How Biden’s American Rescue Plan helped NC finally expand Medicaid

North Carolina Gov. Roy Cooper, right, speaks while state Health and Human Services Secretary Kody Kinsley listens at an Executive Mansion news conference in Raleigh, N.C., on Monday, Sept. 25, 2023. Cooper and Kinsley announced that North Carolina would launch Medicaid expansion coverage on Dec. 1. Expansion will be able to start because Cooper said he'll let a state budget bill sent by the General Assembly last week to his desk become law without his signature. (AP Photo/Gary D. Robertson)

By Keya Vakil

November 29, 2023

President Biden’s 2021 American Rescue Plan provided a $1.7 billion “signing bonus” to North Carolina to expand Medicaid, which Gov. Roy Cooper described as “a major part of our successful effort to finally get Medicaid expansion.”

More than half a million people in North Carolina will finally be able to get health insurance starting Friday, when the state’s Medicaid expansion goes into effect—and the Biden administration is part of the reason why.

The expansion will raise the state’s income limit for Medicaid health insurance, allowing an estimated 600,000 North Carolinians ages 19 to 64 who earn up to 138% of the federal poverty level to qualify for coverage. This means that an individual earning up to about $20,000 a year is eligible, and so are families of three earning up to roughly $34,000.

“Medicaid Expansion is the working families bill of the decade for North Carolina, and its impact on peoples’ health, combating the opioid crisis, saving rural hospitals and boosting our economy can’t be overstated,” North Carolina governor Roy Cooper said in an emailed statement to Cardinal & Pine.

Based on outcomes in other states that have expanded Medicaid over the past decade, North Carolina’s expansion will almost certainly save lives, improve access to care and health outcomes, prevent more rural hospitals from closing, expand access to mental health care and substance abuse treatment, and improve infant and postpartum maternal health outcomes.

“By expanding who is eligible for Medicaid, we can now help hundreds of thousands of hard-working North Carolinians, like child care providers and retail workers who don’t receive health insurance through their employers,” North Carolina Department of Health and Human Services (NCDHHS) Secretary Kody Kinsley said in an emailed statement.

How We Got Here

Medicaid expansion was made possible by President Obama’s Affordable Care Act, which was signed into law in 2010. The first state (Connecticut) to expand Medicaid voted to do so that year, and expanded coverage went into effect there and in dozens of other states in 2014.

Democrats and healthcare advocates in North Carolina fought to expand Medicaid for years, only to be met with opposition from Republicans, who opposed the effort, despite the fact that the federal government covered 100% of the costs in the early years, and 90% at present.

The tide began to turn in recent years, however, as voters across the state—including in rural, conservative areas—advocated for expansion, leading some Republicans to support the idea.

But a key factor in the legislature’s decision to finally expand Medicaid this year was President Biden’s 2021 American Rescue Plan.

The law included a financial incentive for states which hadn’t yet expanded Medicaid to do so, offering them additional financial support for non-expansion Medicaid enrollees, as well as a “signing bonus” to be used however states see fit.

In North Carolina, this “bonus” is expected to total $1.67 billion over the next two years, according to North Carolina Governor Roy Cooper’s office—a significant sum for a state whose annual budget is $30 billion.

“We have fought long and hard to get Medicaid expansion in North Carolina, and convincing the Republican legislature took perseverance and creativity. The federal signing bonus that President Biden signed into law was a major part of our successful effort to finally get Medicaid expansion,” Gov. Cooper said.

Kinsley echoed that sentiment, stating that the bonus was “certainly a factor in getting Medicaid expansion across the finish line.”

How NC is Spending its Bonus

According to NCDHHS, the legislature directed a sizable chunk of that bonus—$835 million—towards behavioral health and resiliency efforts, with $700 million directly supporting Cooper’s $1 billion Behavioral Health Roadmap.

These funds will be used to provide services for people experiencing a mental health or substance use crisis; to better care for children with complex needs, and ensure their families have support; to help individuals with behavioral health conditions avoid incarceration; and to strengthen the behavioral health workforce.

“The signing bonus money is a generational investment in our mental and behavioral health system, which we know has gone underfunded for far too long,” Cooper said.

The most significant investments and projects funded by the federal bonus include:

  • $105 million for the construction of three new rural care centers;
  • $80 million for new mobile crisis teams and crisis and respite facilities;
  • $80 million to support families caring for children with behavioral health or other special needs, and to improve specialized mental health treatment;
  • $76 million for the construction of a new UNC Children’s hospital in the Triangle area, including a children’s behavioral health hospital;
  • $50 million to expand a loan repayment program and create new incentives for healthcare workers who agree to practice in rural and underserved areas, and;
  • $40 million for retention pay and other bonuses to workers at state-run facilities.

The legislature also directed hundreds of millions of dollars of the bonus to universities and community colleges to expand medical, nursing, and health science programs to grow the state’s workforce in those areas. Hospitals also got a substantial sum of funding, and tens of millions of dollars are being directed to rural communities to help stabilize rural hospitals and grow the number of rural providers.

Federal Dollars Will Keep Flowing to NC

Beyond the benefits of Biden’s one-time federal bonus, the expansion itself will also lead to a massive influx of annual federal funds into the state.

Once the expansion has fully ramped up, which NCDHHS expects to take two years, the state will receive roughly $4.8 billion annually from the federal government to cover the cost of expanded coverage. The state will also get an estimated $3 billion each year in federal funds to help support hospitals in the state and allow them to cover the costs affiliated with expansion.

These figures exclude the $2.6 billion in funding—including $1.8 billion in federal dollars— announced this week to help support 102 hospitals statewide.

How to Apply for Coverage

Nearly half of the eligible 600,000 North Carolinians will be automatically enrolled in coverage on Friday, according to Kinsley.

These families will no longer be weighed down by medical bills or afraid to get the care they need due to a lack of insurance. I cannot emphasize how life changing this will be for North Carolinians — especially those in rural communities and working families,” he said in a statement.

The remainder of the eligible expansion population will need to apply for the program online through ePASS, in-person, by phone, or by mail. The processing time for applications can be up to 45 days, and applications submitted online may be processed faster. You can learn more about the application process and expansion here.

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  • Keya Vakil

    Keya Vakil is the deputy political editor at COURIER. He previously worked as a researcher in the film industry and dabbled in the political world.

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