Dive Brief:

• North Carolina became the 40th state to expand Medicaid on Monday, after Gov. Roy Cooper, a Democrat, signed legislation that the state voted to pass last week. The signing ended a fight over the healthcare coverage that waged for more than a decade.
• Republican legislators in the state came to an agreement in early March to expand the safety-net program to roughly 600,000 additional people. Currently, the state has about 2.9 million people in Medicaid, according to the state’s health department.
• There is no set date for the expansion to go into effect, but it can’t be implemented until a state budget is approved, which usually happens early in the summer, according to the Associated Press.

Dive Insight:

The expansion puts an end to a decade-plus political battle over Medicaid in North Carolina and illustrates mounting support for the program.

Last year, North Carolina’s Senate and House of Representatives both passed different bills to expand Medicaid, but the two legislatures didn’t agree on certain aspects of the bills.

However, in early March, Senate and House leaders announced that the parties had found agreement on a few factors of the Medicaid expansion bill after the House sent the bill to the Senate in February.

The Medicaid expansion bill directs the state to enter a federal program by which hospitals would receive additional Medicaid reimbursement funds, with the money intended to help hospitals cover the state’s share of expansion health expenses, or 10% of costs.

The bill also details where certificate of need laws — those that require health regulators to sign off on plans for medical entities to build locations or purchase equipment — would be loosened or eliminated altogether. Senate Republicans insisted on those changes as a way to boost service supplies for the additional Medicaid enrollees.

Republicans in the state have been historically opposed to Medicaid expansion. In 2013, Republican lawmakers passed a bill opposing expansion and forbidding the governor from unilaterally expanding Medicaid. However, since then, some have reversed course, partially due to more generous federal funds available for newly-expanded states.

Medicaid expansion was originally included in the Affordable Care Act passed in 2010, but the Supreme Court later made the expansion voluntary for states.

But more and more states, even long-time holdouts, have expanded Medicaid in recent years. Advocates have put measures in seven conservative state ballots and have passed all of them.

Most recently, in November, South Dakota approved expansion when the states’ voters passed a ballot measure, over opposition from the state’s Republican governor and legislative leaders.

Virginia was the last state to pass expansion legislature in 2018.

The 10 remaining state holdouts are Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin and Wyoming.

Enrollment in Medicaid surged during the COVID-19 pandemic, boosted by increased subsidies and other incentives. The federal safety net insurance program now covers nearly one in four Americans.

However, a drop in enrollment is looming, as redeterminations that were put on hold during the COVID-19 pandemic restart next month, causing as many as 4 million people to lose coverage.

The North Carolina Department of Health and Human Services has indicated that as many as 300,000 current Medicaid beneficiaries could lose coverage as redeterminations resume, but many could requalify via the expansion.

Five managed care organizations participate in North Carolina’s Medicaid program. Centene has 34% of North Carolina’s managed care Medicaid lives while Elevance has 27% and UnitedHealthcare has 21%. Those payers should particularly benefit from the expansion, assuming the additional Medicaid lives are allocated based on existing market share and current per-member per-month fees, Credit Suisse analysts said.

As for hospitals, the expansion should particularly benefit HCA and Community Health Systems, both of which operate hospitals in the state. Universal Health Services operates three behavioral health facilities in North Carolina and received roughly 39% of its behavioral health revenues from Medicaid in 2022.