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Legislators Approve Medicaid Privatization Plan

The chambers of the NC State House
Jorge Valencia
The House of Representatives approved a long-anticipated plan to privatize Medicaid with strong Republican approval in a largely along party lines 65 to 40 vote.

The North Carolina House and Senate approved on Tuesday afternoon a long-awaited plan to overhaul the state's Medicaid system. The proposal could affect more than 1.5 million people who receive health care through the publicly-funded program, but it could take years for it to be fully implemented.

Top Republicans celebrated on Tuesday as they passed a proposal they've been working on for four years. Medicaid serves about 1.8 million people who qualify as low-income or disabled, almost one fifth of the state population.

Sen. Ralph Hise (R-Mitchell), a statistician, explained on the Senate floor key take-aways of the plan: The state health department would give private organizations a determined amount of money for each patient. They would then be responsible for the patient getting care. Ten organizations would be non-profits run by doctors and hospitals. Three would be for-profits led by insurance companies.

"It is a fundamental change in how Medicaid is done, but it is consistent with what many other states have done," Hise said.

Rep. Donnie Lambeth (R-Forsyth) emphasized another key portion of the plan: State health officials will have more ability to make sure patients get good care, he says. Many patients don’t have regular screenings for preventable illnesses, so they eventually wind up in the emergency room.

"We can do better by these patients because some don’t have a primary care doctor, and that’s why they go to the ER’s," Lambeth said. "We can do better by these patients, and they deserve better, quite frankly."

But what lawmakers discussed the most on Tuesday was money.

"For years and years and years, Medicaid has been considered the budget Pac-Man that eats up all the dollars that people in this chamber would like to see spent on many other things," said Rep. Bert Jones (R-Rockingham).

North Carolina spends almost a fifth of its budget on Medicaid annually, roughly $3.7 billion, and lawmakers have been arguing for years that the cost is rapidly growing. They say the point of writing a check to a private company for each patient is so that taxpayers don’t have to shoulder overruns, and so that lawmakers can more accurately estimate the cost of Medicaid every year.

On Tuesday, Democrats saw the plan differently.

"If we put this plan into action, your taxpayer dollars are going to turn into profits for insurance companies based on their ability to cut services to poor people," said Rep. Greg Meyer (D-Orange).

What perhaps stood out more is that one of the main architects of Medicaid reform in the House of
Representatives opposed the latest version of the bill. Rep. Nelson Dollar (R-Wake) says it’s not true that the cost of Medicaid is out of control.

"The truth is that Medicaid claims cost in North Carolina has actually gone down over the last five years while the program grew by over 200,000 recipients," Dollar said.

Dollar participated when Senate and House leaders negotiated a compromise between the two chambers. He says there are good things about the deal such as it helps non-profits provide care for patients, and it helps better organize service.

"But they do not outweigh the fundamental flaw in this bill, which is the introduction of commercial insurance management in our Medicaid program," Dollar said.

For-profit insurance companies would be required to spend at least 88 percent of funds on patient care, but Dollar says it should be non-profits doing that job. He was one few Republicans who voted against the bill. The vote came down largely along party lines, with 65 voting favor and 40 against in the House and 33 voting in favor and 15 against in the Senate.

If the governor signs the Medicaid Transformation and Reorganization bill into law, state officials would still have to apply to the federal government for permission to implement it. That’s because the federal government pays two thirds of the state's Medicaid program, roughly $7.7 billion of the state's. The application process could take months or years.

Jorge Valencia has been with North Carolina Public Radio since 2012. A native of Bogotá, Colombia, Jorge studied journalism at the University of Maryland and reported for four years for the Roanoke Times in Virginia before joining the station. His reporting has also been published in the Wall Street Journal, the Miami Herald, and the Baltimore Sun.
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