McCrory, GOP plan to stop NC Medicaid expansion

jfrank@newsobserver.com, relder@newsobserver.comFebruary 12, 2013 

  • Who is eligible?

    Medicaid currently covers a limited group: long-term disabled adults, low-income people over age 65, pregnant women and children. But under the federal health care law, eligibility for government-backed Medicaid may be expanded in 2014 to anyone making below 138 percent of the federal poverty level. Here’s who would qualify:

    Family size Income level

    1 $15,414

    2 $20,879

    3 $26,344

    4 $31,809

    Source: N.C. Justice Center

  • Health exchanges will be set up by feds

    The bill opposing Medicaid expansion in the state also blocks establishment of a state-run health care insurance exchange – a move Gov. Pat McCrory agrees with.

    Billed as an “online insurance marketplace,” the state-operated agency would have tailored its services to the particular needs of North Carolinians. Instead, those responsibilities will be handed over to the federal government if the bill becomes law.

    On Tuesday, McCrory said North Carolina wasn’t prepared to implement the exchange, blaming the previous administration for not doing enough to prepare. At the same time, he said the state was not taking an obstructionist stance.

    “I do need to let the politicians know that the national health care plan is the law of the land,” McCrory said. “We are implementing it. We are doing it through a federal exchange.”

    Before leaving office, Democratic Gov. Bev Perdue put the state on a path to partner with the federal government on an exchange. And House Republicans approved a measure in 2011 mandating a state exchange, the opposite of their current stance.

— A Republican measure to prevent major components of the federal health care law from taking effect in North Carolina will almost certainly be approved after Gov. Pat McCrory endorsed the effort Tuesday.

The new governor had been a wild card after he expressed caution about the fiscal implications of the legislation and declined for weeks to take a position on the broader bill, which would prevent the expansion of Medicaid in 2014 to roughly 500,000 people and prohibit the state from creating an online exchange for private health insurance.

Hours after McCrory’s announcement, the measure won easy approval in a House committee, where Republicans voiced concern about the cost of offering Medicaid coverage to more North Carolinians and outnumbered Democrats who called the bill an “attack on the poor.” The full House will consider the legislation Wednesday, and it could land on the governor’s desk next week.

The debate is real to the ranks of the uninsured – many of whom likely would get coverage if the state expanded Medicaid eligibility. It currently only covers children under 18, some pregnant women, disabled people, select low-income parents and elderly people who are poor.

But under the federal health care law, anyone making less than 138 percent of the federal poverty level, or $31,809 for a family of four, would qualify. The federal government would pay 100 percent of the cost for those newly eligible in the first three years and no less than 90 percent through 2020.

In explaining his stance, McCrory expressed concerns about whether the federal government would pay its share of the cost to expand in light of the budget deficit, which has exceeded $1 trillion in each of the past four years.

McCrory also said the state’s Medicaid system is too troubled to add more people to its ranks and cited a recent state audit showing more than $1 billion in cost overruns and mismanagement. “We have a broken Medicaid system that is not ready to go,” he told a group of business leaders in Raleigh.

Needing help

The Affordable Care Act requires everyone to obtain health insurance or pay a fee. The Medicaid option was intended to help poor adults obtain that coverage.

About 1.5 million state residents don’t have health insurance, including about 150,000 in Wake County.

Chandra Brown is one of them. She works two jobs, including one as a restaurant cook. Her husband has a part-time maintenance position. The couple own a modest home in Wake Forest and send their son Dillon, 19, to Wake Tech. They are trying to save enough to help pay for him to attend N.C. State University next year.

Brown’s employer offers a health care plan, but it would cost her more than $400 a month – a third of her take-home pay, she said.

“We just can’t afford health insurance,” Brown says.

Instead, Brown, a diabetic who was losing her eyesight and suffering from chronic pain in her hands and feet, now goes to Alliance Health Ministries, a nonprofit clinic that uses grants, donations and co-pays from patients to serve working adults not eligible for Medicaid. The clinic treats about 14,000 patients annually, said Tara Lewis, medical director for the clinic

Republican state Rep. Jim Fulghum, a retired neurosurgeon from Raleigh, called such uninsured people “an agonizing problem. “If there is a lack of care, I want to provide it – that’s just my nature and anyone’s in this field,” he said.

At the same time, he is concerned about the rising cost of Medicaid, which makes up 15 percent of the state’s $20 billion budget. The $3 billion cost to the state in the 2012 fiscal year compares to $2 billion a decade ago. The federal government pays about two-thirds of the cost for current participants, or about $11 billion.

“It’s a difficult issue to throw good money after bad,” Fulghum said.

‘Exactly what is wrong’

The U.S. Supreme Court ruling on the Affordable Care Act gave states the option of extending Medicaid under the federal law. To date, 21 states plan to expand with another four leaning in that direction, including a handful led by Republican governors, according to The Advisory Board, a health policy consulting firm. North Carolina is among 12 that will not expand.

The price tag for the expansion fuels GOP lawmakers’ opposition in North Carolina. One major issue is the “woodwork” factor. Analysts predict that the health insurance mandate will draw out people who are Medicaid-eligible but have never before sought coverage.

An estimated 87,000 are expected to fall in this category by 2021, and the state will bear one-third of the cost, as is current practice. Combined with administrative costs, this group could cost the state an additional $900 million over the next eight years.

Republicans chastised the federal government for offering money with so many strings attached and flimsy promises for future money. McCrory and Republican lawmakers said they would reconsider their position if the terms from the federal government change, but acknowledged such action is unlikely anytime soon.

“This is exactly what is wrong in this country,” said Rep. Justin Burr, the Republican chairman of the House Health and Human Services Committee. “The fact that the federal government constantly comes and dangles some dollars down in front of our face and we instantly think we have to grab it.”

Hospitals dislike bill

Democrats said it’s better to keep the state’s tax money in North Carolina than to send it elsewhere.

“Our tax dollars are going to go to those other states that are expanding Medicaid,” said Rep. Verla Insko, a Chapel Hill Democrat. “There’s no reason for us to be sending North Carolina tax dollars to other places when we could have it here benefiting our own citizens.”

Critics of the Republican legislation touted the economic boost to the health care industry from the federal expansion money, tying it to the campaign pledges of the Republican governor and lawmakers to create jobs.

A state-commissioned study determined that Medicaid expansion would create 23,000 jobs through 2021, along with another 23,000 spin-off positions, and inject more than $1 billion into the state’s economy.

Without the money, the state’s hospitals may face job losses because of the cost of charity care that would likely decrease if more people are insured. Don Dalton, a N.C. Hospitals Association spokesman, said charity care and unpaid bills amounted to $1.6 billion in 2011.

“Without Medicaid expansion, our community hospitals can expect to continue providing huge amounts of charity care and writing off similar, if not increasing, amounts to bad debt,” he wrote in a statement.

On a broader level, Democrats connected the health care bill to an earlier one crafted by Republicans to curtail unemployment benefits.

“We’ve only been here for a few days and already we are rushing through two pieces of legislation and I think they are very much connected,” said Rep. Beverly Earle, a Charlotte Democrat. “This is a safety net for people who would otherwise have no place to go ... I think North Carolina ought to do better than this.”

The economic argument doesn’t makes sense to Republican Sen. Ralph Hise, the chairman of the Senate health care committee. He said he fears an influx of Medicaid patients will hurt hospitals because they will receive less money for Medicaid patients than is typically paid by private insurance companies.

“It’s a basic payer mix that means hospitals can no longer operate,” he said. “I can’t have people in my district where the nearest health care or districts is an hour and a half away.”

Hise believes the answer to serving North Carolina’s uninsured will come through the federal health insurance exchanges.

The federal law set a limit on how much low-income people can pay for health insurance premiums. For those at 138 percent of poverty level, the insurance cost is capped at 2 percent of their income, or roughly $53 a month, the Republican from Spruce Pine said.

“That moves them to the private insurance market that pays the cost associated ... with any procedures,” he said. “I don’t see the overall solution to (the uninsured) as some vast expansion of government systems ... because we don’t want to destroy the benefits of the system we currently have.”

Staff writers Craig Jarvis and Rob Christensen contributed to this report.

Frank: 919-829-4698

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