As I predicted, Gov. McCrory just caved to the Republican radicals in the NC Senate about the expansion of Medicare and participating in the health insurance exchanges created by the federal Affordable Care Act. Everyone expects the NC House to cave too. (The bill is due for first action today in the House Health Committee.)

Donald H. Taylor Jr. is a professor of public policy at Duke and writes a blog (freeforall) that delves deeply into health care policy and politics. As soon as the Guv endorsed the NC Senate bill, Taylor was out with in-depth analysis that is provocative and may just be right. I don't know.

So I quote at length:

Word this morning that Gov. McCrory has decided that North Carolina will have a Federal ACA exchange, and that we will not undertake the Medicaid expansion now. Several quick points:

• Having the federal government run the exchange is a reasonable option. I would prefer that North Carolina do so because it would give our state more flexibility, but Republicans who control the N.C. General Assembly are still saying they are opposed to the ACA while offering no alternatives. Under these circumstances, going with the federal exchange makes sense.
• Gov. McCrory is saying the Medicaid system is too broken to expand, and he is worried about the long run federal cost share issues. Both are a dodge. The Republicans in the General Assembly are opposed for ideological reasons and both the Speaker of the House and the President of the Senate want to run for U.S. Senate, so they are thinking about the upcoming primary. Other states like Arizona have explicitly said they will roll back Medicaid expansions if funding shares change over time; such concerns could easily be dealt with via legislation, and the state could likely get quite a lot of flexibility for other Medicaid changes they desire by linking them to an expansion. Here is a post with lots of links on the benefits of Medicaid expansion. IF you think that expanding health insurance coverage is an important enough goal to warrant using public policy to achieve that goal, then the expansion is a no brainer. Will the Governor or the General Assembly offer an alternative?
• I have been predicting that N.C. will do the Medicaid expansion in spite of the state being run by Republicans; I will stick with that prediction for two main reasons, noted below.
• First, the tax reform that Republicans prefer is to use a sales tax as much as possible to collect tax revenue (good report on options). Get rid of exemptions, broaden the base and all that. However, hospitals and health systems are typically exempt from sales tax, as are professional services for everyone. The desired Republican tax reform route for Republicans will be a massive tax increase on hospitals and health care systems. For them, they are surely going to balk at a large tax increase sans the Medicaid expansion. And if they balk, then other’s want out (like the Realtors) from the sales tax, and that starts to unravel the plan.I also predict that they will raise quite a fuss about expectations of providing uncompensated care when an option such as the Medicaid expansion exists (Diaz v. North Carolina).
• Second, and perhaps most importantly, North Carolinians of all stripes are quite vested in the idea that we “aren’t the deep South.” I have lived in this state for 42 of my 45 years and this sentiment is broadly shared. To the North is Virginia that looks to be going ahead with a Medicaid expansion linked to revisions of the program despite having a Republican Governor and Legislature, and to the South is South Carolina and the rest of the deep South that is not planning to do a Medicaid expansion. North Carolina is squarely in the middle, both literally and figuratively. I predict that as this image settles in, it will not be a comfortable place for this state to remain for very long.