Medicaid madness: Forgiven debt could sink health coverage

It didn’t make national headlines, but the Biden administration recently announced yet another initiative that, despite its good intentions, will have unintended consequences for patients — not to mention taxpayers. This one sees the further expansion of Medicaid to cover liberals’ latest cause du jour.

In late July, North Carolina announced it had received approval from Washington for a Medicaid waiver that the state claims will allow it to relieve up to $4 billion in medical debt. The waiver allows hospitals to receive higher Medicaid reimbursements, provided they agree to relieve outstanding medical debt for patients meeting certain income requirements and also agree to provide discounted and charity care under specified parameters going forward.

With our nation $35 trillion in debt, Washington cannot keep functioning as an ATM for every welfare expansion that states wish to undertake.

Ironically, this government-led “solution” of forgiving debt comes in no small part because of a problem the government helped create in the first place. Like most other states, North Carolina provides paltry Medicaid reimbursements to doctors and hospitals. The Tar Heel State reimburses for primary care at 78% of what Medicare pays. In obstetrics, the rate is even lower, at just 68% of Medicare rates.

North Carolina hospitals, forced to make up for the state’s below-cost rates for Medicaid patients, charge uninsured patients and those with private insurance more, leading to increased medical debt.

A second irony comes in the fact that having medical debt forgiven entirely will discourage patients from signing up for health coverage. For instance, the state’s plan requires participating hospitals to “relieve all medical debt deemed uncollectible dating back to January 1, 2014 for any individuals not enrolled in Medicaid with incomes at or below 350% of the federal poverty level,” or $109,200 for a family of four this year.

Families earning in the low six figures may not be able to repay their entire hospital bill, but most should be able to contribute something. However, the North Carolina plan will erase their debts entirely. Just as the Biden administration’s student loan forgiveness plan discourages borrowers from repaying their debts, the North Carolina policy would weaken Obamacare. Why should families pay hundreds of dollars monthly for health coverage if they can have their medical debts forgiven later?

The North Carolina plan represents but the latest effort to use federal funding designed for health benefits to fund every leftist cause under the sun. Medicaid now pays for housing and food costs in some states. Oregon’s Medicaid program in March began to fund air conditioners and mini fridges as “climate supports.” Yet the Biden administration reversed President Trump’s efforts allowing states to impose work requirements, a common-sense solution that sees Medicaid beneficiaries engaging with their communities to develop valuable job skills.

With our nation $35 trillion in debt, Washington cannot keep functioning as an ATM for every welfare expansion that states wish to undertake. As well-intentioned as the North Carolina plan sounds, shifting medical debt from patients to the federal government will not end well for our children and grandchildren, who will spend decades paying the tab.