- North Carolina has thus far failed to expand Medicaid, and is one of 11 states where a “coverage gap” still exists.
- New state budget calls for a legislative committee to study Medicaid expansion in 2022.
- North Carolina’s Medicaid program transitioned to a managed care model in July 2021 after several delays.
- Governor Cooper has long pushed for Medicaid expansion, but GOP lawmakers oppose expansion.
ACA’s Medicaid eligibility expansion in North Carolina
North Carolina is one of 12 states that has not yet expanded Medicaid under the Affordable Care Act (ACA). If Medicaid is expanded in North Carolina, it was estimated that 400,000-626,000 uninsured non-elderly residents would become newly eligible for coverage. Under current rules, just over 2.7 million North Carolina residents were enrolled in Medicaid as of early 2022.
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Gov. Roy Cooper, who took office in January 2017, began working to expand coverage as one of his first tasks as governor. State lawmakers have thus far blocked his efforts, but Cooper’s first budget proposal called for the expansion of Medicaid and he continues to push for it, despite legislative roadblocks.
New state budget calls for a committee to study Medicaid expansion
Medicaid expansion has long been a sticking point between Gov. Cooper and Republicans in the state’s legislature. As described below, this has prevented budget agreements over the last few years. In late 2021, Cooper signed a budget for the first time since 2018. Although it does not include a provision for Medicaid expansion, it does call for a joint legislative committee to study Medicaid expansion and make recommendations for legislation. North Carolina’s 2022 legislative session doesn’t begin until mid-May.
Under the American Rescue Plan, states that newly expand Medicaid can get additional federal Medicaid funding for their non-expansion population. Only two states — Oklahoma and Missouri — had taken advantage of this as of early 2022, and both were already slated to expand Medicaid in 2021 under the terms of ballot measures that voters had approved in 2020.
The impact of refusing Medicaid expansion
The ACA called for Medicaid expansion in every state, covering all legally-present residents with incomes up to 133% of poverty (138% with the built-in five percent income disregard). But in 2012, the Supreme Court ruled that states could not be penalized if they didn’t expand Medicaid, and North Carolina has so far chosen that path.
Because Medicaid was expected to be available for all low-income residents nationwide, the subsidies to purchase private plans in the exchange were not designed to apply to people living below the poverty level, which is why hundreds of thousands of North Carolina residents who live in poverty are in the coverage gap — unable to afford private health insurance, and ineligible for Medicaid because it hasn’t been expanded.
The federal government paid the full cost of expansion through 2016. States now pay 10% of the cost. In North Carolina, the state’s cost to expand Medicaid is estimated at between $210 million and $600 million per year. But Medicaid expansion would likely result in an overall net improvement in the state’s budget, as explained here.
Cooper and other Medicaid expansion advocates have long noted that the state is missing out on billions of federal dollars by rejecting Medicaid expansion. Tax dollars from North Carolina are being used to pay for Medicaid expansion in other states, while North Carolina hospitals provide about $1 billion in uncompensated care each year (a figure that would decline sharply if Medicaid were expanded and those patients had Medicaid coverage instead of being uninsured).
Cooper has also noted that expanding Medicaid would create 40,000 jobs in North Carolina, and would help keep rural hospitals open.
North Carolina has not accepted federal Medicaid expansion
- 2,706,086 – Number of North Carolinians covered by Medicaid/CHIP as of January 2022
- 621,000 – Number of additional North Carolina residents who would be covered if the state accepted expansion
- 212,000 – Number of people who have NO realistic access to health insurance without Medicaid expansion
- $5.9 billion – Federal money North Carolina is leaving on the table in 2022 by not expanding Medicaid
Who is eligible for Medicaid in North Carolina?
In addition to those with low incomes who are aged, blind, or disabled (receiving SSI benefits), the following populations are eligible for Medicaid in North Carolina (these income limits include a built-in 5% income disregard used with MAGI-based Medicaid eligibility determinations):
- Children aged 0-5: 215% of the federal poverty level (FPL)
- Children age 6-18: 138% of FPL
- Pregnant women: 201% of FPL
- Adults caregivers of children or adult relatives: 45% of FPL
Childless non-disabled adults are not eligible for Medicaid regardless of how low their income is.
How does Medicaid provide financial assistance to Medicare beneficiaries in North Carolina?
Many Medicare beneficiaries receive help through Medicaid with the cost of Medicare premiums, prescription drug expenses, and costs that aren’t covered by Medicare – such as long-term care.
Our guide to financial assistance for Medicare enrollees in North Carolina includes overviews of these benefits, including Medicare Savings Programs, long-term care coverage, and eligibility guidelines for assistance.
How do I enroll in Medicaid in North Carolina?
- You can apply online at ePass, a website run by the North Carolina Department of Health and Human Services.
- You can also apply in person at the County Department of Social Services office in your home county. DHHS provides a list of documents that you’ll need to take with you if you go to a county office to apply for Medicaid.
- You can print the paper application, complete it, and then mail it to your county’s Department of Social Services office.
- You can apply online through HealthCare.gov or call them at 1-800-318-2596 to apply over the phone (use this option if you’re under 65 and don’t have Medicare)
Medicaid enrollment is available year-round.
North Carolina Medicaid enrollment numbers
Although North Carolina has not yet expanded Medicaid, total enrollment in the state’s Medicaid and CHIP programs grew by 32% from the fall of 2013 through July 2021. As of January 2022, Medicaid enrollment in North Carolina was 2,706,086.
North Carolina Medicaid history
North Carolina was one of the last states to adopt the Medicaid program: Only two states took longer to implement original Medicaid coverage. The first states to provide Medicaid did so in January 1966, and North Carolina’s program didn’t become effective until January 1970.
Move to Managed Medicaid
On September 22, 2015, North Carolina lawmakers passed House Bill 372, known as the Medicaid Transformation and Reorganization Act, to privatize the state’s Medicaid system; then-Governor Pat McCrory signed it into law the next day. Most states were already using Medicaid managed care systems for the majority of their enrollees, but the idea remains controversial.
H. 372 called for the privatization of Medicaid in North Carolina, switching to a model that involves the state contracting with for-profit managed care companies. These managed care organizations, called Prepaid Health Plans (PHPs), will receive a per-patient payment from the state Medicaid system, and will be responsible for any cost over-runs beyond what they receive up-front from the Medicaid system. This provision is designed to encourage innovation on the part of carriers and providers, in order to keep patients healthy and reduce overall healthcare costs (as opposed to the traditional fee-for-service model that pays providers each time a service is provided, regardless of overall health outcomes or costs).
The bill was contentious, and votes were divided mostly along party lines, with most Republicans supporting the measure and most Democrats opposing it. Opposition to the legislation primarily revolved around the introduction of private, for-profit health insurance carriers to the NC Medicaid system. Opponents predicted that change would result in higher administrative costs and could incentivize carriers to withhold care from Medicaid patients in order to curtail costs. They also decried the bill for its focus on privatization of the existing system, without an effort to expand Medicaid under the ACA.
Governor Roy Cooper, who was North Carolina’s Attorney General at the time, said that “turning to MCOs is a risky move.”
Medicaid managed care repeatedly delayed; took effect in mid-2021
Since the federal government funds about two-thirds of North Carolina’s Medicaid system, CMS had to approve the details of H. 372 before it could be implemented. The state sent its 1115 waiver proposal to CMS in June 2016, and the approval process was expected to be lengthy. The state amended the proposal in September 2017, seeking to add a variety to changes, including a potential expansion of Medicaid, with a work requirement, if lawmakers were to approve the “Carolina Cares” Medicaid expansion proposal that was introduced in the 2017 legislative session. [The 2017 legislation was not successful, but a similar bill was introduced in April 2019 (House Bill 655).]
North Carolina’s waiver proposal was approved in October 2018, and is effective from 2019 through 2024. Initially, it was to take effect in January 2019, but that was delayed quite a bit.
The state had originally planned to have the managed care transition take effect in November 2019, with a phased-in transition (Regions 2 and 4 switching to managed care in November 2019 – with enrollment beginning in July 2019 – and the rest of the state joining them in February 2020, with enrollment beginning in October 2019).
The rollout was further delayed over the budget standoff described below, and the earlier enrollment window and November 2019 effective date were scrapped, with the whole state scheduled to transition to Medicaid managed care in February 2020 instead.
And, then the February 2020 transition was nixed when the Gov. McCrory and the legislature failed to agree on a budget during the 2019 General Assembly session. Implementation and open enrollment in the managed Medicaid plans was halted following an announcement of the indefinite delay.
In June 2020, North Carolina legislators again authorized the transition from fee-for-service to managed Medicaid. They set a new effective date of July 1, 2021.
North Carolina did transition to NC Managed Medicaid Care on July 1, 2021. You can find more information about this transition here. The selection of insurers to serve as managed care providers was contentious, and involved a lawsuit by insurers who did not win contracts. That was eventually settled by early 2022 when the insurers dropped their appeals.
History of Medicaid Expansion
Expansion of Medicaid in North Carolina has been a topic of much debate by the state’s politicians, policymakers, and advocacy groups.
Expansion discussion during McCrory administration
Former Governor McCrory said that he was open to the idea of Medicaid expansion, but only after they “fix the current system.” This was a reference to the legislature’s Medicaid reform efforts, primarily aimed at transitioning to Medicaid managed care. McCrory made it clear that he would want some sort of work requirement tied to Medicaid eligibility for able-bodied adults, but at that point, no states had successfully petitioned the Obama administration to allow a work requirement and still receive federal funding for Medicaid expansion. (This changed under the Trump administration, which approved Medicaid work requirements for several states. But all of those approvals were revoked by the Biden administration.)
In January 2015, Brad Wilson, President and CEO of Blue Cross Blue Shield of North Carolina, threw his weight behind the push for Medicaid expansion, noting that “expanding Medicaid is the right thing to do for North Carolinians.”
Thom Tillis, who was sworn in as US Senator for North Carolina in January 2015, used to be strongly opposed to Medicaid expansion. But in October 2014, just two weeks before the election, he noted that “we’re trending in a direction where we should consider potential expansion… I would encourage the state legislature and the governor to consider it.” (Tillis defeated incumbent Democrat Kay Hagan in the 2014 election; Hagan supported Medicaid expansion).
By late July 2015, McCrory still had not revealed his proposal for Medicaid expansion, and advocates had begun to tire of waiting, pushing the Governor to reveal his plan or admit that he didn’t have one. And State Rep. Ken Goodman (D, Richmond) — a Medicaid expansion supporter — questioned whether McCrory would have the political clout to expand coverage anyway, given S.B.4 (which prevents the governor from unilaterally expanded Medicaid) and the fact that the majority of the state legislature was opposed to Medicaid expansion.
In September 2015, the NC Justice Center introduced radio and digital advertising calling on Gov. McCrory to reveal his plan for Medicaid expansion, noting that he said the holdup was the unknowns surrounding King v. Burwell earlier in the year (the outcome of that case was decided in June 2015, with the Supreme Court ruling that ACA subsidies were legal in every state, and paving the way for states to utilize private health plans for their Medicaid-eligible population).
By late 2015, however, McCrory had mostly walked back his support for Medicaid expansion, explaining that any expansion proposal would have to wait at least three years, while other Medicaid reforms are made in the state (see details above, regarding the transition to Medicaid managed care that eventually took effect in 2021). McCrory and President Obama had “irreconcilable differences” regarding expansion, and McCrory basically tabled the idea for the remainder of his time in office.
The governor’s race in North Carolina was one of the tightest in the country in 2016, and Cooper won by a razor-thin margin that was contested for weeks by McCrory. McCrory eventually conceded in early December.
Expansion discussion during Cooper administration
On January 4, 2017, Gov. Cooper announced his intention to file an amendment to North Carolina’s Medicaid plan by the end of the week, expanding coverage as called for in the ACA. On Friday, January 6, he notified CMS that his proposal was posted on the North Carolina Department of Health and Human Services website for a required ten-day public comment period.
Cooper’s plan was to file an amendment to the 1115 waiver proposal that North Carolina submitted to CMS in June 2016 to overhaul Medicaid without expanding it (as described above, that proposal was ultimately approved in the fall of 2018, albeit without Medicaid expansion). Once filed, Cooper’s amendment would have to have been approved by CMS, and the state would have had to secure the funding to cover their portion of the cost of expansion.
Cooper was asking North Carolina hospitals to contribute the funds that would have been necessary to cover the state’s portion of the cost of expansion (states began paying 5% of the cost of Medicaid expansion in 2017, and that gradually increased until it reached 10% in 2020, where it will remain going forward).
Ultimately, Cooper never filed his proposed amendment with CMS. But Republican lawmakers in North Carolina reacted swiftly to condemn Cooper’s announcement, noting that the state enacted legislation (S.B.4) in 2013 that prevents the governor from expanding Medicaid unilaterally (the legislation blocks any “department, agency, or institution” of North Carolina from expanding Medicaid without the consent of the General Assembly).
In a letter to CMS, Republican leadership from North Carolina’s House and Senate asked CMS to reject Governor Cooper’s proposal on the grounds that it was illegal under S.B.4.
Cooper had said that he didn’t believe S.B.4 applied in this case, as it impeded “the core executive authority of the governor to accept federal funds to look out for the health of the people.” That argument was a long shot, but the stakes were high and Cooper was doing as much as he could to secure coverage for more than half a million of the state’s poorest residents.
A week after Cooper announced his intention to expand Medicaid by amending the pending 1115 waiver, North Carolina House Speaker, Tim Moore and Senate President Pro Tem, Phil Berger, filed a federal lawsuit (naming the NC and federal departments of Health and Human Services as defendants) to block Cooper’s efforts to expand Medicaid without legislative approval. Moore and Berger said that Cooper’s “unconstitutional Obamacare expansion scheme” necessitated “swift legal action.”
Medicaid expansion proponents noted that the lawsuit filed by Moore and Berger was an overreach, and that Cooper’s efforts to expand Medicaid did not require a temporary restraining order, nor were they an issue for a federal court.
However, on January 14, 2017, the day after Moore and Berger filed their suit, a federal judge issued an order blocking CMS from approving Cooper’s proposal for the time being.
Since Cooper never filed his proposed 1115 waiver amendment to expand Medicaid, Moore and Berger dropped their lawsuit in July 2017.
H.655, introduced in North Carolina’s House of Representatives in April 2019, calls for the expansion of Medicaid, albeit with a work requirement as well as premiums equal to 2% of household income (there would be various exemptions available for the work requirement, and premiums would not be assessed if the person has an income below 50% of the poverty level or experiences various hardships that would allow for an exemption). H.655 would also include mandatory participation in wellness programs/preventive care.
All of the primary sponsors of H.655 are Republicans (and they’re the same lawmakers who introduced the “Carolina Cares” legislation in 2017, discussed above). Although GOP lawmakers have historically opposed Medicaid expansion, the addition of premiums and/or work requirements have bought many Republican lawmakers — nationwide — on board with the idea of Medicaid expansion. Most of the cosponsors of H.655 are also Republicans, but the bill did have bipartisan support, with four Democratic co-sponsors (Representatives James Gaillaird, Charles Graham, Lewis Holley, and Brian Turner). H.655 advanced out of the House Health Committee, but was not taken up by the full House (and thus was not considered by the Senate).
Governor Roy Cooper had made it clear that he was prioritizing Medicaid expansion in 2019, and included it in his budget proposal. Republican lawmakers continued their long history of opposition to Medicaid expansion, and Cooper vetoed their budget in June when it didn’t include Medicaid expansion.
Cooper had vetoed budgets before, but Republicans had a supermajority and were able to override his veto. They no longer had a supermajority in 2019, but House Republicans overrode the veto in a surprise vote when most of the Democratic representatives were at a September 11 memorial ceremony and had been told no voting would take place. The Senate did not act on the override before the end of the 2019 legislative session.
Democratic legislators again pushed for Medicaid expansion in 2020, citing increased health risks and the rising number of people who have lost employment-related insurance coverage due to the Covid-19 pandemic. However, expansion was yet again rejected.
The issue has continued to be a point of conflict between Cooper and the GOP-dominated legislature. But as noted above, Cooper ultimately did sign a budget in late 2021. It didn’t include Medicaid expansion, but instead calls for a joint legislative committee to study the issue of Medicaid expansion and make recommendations to the legislature.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.