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Research ArticlePolicy Forum

Federal Medicaid Reform

Potential Changes and Impact on North Carolina

Adam J. Zolotor, Berkeley Yorkery and Lauren Benbow
North Carolina Medical Journal January 2017, 78 (1) 14-15; DOI: https://doi.org/10.18043/ncm.78.1.14
Adam J. Zolotor
president and chief executive officer, North Carolina Institute of Medicine, Morrisville, North Carolina
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  • For correspondence: adam_zolotor@med.unc.edu
Berkeley Yorkery
associate director, North Carolina Institute of Medicine, Morrisville, North Carolina
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Lauren Benbow
project director, North Carolina Institute of Medicine, Morrisville, North Carolina
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The future of health care, which has been a contentious issue for many years, now appears to be headed in a new direction following the 2016 elections. The election of Donald Trump combined with Republican control over Congress cements power in the hands of those who have promised major health care reform related to Medicaid, Medicare, and the Patient Protection and Affordable Care Act (ACA). Medicaid is the major source of financing for health insurance for children in low-income households and their parents; Medicaid is also the secondary source of financing for health insurance, after Medicare, for low-income elderly individuals and low-income individuals with disabilities. Medicaid currently covers 1.9 million North Carolinians and accounts for 17% of total state appropriations. Any changes to Medicaid will have a significant impact on North Carolina [1-3].

What Could Medicaid Reform Look Like?

President-elect Trump supports turning Medicaid into a block grant program in order to decrease costs to the federal government and increase states' roles in managing Medicaid [4]. House Speaker Paul Ryan's plan gives states the option of a per-capita allotment or a block grant for Medicaid, which is aimed at encouraging states to innovate, manage care, and utilize Medicaid waiver programs. Per-capita allotment would allocate Medicaid resources to states based on the number of beneficiaries in each programmatic category. Ryan's block grant option provides maximum flexibility in Medicaid design; minimum requirements would remain, such as paying for care for the vulnerable elderly poor and for individuals with disabilities, but other eligibility requirements would be at the discretion of the state [5]. President-elect Trump's nominee for secretary of the US Department of Health and Human Services, Representative Tom Price, similarly proposes combining Medicaid and the Children's Health Insurance Program into a single program funded through block grants [6]. Another health leader in the new administration is likely to be Seema Verma, Trump's nominee for director of the Centers for Medicare & Medicaid. As a consultant to the Medicaid expansion of Indiana and Kentucky, Verma helped craft a plan that placed more responsibility on Medicaid beneficiaries, including monthly premiums and work or volunteer requirements [7].

Impact on North Carolina

North Carolina's plan for Medicaid reform is consistent with the vision of Medicaid reform emerging from the new administration. However, it is likely that the goals of federal Medicaid reform—more budget predictability for the federal government and a lower total federal contribution—would increase the financial responsibility and risk to North Carolina. These changes would leave the state responsible for a greater share of the costs of Medicaid and/or require the state to reduce eligibility or benefits.

Another question under federal Medicaid reform is whether Medicaid-expansion and non-expansion states will be treated the same under the proposed changes. Currently, North Carolinians' federal taxes are helping to pay for Medicaid expansion in other states (approximately $1 billion per year) [8, 9]. If block grants or per-capita allotments are based on states' current Medicaid criteria, non-expansion states will get significantly less funding than expansion states. Under proposed changes, however, Medicaid allotments may decrease in Medicaid-expansion states or may be supplanted with premium tax credits to be used for the purchase of health insurance.

Regardless of what proposals emerge, the fiscal impact—as well as the impact on the health and well-being of North Carolina's most vulnerable residents—is likely to be significant. It is imperative that North Carolina's Congressional delegation examine potential short- and long-term impacts of changes to Medicaid allocation on North Carolinians. Support for health reform should not be partisan but should include careful analysis of North Carolina's current Medicaid program and the impact that changes to Medicaid will have on our state's physical and fiscal health.

Acknowledgments

Potential conflicts of interest. All authors have no relevant conflicts of interest.

  • ©2017 by the North Carolina Institute of Medicine and The Duke Endowment. All rights reserved.

References

  1. ↵
    1. Sutten T,
    2. Borchik R
    An overview of North Carolina Medicaid and Health Choice. N C Med J. 2017;78(1):58-62 (in this issue).
    OpenUrlAbstract/FREE Full Text
    1. Henley NS
    Medicaid Overview and Current Measures. Briefing presented at: Meeting of the NCIOM Task Force on Health Care Analytics; December 7, 2016; Morrisville, NC. http://www.nciom.org/wp-content/uploads/2016/11/Henley-NCIOM-intro-to-Mcaid-measures-12-7-16-final2.pdf. Accessed December 15, 2016.
  2. ↵
    Governor McCrory Signs Common Sense Budget That Helps Working Families [press release]. Raleigh, NC; North Carolina Office of the Governor; September 18, 2015. https://governor.nc.gov/press-release/governor-mccrory-signs-common-sense-budget-helps-working-families. Accessed December 15, 2016.
  3. ↵
    Healthcare Reform to Make America Great Again. Donald J. Trump for President website. https://www.donaldjtrump.com/positions/healthcare-reform/. Accessed December 15, 2016.
  4. ↵
    A Better Way: Our Vision for a Confident America. https://abetterway.speaker.gov/_assets/pdf/ABetterWay-HealthCare-PolicyPaper.pdf. Published June 22, 2016. Accessed December 15, 2016.
  5. ↵
    1. House Budget Committee
    FY2016 Budget Resolution: A Balanced Budget for a Stronger America. http://budget.house.gov/uploadedfiles/fy16budget.pdf. Accessed December 15, 2016.
  6. ↵
    1. Bernstein L
    CMS nominee set up Indiana's unusual Medicaid expansion. The Washington Post. November 29, 2016. https://www.washingtonpost.com/national/health-science/cms-nominee-set-up-indianas-unusual-medicaid-expansion/2016/11/29/912a131a-b669-11e6-959c-172c82123976_story.html?utm_term=.37c97775e241. Accessed December 15, 2016.
  7. ↵
    1. Medicaid and CHIP Payment and Access Commission (MACPAC)
    State and Federal Spending Under the ACA. MACPAC website. https://www.macpac.gov/subtopic/state-and-federal-spending-under-the-aca/. Accessed December 15, 2016.
  8. ↵
    1. Chantrill C
    Comparison of Federal Revenue by State in the United States: -5yr -1yr: Fiscal Year 2014. US government revenue website. http://www.usgovernmentrevenue.com/federal_revenue_by_state.php. Published December 10, 2016. Accessed December 15, 2016.
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Federal Medicaid Reform
Adam J. Zolotor, Berkeley Yorkery, Lauren Benbow
North Carolina Medical Journal Jan 2017, 78 (1) 14-15; DOI: 10.18043/ncm.78.1.14

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Adam J. Zolotor, Berkeley Yorkery, Lauren Benbow
North Carolina Medical Journal Jan 2017, 78 (1) 14-15; DOI: 10.18043/ncm.78.1.14
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