North Carolinians stand to benefit from national health reform in many ways. Already, children under age 26 can stay on their parent's private health plans, small businesses are exploring the thousands of dollars in tax credits available if they provide health coverage, and a new federal "high-risk pool" will start on July 1, offering coverage to those uninsured with pre-existing health conditions.
In addition, one of the most far-reaching changes for North Carolina won't go into effect until 2014, but it is already creating much comment and discussion. This is the expansion of the state's Medicaid program to adults earning less than 133% of federal poverty level, or $14,400 a year. This includes nearly one-million North Carolinians, many in some of our poorest and most rural counties.
To help explain the benefits and costs of this expansion, the respected Kaiser Family Foundation released estimates this week on what states can expect to spend on Medicaid between 2014 and 2019 as a part of the expansion of health reform. Kaiser gives a range of figures based on the expected participation rate in Medicaid.
According to this analysis, additional costs to the state will range between $171 million to $299 million each year or between $1.02 billion and $1.8 billion between 2014 and 2019. Because the federal government picks up 93%-95% of the total costs of the Medicaid expansion, the feds will invest between $21 billion and $25 billion in North Carolina, far outstripping state investment.
But spending is not the only important measurement. The Kaiser report says between 633,000 and 888,000 people in North Carolina will receive reliable health insurance as a result of reform. This means that nearly that hundreds of thousands of North Carolinians – all making under $14,400 a year – will go from being uninsured to having a good, basic health insurance package. The impact of this change is hard to understate, especially in the poorer counties in North Carolina. Thousands of people will find their lives changed for the better when they are able to get decent health coverage regardless of their job or financial situation.
Very conservatively, this spending will also have an enormous economic effect on North Carolina, creating over 37,000 new jobs, $3.9 billion in business activity, and $1.4 billion in new salaries and wages. Additional savings to the state as a result of expansion need to be counted too. For example, North Carolina provides nearly $50 million a year to UNC Hospitals to help pay for care for the uninsured. As the number of uninsured drops, so does this cost.
Finally, to put the cost of reform in perspective, North Carolina currently collects $428 million each year from our expanded tobacco taxes and the 1999 tobacco settlement. Even if the state didn't want to devote current tobacco dollars to insuring nearly a million North Carolinians, a 50 cent increase in North Carolina's low cigarette tax would raise $210 million a year, likely paying for all, or at least a majority, of the increased costs.
As a state with high numbers of low-income people, national reform's expansion of Medicaid will mean big changes in North Carolina. Thousands of new jobs created, jumps in business activity – especially in the more rural and lower-income parts of our state, and security and stability for hundreds of thousands of lower-income workers. And, all of this with the federal government picking up 93% to 95% of the costs!
The initial benefits of health reform are significant throughout the United States, but for North Carolinians, the coming changes will be even greater. For all of its imperfections and the controversy that surrounded its passage, health reform continues to look better and better.
Adam Searing is the Director of the North Carolina Health Access Coalition.
