Medicaid expansion can come with costly side effects

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I am a physician practicing hematology and oncology in Wilson since 2003. I treat patients without regard to insurance or ability to pay. The letter to the editor published in The Wilson Times on May 3 by a group of 14 leaders in industry, services and health care described benefits of Medicaid expansion for North Carolinians. These leaders minimize the cost to North Carolinians, explaining how funding will be from federal rather than state tax dollars. We can examine the experiences of other states that expanded Medicaid years ago.

On the same day The Wilson Times published the above letter, The Wall Street Journal published an editorial titled “State Medicaid Tax Trap.” This editorial described unintended and unanticipated side effects based on the Rhode Island experience.

It became clear in Rhode Island that some private employers, who historically used good health-insurance benefits to attract employees, simply offloaded this expense to taxpayers to increase their profit. At the time of Rhode Island Medicaid expansion in 2013, and additional 40,610 low-income childless adults were expected to become eligible. However, an additional 119,754 actually signed up. Last year, 6,428 more people enrolled in Medicaid than Rhode Island estimated, and spending tracked nearly $20 million above budget projections. Gov. Gina Raimondo noted “The biggest part of our budget is Medicaid, over $1 billion a year.”

Realizing how employers are using Medicaid to reduce their health care expenses to increase profit, Governor Raimondo proposed a 10% payroll tax on businesses with more than 300 workers for each employee who enrolls on Medicaid. She explained “The reality is this [Medicaid] is a growing cost, and you [the employer] are getting the benefit of an employee with health insurance. To pay a small piece of our cost, I think, is reasonable.” Conservatives are concerned this new payroll tax will drive businesses out of Rhode Island.

I personally have not taken a position on Medicaid expansion in North Carolina. Medicaid expansion would be good financially for my practice and our local hospital in the short term. However, my 16 years in medical practice have informed me the problem of health insurance coverage is driven largely by high cost. Higher costs are being accelerated by the process of hospital consolidation into vast networks. In North Carolina, large networks formed by Atrium, Novant and UNC-REX among others have achieved vast negotiating power over health insurers including Blue Cross Blue Shield, United Healthcare and Aetna. These insurers then pass on higher costs to consumers.

This means we all pay higher monthly health insurance premiums. Studies in peer-reviewed journals in my specialty have documented how consolidated hospital networks drive up costs without improving quality.

We should be suspicious of elites who promote Medicaid expansion based on virtue when their organizations stand to profit.

Keith A. Lerro, M.D., Ph.D.


The writer practices medicine at Regional Medical Oncology Center in Wilson.