‘Unintended Consequences’ of Republicans’ Medicaid Deal

Last Tuesday, state legislative leaders announced a deal to fill a $319 million Medicaid funding gap, heading off a looming catastrophe for the program’s 3 million beneficiaries. On Wednesday, the House and Senate signed off, with only one Democrat in each chamber voting no. Final votes are expected today, and Gov. Josh Stein is almost certain to sign the bill. 

But in a Friday afternoon press release, Senate Democratic leader Sydney Batch asked Republicans to slam the brakes on the so-called Medicaid rebase and “use the weekend to produce a new version.” Batch complained that the bill contained provisions attacking legal immigrants and enacting barriers to coverage. 

“There is a weekend between now and Tuesday,” Batch said in the release. “Pull the [bill]. Produce a clean one. Fund what needs funding, and leave out the culture wars bullshit.”

As of Monday evening, Republicans had not pulled the bill. 

From one perspective, Batch’s comments seemed politically incongruous. After all, she had voted for this bill, with these provisions, just 48 hours earlier. So had every member of her caucus except state Sen. Michael Garrett. Likewise, House Democrats had lined up behind it; only state Rep. Pricey Harrison voted no. 

What’s more, it was hardly surprising that Republicans exacted blood in exchange for passing a Democratic priority. Stein denounced GOP lawmakers last year as “irresponsible and callous” for failing to fully fund Medicaid. In October, the N.C. Department of Health and Human Services slashed reimbursement rates, which it said was necessary to keep the program solvent through the end of the fiscal year. (DHHS reversed the cuts in December after losing in court.)

Republicans said the cuts were unnecessary because they’d fill the shortfall before Medicaid ran out of money—which they’re now poised to do. 

But Batch was giving a public voice to concerns DHHS had raised privately—though without asking the General Assembly to scuttle the bill. Late Thursday night, DHHS Undersecretary of Government Affairs Janssen White emailed the four Republican chairs of the House Health Committee, as well as GOP staffers, to point out some “potentially unintended consequences.” (DHHS sent a similar email to Senate Republicans, as well as to Democratic legislative leaders, a spokesperson said.)

After thanking them for addressing the rebase, White wrote that “these points are being flagged proactively in case they may be helpful when considering future adjustments after passage,” according to the email, which The Assembly obtained.     

White pointed to four provisions. The first eliminates traditional Medicaid coverage for about 27,000 children and pregnant women. A law Congress passed last year eliminated Medicaid coverage for many immigrants who are not citizens but are in the country legally, including refugees, asylum seekers, and new green card holders. But it allowed states to cover children and pregnant women in those groups; 40 states, including North Carolina, do so. The Medicaid funding bill would end that. 

The second and third provisions increase burdens on Medicaid recipients. The bill increases copays for prescriptions and specialist physician visits to the highest amount allowed under federal law, while implementing work requirements that will make it much more difficult for someone who has lost a job to access coverage. 

Both of these changes will affect the 720,000 people enrolled in Medicaid expansion, “which uses no General Fund dollars and does not contribute to the Medicaid rebase,” White pointed out. “Any reduction in coverage from this change would not lower the Medicaid rebase amount.”

The final provision she highlighted tightens screening for food stamps. The bill prohibits social workers from relying on applicants’ statements to determine eligibility or ignoring the incomes of other members of a household who are not eligible for assistance. 

Those requirements would drive up caseloads, increase delays in processing applications, and potentially increase the state’s payment error rate, White wrote. The state already faces potential penalties of between $140 million and $420 million a year. 

Lawmakers did not respond to the unsolicited email, according to a DHHS spokesperson. A source familiar with House Republicans’ thinking said that DHHS’ concerns were “overblown.”