Why are health care premiums steadily going up?
Gallup polls at the end of 2015 found that 74% of Americans say the amount they pay in premiums had gone up over the past year. While this is up a bit from 2014 (67%), according to Gallup, this is pretty much in line with what they’ve seen reported since 2003. Historically, health insurance premiums always increase. On average, premiums have risen by about 5.8% a year since Obama took office. In the nine years prior to Obama, rates rose at an average of 13.2%. In fact, under the Affordable Care Act, insurers planning to increase their rates by more than 10% must submit their proposals for federal review.
Of course, premiums have gone up in North Carolina. But as our legislators did not agree to a state-led exchange for health care when the marketplace opened, we have less bargaining power to negotiate premium rates. Additionally, because we did not expand Medicaid, sicker individuals and those who are more financially fragile have purchased insurance through the marketplace. Under expansion, many such individuals would be eligible for Medicaid and would receive federal funding to cover their health care costs.
But what if the federal government stops funding Medicaid expansion?
In 2014, additional Medicaid enrollees in each state were funded 100% by the federal government. The funding ratio will now gradually shift to 90% federal funding by 2020. Some have expressed economic concern that if the federal government were to shift on this, the state would be left with a large financial burden.
Since its creation in 1965, the federal government has always provided a match to help states pay for Medicaid. In North Carolina, that match rate is 66%. The federal government has only changed the match rate two times and both times it was to increase the rate during economic downturns. Through the ACA, Medicaid expansion offers an enhanced matching rate to extend Medicaid to all those under 133% of the federal poverty level. Some states have written in provisions to repeal expansion if the federal government were to lower the match below 90% starting in 2020, which would require Congressional action.
North Carolina’s Medicaid program experienced a surplus this year. Isn’t that a good thing for the program?
NC’s Medicaid program has been coming under budget in recent years. But North Carolinians have felt too many shortcomings in state health care coverage to be fooled into thinking a surplus exists. In other words, coming under budget doesn’t mean lawmakers are adequately addressing health care needs across our state.
We are currently seeing savings from flatter enrollment, lower utilization, and improved budget forecasting models over time. What is not reflected in this “surplus” is the growing cost of uncompensated emergency room debt that is faced by individuals without health care coverage and the facilities who treat them — especially in rural areas.
But aren’t there a lot of the doctors who are unwilling to serve more Medicaid patients?
In NC, many of our rural and historically underserved areas have experienced fewer provider options overall. Closing the coverage gap will actually bolster rural hospitals’ ability to remain open, employ health professionals, and generate revenue so that access to health care is improved. North Carolina actually has a very high provider participation rate for Medicaid; NC’s Department of Health and Human Services reported 90% during the Medicaid reform hearings held in April.
North Carolina missed the window to have 100% federal funding of Medicaid Expansion. Why would our legislators choose to expand Medicaid now?
It’s true that our state is one of nineteen who missed out on 100% federally funded expansion. However, that cost has only just started shifting toward the cap, which is a 10% maximum cost to the state for additional Medicaid enrollees. That means that for every one dollar North Carolina spends on providing affordable health insurance to all its citizens, the state will see a minimum nine dollar return on this investment. This cost of investment will be balanced by money flowing directly into our health care sector, stimulating our economy, growing jobs, and tax revenues, and reducing the state’s share of costs for mental health programs and inmate health care. And if all the fiscal benefits aren’t enough, Medicaid expansion in our state would prevent at least 1,000 unnecessary deaths every year by making health care more affordable.
We can point to numerous examples in other conservatively-governed states which expanded Medicaid and are now reporting back on the benefits. To name a few, Arizona experienced a 31% decrease in uncompensated care in hospitals during the first four months of expansion. Michigan reported savings of $180 million in 2014, most due to a drop in demand for community mental health programs. And after Kentucky closed their health care gap, 12,000 new jobs were created, provider revenue increased 26%, and uncompensated hospital services decreased by 55%.
To learn more about supporting Medicaid expansion in North Carolina, contact Liz Millar at liz@ncchurches.org.
