The Bigger Picture of Medicaid Expansion

By Scott Mooneyham, Editor, NC Insider For state Rep. Bert Jones, the expansion of Medicaid under federal health care reform could be explained easily. "It's simply another step toward the goal of socialized medicine controlled by the federal government," the Rockingham County Republican said as the state House considered legislation to block that expansion in North Carolina. Jones seems to have missed something. To a significant degree, health care in this country is already socialized, and has been for a long time. Government programs Medicare and Medicaid are dominate players in the health care market. They account for 55 percent of U.S. hospital revenue. And private, employer-based insurance, making up about 60 percent of the overall health insurance market, is itself socialist in nature. It is a risk pool, people pooling their resources to hedge against the risk that each, individually, might be the one to suffer some catastrophic injury or illness. As for that word "market," it too is a stretch. A day before Jones made his comment, I was on the phone with a leading health care lobbyist. "You know this. There is no health care market in the country," he said. What he meant is that no one goes shopping for health care services like we shop for cars or groceries, by comparing prices. If there is no market, there is a health care economy. Even if we pay for health care indirectly, through insurance premiums and taxes, the amount of money that moves into and through the health care economy is substantial. Roughly 18 percent of the country's gross domestic product is health care. By comparison, construction spending -- residential and commercial -- makes up about 6 percent of the U.S. economy. These rambling remarks about health care spending are a winding prelude to suggest that the Republican-controlled state legislature and a Republican governor are playing with a very complex fire by falling on their ideological sword regarding Medicaid expansion. The state House and Senate have passed bills to block that expansion, which would extend coverage to another 500,000 low-income North Carolinians. Gov. Pat McCrory supports the move. In the first three years, the federal government would pick up all the costs, with the state paying 10 percent down the road. The GOP case to turn down the money includes that, within five years, the state would be paying more than $240 million as its match and that the expansion would cover not only the uninsured but some who would shift to Medicaid from private insurance. That reasoning doesn't trump the bigger picture of how the health care economy is critical to North Carolina's larger economy. McCrory and state legislators cannot stop the federal health care law from moving, shifting and taking away portions of the health care dollar, including Medicare money, in North Carolina. They have ensured that another source of revenue will not backfill those dollars. If the result is a more stagnant state economy, we all will feel the effects soon enough. So will those who made the decision.