Medicaid Madness: Debt Cancellation Could Cause Health Coverage to Plummet

While it hasn’t made national headlines, the Biden administration recently announced another initiative that, despite its good intentions, will have unintended consequences for patients, not to mention taxpayers. This time, it’s an even bigger Medicaid expansion to cover the liberals’ latest cause du jour.

In late July, North Carolina announced that it had received approval from Washington for a Medicaid waiver that the state says 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 the outstanding medical debt of patients who meet certain income requirements and also agree to provide discounted and charity care within specified parameters in the future.

With a national debt of $35 trillion, Washington cannot continue to function as an ATM for every welfare expansion states want to undertake.

Ironically, this government “solution” to debt forgiveness is largely due to a problem that the government helped create. Like most other states, North Carolina offers paltry Medicaid reimbursements to doctors and hospitals. The Tar Heel State reimburses primary care at 78% of what Medicare pays. Obstetrics rates are even lower, at just 68% of Medicare rates.

North Carolina hospitals, forced to make up for below-state rates for Medicaid patients, are charging uninsured patients and those with private insurance more, leading to increased medical debt.

The second paradox is that total medical debt forgiveness will discourage patients from buying health insurance. For example, the state plan requires participating hospitals to “forgive all medical debts deemed uncollectible dating back to January 1, 2014, for any person not enrolled in Medicaid whose income is at or below 350 percent of the federal poverty level,” or $109,200 for a family of four this year.

Families with incomes below six figures may not be able to pay their entire hospital bill, but most should be able to contribute to their plans. However, North Carolina’s plan would completely forgive their debts. Just as the Biden administration’s student loan forgiveness plan discourages borrowers from paying back their debts, North Carolina’s policy would weaken Obamacare. Why should families pay hundreds of dollars a month for health coverage if they can have their medical debt forgiven later?

North Carolina’s plan is just the latest effort to use federal health benefit funds to fund every left-wing cause under the sun. Medicaid now pays for housing and food in some states. Oregon’s Medicaid program began funding air conditioners and mini-fridges in March as “climate supports.” Yet the Biden administration has reversed President Trump’s efforts to allow states to impose work requirements, a common-sense solution that allows Medicaid recipients to engage in their communities to develop valuable job skills.

With a national debt of $35 trillion, Washington cannot continue to serve as an ATM for every welfare expansion states want to undertake. As well-intentioned as North Carolina’s plan may seem, shifting patients’ medical debt to the federal government will not end well for our children and grandchildren, who will spend decades footing the bill.