Jon Ostendorff

ASH

ASHEVILLE – North Carolina will miss $51 billion in federal payments over the next decade unless lawmakers expand Medicaid under Obamacare, according to a new report.

Hospitals in the state would get $11.3 billion of that amount under an expanded system, the Robert Wood Johnson Foundation and Urban Institute say.

The report comes as hospitals across the nation are laying off workers. The health care sector cut 52,638 jobs nationally last year, making it second only to the financial industry in layoffs.

Mission Health System in Asheville has warned of possible layoffs this year as it restructures.

The new report also comes as lawmakers in the Republican-dominated General Assembly face an election in November.

North Carolina joined two dozen other states last year in not expanding Medicaid, which covers the poor. The expansion would have helped offset the declining reimbursement rates under President Barack Obama’s Affordable Care Act.

Democrats have made Medicaid expansion a campaign issue, though observers say their push is unlikely to get traction this year or next year in the state legislature. Republicans largely control the state through electoral districts they created four years ago. The districts, for the most part, isolate Democrats in urban areas.

Republican Gov. Pat McCrory’s office said expansion is off the table, for now.

“At this time no, we will not expand Medicaid, but the governor will keep the door open for all options in the future,” said Ryan Tronovitch, McCrory’s deputy communications director. “The governor’s goal is to address the issues with the current system before expanding it.”

No plans to expand

Republicans, generally, are against expansion because they believe the Medicaid system is broken.

They also fear the federal government won’t continue to fund the expansion and leave the state to cover added costs.

McCrory has pointed to a staggering 1.1 million emergency room visits and $13 billion spent annually on the program.

Part of the problem with Medicaid, Republicans and health providers say, is recipients increasingly seek care in the more expensive ER setting because family doctors won’t accept them. Family doctors lose money, for the most part, on Medicaid claims.

Sen. Ralph Hise, R-Spruce Pine, to whom Republican leaders in the Senate look as an expert on Medicaid, says the Robert Wood Johnson Foundation report is likely an exaggeration.

The nonprofit foundation focuses on health policy.

Hise said the state would miss out on about $18 billion over the decade. It would have to spend up to $2 billion a year of its own money to get the payments, he says. The expansion does not cover all costs. Administrative costs, he said, are still a 50-50 split with the state.

Expansion starts with 100 percent funding for services and drops to 90 percent by 2020. But, Hise said, if the federal government changed the plan, the state could pay much more.

And, he said, expansion would make Medicaid the largest health insurance provider in the state — bigger even than Blue Cross Blue Shield.

Since its rates are lower than private insurance, that would be bad for the economy and health care, he said.

Hise said hospitals are better off when the economy creates jobs and more people have private insurance.

He also wonders how many people would drop the private insurance they already have and move on to Medicaid. Private insurance costs increased dramatically in North Carolina last year as Obamacare ended some plans. Forbes put the increase at a whopping 136 percent.

Hise said, nationally, the average has been 50 percent of people moving on to Medicaid.

“To do the expansion, you are having to compete with education and transportation,” he said. “That would ultimately be a reduction services to provide this.”

What would Wall Street do?

Dr. Ron Paulus, CEO of Mission Health System, makes his point in support of expanding Medicaid this way:

“Assuming a functioning system at baseline, it’s more than a 10-to-1 return, which is why I always say that no venture capitalist would ever turn down that offer,” he said this week.

The foundation report says states would have to spend $1 to get $13.41 from the federal government in Medicaid money.

The 10-year cost to expand in North Carolina is $3.1 billion, according the foundation’s report found.

Expansion would have covered an additional 400,000 people.

Duke LifePoint, which recently bought the hospitals in Haywood, Jackson and Swain counties, referred questions to the North Carolina Hospital Association.

The association, this year, has focused on reform.

“But we are making very clear that the effect of not having health insurance, in addition to all the other cuts that are happening, is having profound effects on hospitals,” said Hugh Tilson, association executive vice president.

Mission Health predicts a $500 million decrease in payments over the next decade as more people get medical care outside hospitals and reimbursements decline. Seventy-five percent of Mission’s patients are covered by Medicare and Medicaid.

Included in that amount is $228 million the company says it will lose under the Affordable Care Act. That hit would have been lessened by Medicaid expansion.

The not-for-profit company is restructuring to save $42 million. The system has six hospitals and more than 10,000 employees in Western North Carolina.

Sen. Terry Van Duyn, D-Asheville, doesn’t expect expansion in November or in the long legislative session starting in January.

The debate now is whether to give Medicaid to health services providers, like Mission and other hospital systems, or contract with private companies to run the program, she said.

Hise, the Republican from Spruce Pine, agreed. The Senate plan, he said, called for private companies and health systems getting Medicaid dollars and managing them on their own. The House plan wanted only health providers in the game.

Hise said the state is better off giving the program to a company or health system.

“They could manage the patient care to reduce cost in ways the state is just not able to do,” he said.

Van Duyn countered. She said officials in other states, like Florida, are not sure they are saving money with moving Medicaid management out of state offices.

Chris Cooper, a political scientist at Western Carolina University, said the economic argument probably won’t move Republicans. “There is going to have to be more to it,” he said. “Those folks are going to have to pull their money from the Republican Party and threaten no re-election.”

Expansion impacts

The 24 states that did not expand Medicaid will miss out on $423.6 billion in funding over the next decade. Hospitals in those states will miss out on $167.8 billion.

Here’s an look at the South:

• North Carolina: $51 billion

• Florida: $88.7 billion

• Georgia: $46.5 billion

• Mississippi: $19.3 billion

• South Carolina: $22 billion

• Tennessee: $30.2 billion

• Texas: $99.9 billion

• Virginia: $20.9

Source: Robert Wood Johnson Foundation/Urban Institute.