ND is paying too much for Medicaid expansion

Caprice Knapp, Medicaid Director for the North Dakota Department of Human Services

The saying goes that to understand what someone values, you should look at their checkbook. 

In almost every state, Medicaid is among the most expensive parts of the budget. North Dakota is no exception.

However, North Dakota is the exception in one area: Our state pays more than any other state for Medicaid expansion members – over 50% more.  In fact, last year the state spent $309 million on about 20,000 expansion members compared to $300 million for about 70,000 members in the traditional Medicaid program.

Taxpayers deserve better, and they deserve to know how we got to this point.

In 2013, North Dakota approved the expansion of Medicaid to cover able-bodied adults whose income falls below 138% of the federal poverty level.

The arguments in favor of Medicaid expansion were that the federal government would pay about 90 cents on the dollar and the state would pay the remaining 10 cents. Medicaid expansion would increase the percentage of people who have health insurance, and insurance would improve health outcomes so that expansion members could return to the workforce. 

At first glance, this is a win-win for the state. Thirty-eight states have expanded Medicaid. Only about a dozen states have not, and one of the reasons is the burden on taxpayers. Ten cents on the dollar is still a significant investment for many states. 

Opening the Medicaid checkbook in North Dakota reveals something curious has happened. 

Since 2013, the state has paid costlier commercial insurance rates for Medicaid expansion members, rather than paying typical Medicaid rates as every other state does.

Cartoon by M. Scott Byers

This amounts to paying about $14,000 annually per expansion member in North Dakota, compared with $9,000 in the next highest state, Alaska.  $14,000 is $4,000 more than North Dakota spends on public school children and $6,000 more than is spent on students in higher education.

By paying higher insurance rates for Medicaid expansion members, North Dakota is placing a higher value on able-bodied adults compared to all other Medicaid members who in most cases can’t work, such as children, pregnant women, the elderly in nursing homes and the community, and children and adults who have disabilities.

There is a way for North Dakota to keep Medicaid expansion, benefit from the high federal match rate, and right-size the inequity that has been created between expansion and non-expansion members. 

The 2019 legislative session saw debate about whether the Medicaid program should value insurance the same for all members by paying similar rates. Opponents, primarily hospitals, disagreed, indicating that the state would be throwing away free money – that is, federal money. 

What’s clear is taxpayers know there is no such thing as a free lunch. Whether it’s 90 cents from federal taxes or 10 cents from state taxes, it all comes out of the taxpayer’s wallet. 

What’s not clear is whether taxpayers know that the state spends more on able-bodied adults than the individuals for whom Medicaid was originally created, including the elderly, disabled and children. 

Cartoon by M. Scott Byers

To balance the budget, programs for those traditional Medicaid groups will need to be cut disproportionately to maintain the high commercial rates for Medicaid expansion members. That’s unfair.

Of course, the other option is to right-size the program and value everyone equally.

Hospitals will likely claim that this will drive them out of business, but Medicaid expansion supports on average less than 2% of their total patients.  Additional funds will ensure that small, rural hospitals are not impacted at all. 

It is time to open the checkbook again and have another debate to ensure that Medicaid spending reflects what all North Dakotans value: caring for the most vulnerable, giving people the tools they need to get back to work, and protecting taxpayers.

Caprice Knapp is Medicaid Director for the North Dakota Department of Human Services. Prior to joining the department, Knapp was the federal policy director of Molina Healthcare, a Fortune 500, multi-state managed care organization specializing in Medicaid and Medicare programs. Knapp is also a former Robert Wood Johnson Health Policy Fellow for the U.S. House of Representatives’ Energy and Commerce Committee (Republicans) from 2017-2018, where she researched and helped draft bills related to Medicaid, Medicaid drug pricing and other health policies.

K. William Boyer is the Managing Editor of the Devils Lake News Journal. He can be reached at kboyer@gannett.com, or by phone at (701) 662-2127.  

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