RALEIGH — Gov. Pat McCrory signed legislation Wednesday that rejects major components of the federal health care law, denying about 500,000 low-income people health care coverage under an expanded Medicaid program.
The measure also prevents North Carolina from establishing a state-sponsored marketplace for health insurance, giving the control to the federal government, which will begin selling policies on the exchange in October.
McCrory voiced support for the controversial measure as it progressed through the General Assembly and reiterated his concerns about the state’s current system and inability to absorb new participants, particularly after a state audit showed misspending and administrative troubles in the system.
“In my first eight weeks as governor, I’ve had to make some difficult decisions,” McCrory said in a statement released by his office after he signed the bill in private. “Before considering Medicaid expansion, we must reform the current system to make sure people currently enrolled receive the services they need and more taxpayer dollars are not put at risk.”
The Republican’s signature on the measure puts North Carolina in the minority of states that oppose extending government-paid health care coverage in 2014 to those below 138 percent of the federal poverty line, one of the key provisions of President Barack Obama’s health care law.
A number of prominent Republican governors who opposed the federal law, including New Jersey Gov. Chris Christie, a close McCrory ally, have agreed to expand Medicaid. At this point, roughly 28 states plan to expand coverage or appear likely to do so, while 17 states are not participating or leaning against it. Another five are undecided.
McCrory and GOP state lawmakers made clear they are willing to reconsider the state’s position in the future if changes are made to the current system and the federal government softens its rules for expansion.
But such a move would cost the state more money without the current federal incentives, and administration officials said it is unlikely to happen in the next couple of years.
Under the Affordable Care Act, the federal government would pay the entire cost for newly eligible Medicaid patients for the first three years, declining on a sliding scale to no less than 90 percent after 2019.
The number of state residents who receive Medicaid is already expected to increase as those currently eligible but not covered seek coverage because of the federal insurance mandate. Those people “coming out of the woodwork” will cost the state roughly $900 million over eight years.
In opposing the expansion, Republicans cited the cost and doubts about the sustainability of future federal money. They also voiced overall objections to “Obamacare.”
Republicans also feared a large portion of newly eligible people would move from private insurance to the government-paid plan, but studies and industry experts say the number of people that might do that is much smaller, ranging from 10 percent to 30 percent.
Democrats fought the measure by emphasizing that 1.5 million people in the state don’t have insurance.
Rep. Verla Insko, a Chapel Hill Democrat, said the state’s system is solid, despite administrative challenges. The problems cited “are not a good reason not to expand,” she said. “If they are waiting for perfect, they are not going to get there.”
The decision not to expand hits hardest those who aren’t currently eligible but fall below the federal poverty level. This group is not able to receive subsidies to buy health coverage through the exchange, like those between 100 percent and 400 percent of the federal poverty level.
“In the short run, it means hundreds of thousands of North Carolinians will remain uninsured, and they are not going to get adequate medical care,” said Jonathan Oberlander, a health policy professor at the UNC School of Medicine. “Research shows it makes significant health difference for people who get coverage. ... There is mounting evidence that it saves lives.”
The director of the state’s Medicaid program, Carol Steckel, a McCrory appointee, said she doesn’t believe an expansion would help the uninsured get better care because there are not enough providers. “If I gave 700,000 people who don’t have health care coverage a Medicaid card in North Carolina, do you really think they would get healthier?” she recently told Stateline News Service.
In the same interview, she disputed that low-income people don’t have options for coverage, saying they can use rural health centers, as well as free clinics and state health departments. “Right now, all they’re talking about is Medicaid or emergency rooms like there’s nothing in between,” she told the publication. “Well, there is this whole system in between.”
The jobs angle
A state report estimated that expansion would add 25,000 jobs in the health care industry and infuse $1 billion into the state to help meet the growing number of insured patients.
Democrats touted the study as a reason to extend Medicaid coverage. “This is a jobs bill,” Insko said, using a familiar political refrain. “A lot of the issues we are dealing with are not jobs bills, but this is.”
Without the expansion, hospitals warn job cuts are possible. The federal health care law cut billions of dollars paid to hospitals to help defray the cost of uncompensated care because more patients would be covered under an expanded Medicaid program. N.C. hospitals totaled $3 billion in uncompensated care in 2011, according to the industry’s state association.
David Herman, the CEO at Vidant Health, which owns 10 hospitals in Eastern North Carolina, said he remains optimistic about expansion in the future and will try to prevent deep cuts.
“We will do everything we possibly can to insulate (our patients) from the reduction in payments we are going to get because those funds are being diverted to other states for Medicaid expansion,” he said in a recent interview. “And make it safe and rational for the state of North Carolina to consider Medicaid expansion sometime in the future.”