By Katie Horneffer, Intern, Care4Carolina
Closing the coverage gap would make affordable health insurance accessible to 600,000 more North Carolinians, bringing countless health benefits to the state. Closing the coverage gap is also a fiscally responsible decision for North Carolina. Should the NC General Assembly close the health insurance coverage gap in the budget, NC would draw down federal dollars, boost the state economy, and create new jobs all while improving healthcare access.
From a fiscal perspective, now is the best time to close the coverage gap. In addition to 90% federal match for states that have expanded, funding incentives were added under the American Rescue Plan passed earlier this year. The increased federal match rate will bring $1.7 billion in federal funding to North Carolina over the next two years. The NC Department of Health and Human Services estimates the cost of closing the gap to be only $700 million for the first two years, meaning our state would bring in a $1.0 billion surplus. This funding is estimated to be able to cover the full cost of closing the gap for up to 6 years—after which the federal government would still cover 90%.
Furthermore, research shows that the 10% state share has not proven to be a financial burden for other states. Closing the gap results in savings in other areas of the budget, such as mental healthcare and public safety. Because of this, the true cost of closing the gap is often far less than the sticker price, and states do not have to worry about raising revenue equivalent to the full 10%. In fact, in some other states, closing the coverage gap resulted in net savings to the state budget. For example, Michigan has been reaping net savings of $160 million per year after closing the coverage gap, and it sees an additional $140 million per year in tax revenue due to increased economic activity. Similarly, the cost of closing the gap in Virginia was covered by savings within the Medicaid program alone; in its first year after closing the gap, the state saved $211.7 million more than expected.
This infusion of federal dollars into the state would also help boost North Carolina’s economy. An updated analysis from the Commonwealth Fund, which accounts for the increased American Rescue Plan Funding, shows even bigger boosts in the state economy and job growth. If North Carolina closed its coverage gap today, the state gross output is projected to increase by $34.1 billion between 2022 and 2025. Personal incomes would also be expected to grow by $20.9 billion over this timeframe. 83,000 new jobs would be created in the state; over 43,000 of these would be in healthcare, but the economic impacts would trickle into other sectors too, such as construction, retail, and finance.
Closing the coverage gap wouldn’t only be good for North Carolinians’ health and well-being: it also makes fiscal sense. With North Carolinians’ federal tax dollars being used to support closing the gap in other states, it’s about time we bring some of those tax dollars back home. Our health—and our economy—depend on it.