Medicaid Expansion Would Strengthen Nonprofits’ Services and Operations

By David Heinen, Vice President for Public Policy and Advocacy, North Carolina Center for Nonprofits

Because of the confluence of the ongoing COVID-19 pandemic, the nonprofit workforce shortage, and inflation, North Carolina nonprofits are currently experiencing several major operational challenges, including: 

1. Increased need. More than half of North Carolina nonprofits experienced an increase in demand for their services during the COVID-19 pandemic, and that need continues to grow as more people turn to nonprofits for help as their budgets have become tighter with the recent inflationary cost-of-living increases. 
2. Lost volunteers. Many nonprofits rely heavily on volunteers to deliver their programs and services. Unfortunately, North Carolina nonprofits lost about 40% of their volunteers in 2020, and the majority of these volunteers have not returned. Many nonprofits have had to hire – or attempt to hire – additional paid staff to fill positions that are typically covered by volunteers.
3. Shortage in paid workers. On top of the decline in volunteerism, the nonprofit sector is now facing a severe workforce shortage. In a recent national survey, more than three-fourths of nonprofits reported having at least 10% of their staff positions vacant. 

The North Carolina Center for Nonprofits has been advocating for state and federal policymakers to take a variety of actions to help address each of these challenges. One major policy solution that would help with all three of these issues is Medicaid expansion. By expanding Medicaid coverage to adults with incomes up to 133% of the federal poverty level, the NC General Assembly could support the work of charitable nonprofits in three ways:

1. Complementing the work of many nonprofits that provide services to North Carolinians who don’t currently have adequate health coverage;
2. Providing health coverage for some employees of nonprofits that don’t offer group health plans and whose salaries leave them in the health care coverage gap; and 
3. Providing payment for some types of Medicaid-eligible services that nonprofits currently provide to clients for free.

Providing health care to nonprofits’ clients

North Carolina’s 40,000 nonprofits provide a wide range of programs and services to people throughout the state. With ever-rising health care costs, the 600,000 North Carolinians in the coverage gap are turning more and more to nonprofits to meet many of their basic needs, such as food, housing, and child care. If these North Carolinians were eligible for Medicaid, they could use some of the money that they would otherwise spend on staggering out-of-pocket medical expenses to pay for a portion of the services that nonprofits provide. 

Perhaps more importantly, Medicaid expansion would create healthier communities in North Carolina. Nonprofits are, at their core, problem solvers, and many of the problems that nonprofits solve are exacerbated when the people they serve don’t have access to health care. The Center has heard from almost every type of nonprofit – including food banks, crisis assistance centers, affordable housing providers, community health centers, domestic violence agencies, and consumer credit counseling services – that their overflowing caseloads would be significantly reduced if the people they served received the preventative health care that they needed. 

Providing coverage for nonprofit workers

More than one-third of nonprofits that participated in the Center’s 2020 survey of salaries and benefits in the state’s nonprofit sector, reported that they aren’t able to offer health benefits for their employees. Because most respondents to this survey are well-resourced organizations, it is likely that an even greater portion of the overall nonprofit sector – particularly smaller nonprofits and those that pay relatively low wages –  aren’t able to offer health benefits to their workers. Based on available demographic data on the nonprofit sector, the Center estimates that at least 5,000-10,000 nonprofit employees across the state – and possibly far more – are currently in the health coverage gap and would be direct beneficiaries of Medicaid expansion. 

For nonprofits with workers in the health coverage gap – and for organizations that can’t fill job positions because they can’t afford to provide health benefits – Medicaid expansion would be a tremendous job recruitment tool. Nonprofits report that one of the biggest reasons they have trouble filling staff positions is that they offer insufficient benefits. For many low-resource nonprofits that can’t offer high salaries or competitive benefits, Medicaid expansion would provide quality health coverage that might make meaningful jobs a more sustainable option for potential workers. 

Further, there is a strong correlation between volunteerism and physical wellbeing and mental health. Consequently, it is quite likely that Medicaid expansion would significantly increase the pool of potential volunteers for nonprofits, helping fill some of the gaps in volunteerism that have persisted for the past two-and-a-half years. 

Paying for services currently nonprofits currently provide for free

Many nonprofits provide services health and behavioral health services that are covered by Medicaid. Because nonprofits operate for the public benefit rather than to make a profit, many organizations provide these services to people regardless of their ability to pay. For nonprofit like behavioral health providers, health centers, hospitals, and free clinics, Medicaid expansion would be a significant new source of revenue to help pay at least a portion of the cost of providing these services. 

A nonprofit sector policy solution

Ultimately, almost every nonprofit organization in North Carolina would benefit from Medicaid expansion. It would improve the health of more than half a million North Carolinians who turn to nonprofits every day to help meet their basic needs. And it would help address the nonprofit workforce shortage by expanding the pool of potential paid workers and volunteers who can help nonprofits deliver their programs and services in communities across the state. That’s why the North Carolina Center for Nonprofits and nonprofit organizations across the state are encouraging the House, the Senate, and Governor Cooper to work together to finalize a plan for Medicaid expansion this year.