some larger employers who pay lower wages could be penalized by the decision.

There is also the little inconvenient fact that the Medicaid expansion — not happening in North Carolina — will be paid for with Medicare cuts — will happen in North Carolina.

You don't need to be an economist to figure that out.

None of that means that anyone knows exactly what the economic effects will be.

We will eventually.