Here's what you need to know about North Carolina Medicaid, a big sprawling program that looms large in the state budget and will be in the news in coming months.

By Sarah Ovaska-Few

Medicaid – the $14.6 billion health care program managed by the N.C. Department of Health and Human Services – is one of the state’s biggest expenditures and funded with a mix of federal and state dollars.

With size, however, comes complexity, and the particulars of the Medicaid program and how it affects the low-income seniors, disabled persons and children and their families can often become lost among the figures about growth and cost.

Here’s a closer look at the Medicaid program, how it works and who uses it.

What is Medicaid?

Medicaid is a federally mandated but state-managed program, meaning that North Carolina runs the day-to-day particulars while the federal government offers guidance on what must be offered, and who it must be offered to.

The program is not open to everyone who struggles financially in North Carolina. It was designed to serve as a safety net for the nation’s most vulnerable citizens and covers children and their families, seniors and disabled persons whose income are below certain thresholds.

Who pays for Medicaid?

Taxpayers along with the federal and state government fund the nearly $15 billion mandated health care coverage program through a mix of federal and state dollars. The feds pick up most – 67 percent – of the tab, according to a February presentation by the N.C. General Assembly’s Fiscal Research Division.

North Carolina’s share worked out to about $4 billion in the 2017-18 fiscal year.

Who uses it?

Many North Carolinians depend on Medicaid. With nearly 2.1 million people in the state enrolled in Medicaid, that means one out of every five people in the state depends on the federally mandated health program.

The largest category of users is kids – with children making up 53 percent of the total enrollment.

More women than men are on the program, with women and girls making up 57.7 percent of total enrollments, according to a DHHS summary of Medicaid in the 2017-18 fiscal year.

Eligibility is largely dependent on age, disability status and income – ranging from 100 to 210 percent of the federal poverty level (FPL), or $25,750 to $54,075 for a family of four, with different eligibility requirements for different categories.

The eligible categories for Medicaid and N.C. Health Choice, a supplemental health care plan for struggling families who make too much to qualify for Medicaid, include:

Aged, blind and disabled

Pregnant women

Foster and many adoptive children, including former foster care children through age 25

Newborns and children (up to age 18)

Some low-income families with children

Family planning (access to reproductive and contraceptive services)

Working disabled

Breast and cervical Cancer patients

Medically needy individuals

What is happening to Medicaid enrollment?

Like everywhere in the country, the numbers of people eligible for Medicaid are increasing, according to figures presented at a February legislative hearing.

But most of North Carolina’s increase in the number of enrollees is due to growth in the family planning program, which is available to men and women making 196 percent of the federal poverty level, that is less than $24,480 for an individual, and covers reproductive health and contraceptive services with the goal of avoiding unintended pregnancies. These beneficiaries cost very little, only about $5 a month.

In comparison, people with disabilities and low-income seniors cost an average of $16,152 each year.

It costs $2,688 to cover a child in the Medicaid system for a year, according to estimates from the legislature’s fiscal research division.

North Carolina also operates an extension of the Medicaid program known as the State Children’s Health Insurance Program, a way of getting more children in low-income families insured since the mid-1990s when it first passed Congress. SCHIP in North Carolina, known as Health Choice, is available to children from ages 6 to 18 in households with annual incomes between $34,248 and $54,075 (for a family of four).

There were 106,333 children enrolled in N.C. Health Choice as of February.

For decades, the federal government paid about 75 percent of the costs of Health Choice, but in 2015, Congress voted to bump up that reimbursement so that in North Carolina, the feds have effectively paid for the entire program since then.

But that enhanced rate is phasing down in the coming year, with it going away entirely in October 2020. At that point, North Carolina will again pay for about a quarter of these children’s health care.

What does Medicaid expansion mean?

A key piece of the 2011 Affordable Care Act initially required states to extend Medicaid coverage to low-income adults making at or less than 138 percent of the federal poverty level ($17,236 for an individual in 2019) — a population not covered by the safety net program.

But a 2012 U.S. Supreme Court decision found that the mandated coverage expansion stepped over the line and that the decision to expand is left up to the states themselves. Currently, 36 states and Washington, D.C. have opted to expand Medicaid, a move that brought in significant federal dollars to pay for most of it, according to the Kaiser Family Foundation.

North Carolina is one of the 14 states that has not expanded Medicaid coverage. It’s a hot topic in the state, however, with Gov. Roy Cooper, a Democrat, pushing hard for expansion. The Republican-led legislature has not shown the same enthusiasm, though a proposal with work requirements has garnered some support in the state House of Representatives. The state Senate released its budget proposal earlier this week, without any mention of expanding Medicaid.

What does this switch to Medicaid managed care mean?

North Carolina’s Medicaid system currently uses a fee-for-service system where the state largely pays for each service a Medicaid recipient uses. But it is in the midst of moving to managed care – where the state will pay five managed care groups a set amount each month to handle all of an individual’s health care needs. If the patients use less care, the providers can keep some of that money, if the patients need more care, the providers eat the cost.

Some folks worry that this will be a repeat of the HMO system of the 1990s that saw a lot of patients being denied care. But health care leaders argue now the insurance companies running the transformed Medicaid system will be subject to quality benchmarks that will keep them from providing low-quality care.

It will be a big change, and the first groups of Medicaid recipients in sections of the Triangle and Piedmont are scheduled to switch over to the new managed care system in November, with the rest of the state to follow in 2020.

About a half-million Medicaid users with complex behavioral health needs will transition to a tailored managed care plan after that.