Combining Medicaid Expansion with Managed Care Reform in North Carolina

October 10, 2017
Analysis explores how a non-expansion state like NC could combine ideas from both parties to achieve mutual goals

Medicaid expansion, combined with managed care reform, could increase the number of the insured North Carolinians living in rural areas, help providers succeed in population-based payment models, and improve health needs of the uninsured, according to a new report prepared by experts at the Duke-Margolis Center for Health Policy with funding from the Robert Wood Johnson Foundation. The analysis finds that pairing expansion with reform could help to improve health and avoid future spending on related illnesses.

North Carolina is one of 18 states yet to expand Medicaid eligibility under the Affordable Care Act (ACA). The state is on the cusp of undertaking significant reforms to its $12.4 billion Medicaid program that insures two million of its residents.

Researchers investigated how Medicaid expansion could affect the state’s managed care reform goals. The analysis found that combining expansion with managed care reform could:

  • Increase the number of Medicaid beneficiaries in rural areas, supporting higher enrollment levels that would lead to more robust competition among managed care plans, but could also strain existing physician networks and lead to patients seeking care in higher-cost hospital settings.
  • Help physicians and hospitals achieve the scale required to succeed in population-based payment models, but in the short term could make providers reluctant to enter into contracts that hold them accountable for managing the care of new, unfamiliar patients.
  • Address the physical and behavioral health needs of the uninsured—which will ultimately improve health and cut future spending—but would require short-term investment and could exacerbate problems with the state’s behavioral health system.

“North Carolina may prove to be an important case study in whether and how a divided state government can forge a path to better health and value for care,” said Donald H. Taylor, Jr., PhD, MPA, professor of policy and member of the Duke-Margolis Center for Health Policy. “States that have yet to expand Medicaid eligibility for their residents may consider complementing expanded eligibility with other alternatives, such as managed care reform, that they have already put in place or proposed.”