In North Carolina, the Medicaid expansion was made possible through a financing scheme that benefits hospitals, the state government, and the Biden Administration, but at the expense of workers, employers, independent physicians, and federal taxpayers. The scheme involves reimbursing hospitals for Medicaid services at commercial payment rates, funded largely by federal taxpayers. This allows hospitals to enjoy higher payments for serving Medicaid patients, acquire independent physician practices, and crush competing physicians who are not paid at commercial rates by the Medicaid program.
While the state government benefits from federal matching funds and control over their use, the Biden Administration benefits politically by bringing Medicaid expansion to North Carolina. However, workers and employers in North Carolina face increased pricing challenges as hospitals raise commercial rates and squeeze more Medicaid payments from purchasers. Independent physicians, who already receive lower reimbursement rates than hospitals, are further disadvantaged by the financing scheme, pushing them to become employees of hospital systems.
The Medicaid-expansion financing scheme in North Carolina represents an expensive, inefficient, and nontransparent approach that erodes public trust and incurs substantial negative consequences and opportunity costs for taxpayers. The use of federal taxpayer dollars to channel funds to hospitals in North Carolina inadvertently encourages high commercial prices that harm workers and employers in the state. It is important for policymakers to consider the impact of their decisions on private players in the healthcare market, as well as the implications for healthcare affordability and access for low-income patients.
Instead of blaming greed or seeking help from regulatory bodies like the Federal Trade Commission and state commissions, attention should be focused on policies that tilt the playing field in favor of hospitals and other powerful players in the healthcare industry. CMS has a responsibility to provide transparency and explanation for its regulatory decisions, especially regarding financing schemes that have far-reaching implications for healthcare affordability and access in states like North Carolina. Addressing these underlying policy issues is crucial to creating a fairer and more sustainable healthcare system for all.
