John Hood: Let's make Medicaid Expansion Work

RALEIGH — Are Democratic Gov. Roy Cooper, Republican House Speaker Tim Moore, and Republican Senate leader Phil Berger about to strike a deal to expand North Carolina’s Medicaid program?

I don’t know. The three leaders have been negotiating for months. While they broadly agree on the expansion itself, Berger’s chamber is the only one to have passed a bill — by a 44-2 vote — and it included some deregulatory measures to expand the supply of medical services to North Carolinians.

Special-interest groups that benefit from the current regulatory structure dislike the Senate version. Hospitals, in particular, strongly dislike the idea of having to compete for your business, which is what the bill’s certificate-of-need reforms would encourage. Many House members disagree with the Senate’s approach, as well. So does Cooper. Still, they’d rather enact it than nothing, so the governor has publicly called for the interest groups to give in. A few days ago, the hospitals offered what they termed a compromise, though Berger called it more “public relations than a substantive or serious proposal.”

If North Carolina acts on Medicaid, we certainly ought to accompany expansion with the Senate’s pro-competition reforms. We need to reduce the actual cost of delivering health care, not simply transfer the bill from patients or employers to taxpayer-funded Medicaid. While our leaders have been negotiating, however, events in a neighboring state have reopened an issue once thought dead: work requirements.

As originally written, the Affordable Care Act didn’t really leave state governments any choice in the matter: they had to expand Medicaid. After the U.S. Supreme Court struck down that part of the bill in 2012, many Republican-led states signaled that they were willing to forego the massive federal subsidies attached to Medicaid expansion because of their concerns about long-term fiscal impact and increased dependency on public assistance (Medicaid is already America’s largest welfare program).

Allowing states to require work in exchange for Medicaid enrollment would have made expansion more palatable. The Obama administration sounded at first like this might be a real option, but it soon became clear that President Obama would never allow the enforcement of serious work requirements.

The next administration saw things very differently. During President Trump’s four-year term, 13 states received federal waivers to implement work rules for Medicaid. Several other states were in the process of seeking such approval when President Biden won election. States were instructed not to bother submitting such applications. All previously granted waivers were rescinded.

Most of these work requirements had never been implemented, anyway. Progressive groups had successfully sued to strike them down. The cases hadn’t yet reached the U.S. Supreme Court when the Biden administration rescinded the waivers. Earlier this year, the Court declared the cases moot.

But what if Biden’s action was itself illegal? That’s what the State of Georgia argued in a lawsuit filed in January. Last month, a federal judge sided with Georgia, calling the administration’s actions arbitrary, capricious, and contrary to “reasoned decision making.” For now, at least, Georgia is authorized to proceed with its work requirement for non-disabled Medicaid recipients. 

Given this development, I think Berger and Moore ought to consider adding another provision to any compromise: a work requirement for the childless adults who make up the majority of potential beneficiaries of Medicaid expansion. Cooper and Democratic lawmakers won’t like it, of course, but would they truly prefer no Medicaid expansion at all? I think Cooper knows his negotiating position will probably be weaker after the 2022 election. Democrats might also conclude that the Biden administration will refuse to grant such a waiver, anyway, and thus there’d be no risk in allowing Republicans to include work requirements in an expansion bill.

If that’s true, what would be the point of adding it? Well, I would argue that as a general proposition all public-assistance programs — cash, nutrition, housing, and health care — should have work requirements. Let the president say otherwise. Then let voters say what they think about that in 2024.