Senator Phil Berger: ‘Healthy Competition’ Will Keep Down Medicaid Costs

Oct 16, 2015

Senate President Pro-Tem Phil Berger says the Medicaid overhaul North Carolina lawmakers approved last month will contain the cost of the publicly funded health insurance program and improve the quality of service patients receive.

The overhaul, which was approved after more than two years of deliberations, will allow a majority of the state’s 1.8 million Medicaid recipients to get an improved quality of care because organizations led by insurance companies and organizations led by local groups of medical providers will compete to manage care of patients, Berger says.

“What we should see is some fairly healthy competition,” said Berger, a Republican from Rockingham County . “It's my belief that competition will assist in both the area of controlling cost and on the quality side.”

Berger spoke at length during an interview at his corner office in the state Legislative Building about Medicaid overhaul, public school spending, same-sex marriage and other issues the General Assembly addressed during this year’s eight-month session.

Excerpts:

Jorge Valencia: Democrats say the Republican leadership has eroded support for public education, and they point to the fact that North Carolina ranks among the lowest states in the nation in terms of spending for each student.

Sen. Phil Berger: I think if you look at state-level funding and you don’t lump in local funding and federal funding, North Carolina ranks fairly well. We’re in the upper half of state-level funding for K-12 public education. But I think if you want to talk about is just bare rankings, I think if you look at the money that has been appropriated since 2011, which is when Republicans took a majority, we actually are funding public education at levels higher than the Democrats did.

Certainly, the Democrats did make made cuts during the recession, but if you look at per-pupil spending at pre-recession levels, on a per-pupil basis, it hasn't returned to that level, even though we've seen an economic recovery.

I would point out that last year, the General Assembly, with the approval of Gov. Pat McCrory, provided an average 7 percent increase in pay for teachers all across the state of North Carolina, and education continues to be the largest single budget item in our state budget.

Moving on to Medicaid, you and other top members promised Medicaid reform. This session, you delivered on that promise. The new model will limit the amount of money spent on each patient, and it will allow both out-of-state insurance companies and local groups of hospitals or doctors to handle care of those patients, so there seems to be perhaps a tension between those two groups that will offer that service. What's your vision for this plan?

Our concern has been for a number of years that Medicaid, the growth in the state expenditures, the state budget for Medicaid has been at levels that far exceed the rate of inflation that in fact has been crowding out our ability to do some other things; you mentioned education before. But the key goal is that we want to make sure that we provide for medical care for those folks who were eligible for Medicaid at levels and with the quality that North Carolina has been known for. But we want to do that within the context of controlling the tax-payer obligation for that program, so that we don't see the kind of growth in spending that we've seen over the past 10 years or so.

Do you think that these new insurance-led organizations that are coming in from out of state, that they could run out of business these local, hospital-led or doctor-led organizations?

I don't know. We'll see what happens. I don't think so. What I would point out is one of the arguments against having the insurance companies involved is this idea that they are “for profit," and that a non-profit entity would be in a better position to handle Medicaid. Well, if in fact that's the case, and the for-profit companies have to set aside a certain amount for their profits, then I would say they would be at disadvantage to a non-profit, so I think what we should see is some fairly healthy competition. And it's my belief that competition will assist in both the area of controlling cost and on the quality side. Remember, the Medicaid enrollees are going to get to pick which they want to go with, whether or not they want to be involved with managed care on the provider-led or managed care with the insurance companies.  

The Republican Party is known for espousing the notion of small government. Why was it appropriate for the General Assembly to intervene in local redistricting? In particular, I'd like to talk about a measure that reduces the power of the mayor and the number of seats on city council in one of the cities that you represent -- Greensboro.

Much of what we've done with reference to the relationship between state and local governments is either consistent with historically the how things have been handled. You mention redistricting. It's also consistent with what would be an idea or the thought that we need to have regulation in terms of trade and trade matters that is consistent across the state, rather than having a hodge podge of different kinds of regulations in different parts of the state.

But in Greensboro, you had a number of city leaders who really bucked at this redistricting. They have challenged you in court, and an injunction has been issued, so this is being held up right now. Why was it appropriate in this particular case?

I think you'd look at the historical examples of how Greensboro has had the form of government or the council seats set before. It is perfectly within the precedent that has existed that the General Assembly has been involved in that.

Looking forward a little bit, Sen. Berger, which races have your attention and who will you be voting for in the March presidential primaries?

I've not picked a candidate. I'll tell you, Jorge, here's what I would like to talk about:

Over the past four years, what we've seen in North Carolina is a complete change in the direction of our state. January of 2011, we had a state that had a budget that had a two-and-a-half billion dollar shortfall.

Move ahead to now, and what you’ve got is you’ve got a state that has had four consecutive balanced budgets. You have a state that this past year had state revenues actually $4.5 million above projections. You had billions of additional dollars funded into public education. You’ve had an unemployment rate that is now close to the national average as opposed to being one of the worst in the nation. You have a tax system now, we now have one of the lowest individual and corporate tax rates in the southeast.

I’d like to see the same thing happen at the national level, where, if we had new leadership at the national level that would move the United States in a similar direction, there are a number of folks running on the Republican side that I think will do that. I’ve not picked a candidate. I look for someone who’s going to take the nation in the same direction.