The North Carolina Experiment: How One State Is Trying To Reshape Medicaid

North Carolina is in the process of overhauling its Medicaid program. The governor and state lawmakers are using a mixture of health care models to put the major players — doctors, hospitals and insurers — all on the hook to keep rising costs in check.

For many of the Republicans who control the state legislature, the reason for the change is simple: budget predictability.

“For years and years and years, Medicaid has been considered the budget Pac-Man that eats up all the dollars that people in this chamber would like to see spent on many, many other things,” Rep. Bert Jones said during the North Carolina House’s debate of the bill last month. Gov. Pat McCrory signed the overhaul into law on Sept. 23.

The state, which has not expanded Medicaid under the health law, struggled with huge Medicaid cost overruns from 2010 through 2013. That sent lawmakers looking for a better way to manage it, even though a signature part of the program has won national awards for quality and cost.

The lawmakers settled into two camps: One camp wanted to use a managed care model, which basically means paying large insurance companies a specific amount per person covered and relying on the companies to contain costs.