Top 5 Reasons North Carolina Should Close the Coverage Gap Now

By Katie Horneffer, Intern, Care4Carolina

North Carolina is one of only 12 states that has still not closed its health insurance coverage gap. This means that people who make too much money to qualify for Medicaid but not enough to qualify for subsidies in the marketplace are left without access to affordable health insurance. 600,000 North Carolinians, the majority of whom are from working families, would gain access to affordable coverage if North Carolina closed the gap today.  Our state leaders are currently negotiating a budget, and it’s imperative that the final budget include a solution to the coverage gap. Here’s why.

Closing the coverage gap would:

1. Make North Carolinians healthier. Research has proven that closing the gap improves a wide range of health outcomes. With greater access to medication and doctor’s visits, individuals can better manage chronic conditions like diabetes and heart disease. People are more likely to get treatment for substance use and mental health disorders. Women have better access to healthcare before pregnancy, which in turn improves infant health. People with cancer are diagnosed earlier and have better access to treatment. Most importantly, healthcare access saves lives: nationwide, closing the coverage gap has been associated with at least 19,000 prevented deaths.
2. Boost North Carolina’s economy. With the new federal funding from the American Rescue Plan, closing the gap would create an estimated 83,000 new jobs in North Carolina, much of which would be in healthcare. These economic effects would trickle out into other sectors as well, ultimately boosting our state’s economy by $34.1 billion from 2022 to 2025. Furthermore, because 63% of adults in the coverage gap are working, closing the gap would help keep our workforce healthy and productive.
3. Strengthen our state’s healthcare system. Over the past decade, many rural hospitals have been forced to close due to financial instability. The COVID-19 pandemic has stretched hospital budgets even tighter. Uncompensated care for uninsured individuals is one source of financial stress for hospitals. Uninsured patients often can’t afford to pay the high bills from an emergency department visit, so the hospital absorbs the cost. By reducing the amount of uncompensated care, closing the gap can help protect hospitals’ finances: in fact, closing the gap decreases the likelihood of rural hospital closure by 62%. Stronger hospitals means a stronger healthcare system for all North Carolinians, not just those gaining coverage.
4. Improve North Carolinians’ financial security. When families have health insurance, medical bills are far less likely to cause financial hardship. Access to insurance leads to decreased catastrophic health expenditures and greater increases in income among low-income individuals. Closing the gap has been associated with a $1,140 reduction in medical debt per person gaining coverage. When people are less worried about their health and healthcare costs, they can spend their money and time on other things. For example, the majority of adults gaining coverage in states that have closed their gap report that coverage makes it easier for them to work or look for work. With healthcare coverage, North Carolinians would have more money to spend on food, rent, education, or other necessities.
5. Be fiscally responsible. Closing the coverage gap is an opportunity to reinvest North Carolinians’ federal tax dollars back into our own state. Currently, the taxes North Carolinians pay to support this federal program are being funneled into 38 other states, but not our own communities. Importantly, nowis the ideal time to close the coverage gap due to increased federal funding under the American Rescue Plan. The increased federal match rate will bring $1.7 billion in federal funding to North Carolina over the next two years. Federal funding could cover the state cost of closing the gap for up to six years while leaving a $400 million surplus that could be used for other state initiatives. Closing the gap isn’t just good for North Carolinians—it’s good for our state’s budget, too.

Improving access to affordable health insurance would have sweeping benefits for the health and finances of our state and its residents. A solution to close the gap is widely popular, with 75% of North Carolina voters in support. North Carolinians recognize the positive impact of closing the health insurance coverage gap. It’s time for our state leaders to do the same.