The Republican leadership in the N.C. Senate in Raleigh unveiled their proposed 2019-21 state budget Tuesday that — as expected — does not expand the state’s Medicaid program.

The possibility of expanding Medicaid to add between 450,000 and 650,000 North Carolinians is arguably the most contentious legislative issue at present. Expansion would allow many of those residents to be covered by health insurance, giving them access to affordable primary physician care and reduce the dependency on hospital emergency-department services.

The program already serves 2.14 million North Carolinians, representing about 21% of the state population. About 1.6 million will be enrolled in managed care under a federal waiver.

The state Senate expects to pass its proposal by the end of the week, which would begin negotiations with the N.C. House, which as passed its own version off the budget.

Medicaid expansion was brought up by N.C. Senate leader Phil Berger, R-Rockingham, only when he cited that the state is picking up $141.3 million in reduced N.C. Health Choice federal funding. The federal match in the program drops to 88.4% in fiscal 2019-20 and just under 77% in 2020-21 (preliminary number).

Berger has said for years that his primary opposition to Medicaid expansion is his concern that the federal government may chose not to keep up its 90% funding of additional administrative costs.

When asked at Tuesday’s news conference whether Medicaid expansion was in the Senate budget proposal, Berger’s response was an emphatic “no.”

A statement from Berger’s office said that “while Democrats have focused their efforts on expanding socialized medicine via Obamacare Medicaid expansion, Republicans believe that care for people with severe disabilities should be prioritized over taxpayer funding for able-bodied adults.”

State Sen. Joyce Krawiec, R-Forsyth, said that “the backlog of people with disabilities who cannot care for themselves is a serious issue, and funding these slots will continue to be a priority for us.”

The lack of Medicaid expansion in the Senate budget proposal is likely to set up a clash with Democratic Gov. Roy Cooper and Senate Democrats, who may be willing to bog down the budget process for months to get some form of expansion.

Cooper can veto any public bill if he has the unanimous support of the 21 Democratic senators and loses no more than six Democratic votes in the House.

If that is the case, expectations could go out the window for wrapping up the session around the Fourth of July and opening new state funding streams at the start of the 2019-20 fiscal year on July 1.

Cooper's office said in a statement that "this budget leaves out Medicaid expansion that would close the health care coverage gap, and it shortchanges public schools in exchange for more corporate tax cuts."

"The governor hopes to continue working with the House and Senate on a budget that does more to help hard working North Carolinians.”

“This will be the subject of extensive negotiations between the House and Senate, and eventually including the governor,” said John Dinan, a political science professor at Wake Forest University and a leading expert on state legislatures.

“With the loss of Republican supermajorities, the governor can veto the budget, as he almost certainly will do because it does not meet his priorities in key respects,” Dinan said. “This time, his veto will very likely be sustained by the newly empowered Democratic minority.

“At that point, the real negotiations will begin between legislative leaders and the governor over whether to sign on to the Affordable Care Act’s Medicaid expansion, over a number of education issues, and over a number of other issues.” Dinan said.

Hotly debated

Cooper’s budget plan recommends expanding Medicaid “to bring $4 billion into North Carolina’s economy, create an estimated 40,000 jobs and provide more affordable health care for 500,000 people,” according to a statement from his office.

Berger said that Medicaid expansion would take away federal insurance marketplace options for 40% of the potential Medicaid-expansion population.

He repeated a GOP talking point that expansion is a disincentive to some “able-bodied” Medicaid recipients to pursue work.

A 2013 state law signed by then-Republican Gov. Pat McCrory surrendered the governor’s ability to expand Medicaid through executive order, as Ohio did with then-Gov. John Kasich, a Republican.

Wesson said it is likely that Kasich’s expansion success led to the North Carolina law that prohibits the executive branch from making any expansion attempt without the legislature’s approval.

When asked about Cooper opposition to the Senate budget proposal sans Medicaid expansion, Berger acknowledged the potential for lengthy negotiations.

“We are likely to have a disagreement with the governor (over Medicaid expansion) but not that it should prevent an agreement,” Berger said.

“He should look at how the state’s revenues have been managed the last nine years and the fiscal soundness. We’re going to continue those policies.

“He should sign the budget that we work out with the House,” Berger said.

Bills stuck

in committee

None of the three Democratic and Republican bills containing Medicaid language have advanced in the committee stage this session

That includes bipartisan support behind House Bill 655, sponsored by state Rep. Donny Lambeth, R-Forsyth, which includes a work requirement for some recipients.

The proposed legislation retains two controversial elements: a work requirement for some Medicaid recipients between ages 19 and 64; and an assessment for health-care systems and prepaid health plans, or PHPs, to pay for the state’s 10% share of additional administrative costs. Health-care systems and PHPs operating in the state would pay $758 million annually.

The N.C. Healthcare Association said it supports HB655 “as a common-sense option” to close the coverage gap and increase affordable access to health insurance” for working individuals and families in North Carolina.

“While some Republican legislators have signaled a willingness to address a form of expansion that also included work requirements and premiums, GOP leaders — especially in the Senate — continue to oppose the idea,” said Mitch Kokai, policy analyst with the John Locke Foundation, a conservative-leaning research group. “All signs point to a collision course between the General Assembly and the governor.”

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rcraver@wsjournal.com 336-727-7376 @rcraverWSJ

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