Study Finds Medicaid Expansion Would Mean 37,000 New Jobs In North Carolina

Jun 27, 2019

Credit Lisa Philip / WUNC

A new study found that expanding Medicaid in North Carolina would not only provide health insurance to 634,000 people, it would also create some 37,000 new jobs and increase business activity by close to $12 billion.

The figures come from researchers at The George Washington University with funding from Cone Health Foundation and the Kate B. Reynolds Charitable Trust.

When the Affordable Care Act passed, one of the main tenets was an expansion of Medicaid to anyone up to 138 percent of the federal poverty line. In what became a historic U.S. Supreme Court ruling, some of the ACA was upheld, but one aspect struck down was that states could not be forced to expand Medicaid coverage. Although two-thirds of Medicaid dollars come from the federal government, the program is administered by the states, which determine eligibility, program design and cover the remainder of the costs.

States controlled by Democrats quickly expanded Medicaid as intended by the ACA – which became known as Obamacare – while those led by Republicans, including North Carolina, did not. In North Carolina, parents are not eligible if their incomes exceed 42 percent of poverty and most adults without dependent children are ineligible for Medicaid.

But because states still rely on the federal government for Medicaid funding, those states that did not expand are effectively subsidizing Medicaid programs in expansion states.

It's a point supporters of expansion have been making for years.

"We're leaving those dollars on the table," said Brendan Riley, a health policy analyst for the N.C. Justice Center, a Raleigh-based liberal advocacy group.

From a purely financial perspective, the GWU study agrees, and uses estimates of increased federal spending in North Carolina to form its projections.

In North Carolina, parents are not eligible if their incomes exceed 42 percent of poverty and most adults without dependent children are ineligible for Medicaid.
Credit The George Washington University

While expansion has been a Republican non-starter for years, there are signs that might be changing. Legislative leadership had for years said that it wanted to reform North Carolina Medicaid before expanding it. That's currently underway. In addition, the Republican-led legislature, while still in the majority, has lost the ability to override a governor's veto purely along partisan lines. Gov. Roy Cooper could make Medicaid expansion a sticking point in the budget debate, and if he can whip enough Democrats, or even a few Republicans, in the General Assembly to his side, this year could be different than years past.

What's more, Republicans have pitched their own Medicaid expansion plan.

In addition to the topline findings, the GWU study found:

  • In Calendar Year 2020, about 464,000 more people will gain Medicaid coverage. This will rise to about 634,000 people in 2022, then stabilize.
  • New federal funding flowing into North Carolina will rise by $2.8 billion in 2019 and gradually climb to $4.7 billion by 2022 because the federal government would pay 90 percent of Medicaid costs for newly eligible adults. From 2020 to 2022, North Carolina will gain $11.7 billion more in federal funding.
  • The injection of billions of dollars into North Carolina's economy will spur business activity, which will in turn create more jobs. We estimate that 24,400 additional jobs would be created in 2020, climbing to 37,200 more jobs in 2022, compared to levels if Medicaid is not expanded.
  • The Gross State Product (a measure of economic activity in North Carolina) would be increased by $1.9 billion in 2020 and $2.9 billion in 2022. The increased economic activity and employment would trigger increases in state and county tax revenues, totaling $500 million in state revenue from 2020 to 2022 and $100 million in county revenue over the three-year period. The additional revenues can help the state and the counties address other budgetary needs.