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In Wake of Election, Questions About NC’s Implementation of Health Reform

President Obama’s electoral victory yesterday all but guarantees his health reform efforts will move forward. Now, it’s up to North Carolina to decide how the state will implement the law.

By Rose Hoban

One of the questions that’s been open during this campaign season in North Carolina has been the fate of the state’s Medicaid program. And even though President Obama’s victory last night all but guarantees his health reform measures will move forward nationally, many questions remain over North Carolina’s implementation of health reform.

One way that the Affordable Care Act – known as Obamacare – expands health insurance coverage is by having states expand their Medicaid programs, with the federal government picking up a large part of the tab.

That Medicaid expansion is a cornerstone of the law: it allows for working poor who don’t make enough to buy insurance to get coverage. But in June, when the U. S. Supreme court ruled on the constitutionality of the ACA, the ruling surprised many by making it optional for states to expand Medicaid.

Expanding the program would cost North Carolina hundreds of millions over the coming six years, and provide health coverage for as many as 720,000 people. Although some in the General Assembly have balked at the price tag, the political backlash of not covering a big chunk of North Carolina’s 1.5 million uninsured may be too great.

And the state’s hospitals stand to lose big if a Medicaid expansion does not go forward.

North Carolina in a holding pattern

At least six states with Republican governors and legislatures have said they have no plans to expand their Medicaid programs: Texas, Mississippi, South Carolina, Louisiana, Georgia and Florida.

Another handful of states are on the fence. Presumably, many governors and legislatures were waiting to see yesterday’s election results before deciding their course. If Mitt Romney had won the presidency, he had pledged to repeal the ACA. Even though complete repeal might have been difficult, a President Romney and a Republican House of Representatives could have gutted the law by underfunding measures essential to the ACA’s success.

So, many delayed acting until after last night’s results.

That’s been the case in North Carolina, where legislators have taken no action on the program. The Supreme Court ruling this summer came only days before the end of the legislative session, and state lawmakers are not due to gather again until late January.

Last year, the Medicaid program came under fire after it posted an overrun of more than $200 million (about 1.5 percent of the total budget of more than $13 billion).

State representative Justin Burr (R-Albemarle) said shortly after the Supreme Court ruling this summer that his preference was not to expand Medicaid.

“I’m thinking I can say with full confidence we probably won’t see this General Assembly picking up the tab for additional enrollees,” said Burr, co-chair of the joint Health and Human Services oversight committee. “We’re trying to manage what we have and meet the needs for current enrollees.”

Other Republican lawmakers have been more circumspect, and many have declined to answer questions about the expansion altogether.

Outgoing Senator Bill Purcell (D-Scotland County) said lawmakers on his side of the aisle were committed to expansion.

“What you hear said in the campaign that they’ll repeal it as soon as they take over, so I guess everybody’s been waiting for these things to happen,” said Purcell, who is a pediatrician. “But if we don’t do it, I want to see some plan that’s going to take care of all these people who don’t have care now.”

Under the ACA, up to 720,000 of North Carolina’s uninsured would become eligible for Medicaid under the expansion, most of them would have been previously uninsured.

An analysis by the North Carolina Institute of Medicine has shown that the state would have to pay about $830 million over the first six years of the expansion, about $138 million per year. North Carolina receives more – $144 million – from the tobacco industry Master Settlement Agreement each year.

Meanwhile, the Medicaid expansion would bring more than $15 billion federal dollars to the state over the same time period – 18 times the state expenditure.

“Where is that money coming from? Who are we taking that money from, who are we borrowing that money from? That’s not free money,” Burr said. “I don’t believe we need these massive expansions of government programs. We need to manage what we have and keep costs down as much as possible.”

For newly eligible people, the federal government will pay the all of the cost for three years, and 90 percent of the cost for the following three years.

The expansion could be considered a bargain for state lawmakers. Right now, Medicaid recipients cost the state, on average, more than $6,000 per year. But because of the federal subsidies, people being covered by the expansion will only cost North Carolina $188/ year for at least six years.

“But after that period, once we get to 2020, what happens then? Where does the tab go then, with the state?,” Burr asked.

Hospitals hoping to see expansion

Hospital leaders have been waiting to see what would happen in the presidential election as a signal about the Medicaid expansion, according to Don Dalton, a spokesman from the North Carolina Hospital Association.

Hospitals in areas with many uninsured and low-income people receive help from the federal government in the form of “disproportionate share hospital” (DSH) payments. And because of North Carolina’s high rate of uninsurance, most hospitals in the state get these subsidies.

But under the ACA, DSH payments will be phased out as more people are able to get insurance.

President Obama signing the Affordable Care Act, March 24, 2010. Photo courtesy Keith Ellison, Flickr Creative Commons

President Obama signing the Affordable Care Act, March 24, 2010. Photo courtesy Keith Ellison, Flickr Creative Commons

“I asked a hospital administrator recently aren’t you better off if people who come to you have some kind of insurance?” Sen. Purcell said, “And he said, ‘yes we are.’”

But hospital leaders won’t talk publicly about their conversations with lawmakers.

Dalton did say that officials from his organization have been talking to lawmakers behind the scenes about the loss of the DSH subsidies, and what it would mean to hospitals if Medicaid did not expand to cover the working poor.

For many of the uninsured, their portals to care are hospital emergency rooms, which are required to provide basic care for people who show up at their doors in distress. But it’s expensive – for patients and hospitals. And according to Dalton, about 70 precent of hospitals’ bad debt comes from this kind of charity care.

“(Medicaid expansion) would bring probably the amounts that hospitals now spend on charity care or the amounts that go into hospitals’ bad debt… it would lower those amounts,” Dalton said.

He also said it’s a trade off. Dalton claimed hospitals don’t really get paid for the full cost of Medicaid patients – currently, they make about eighty-five cents on the dollar for their care.

But he admitted that getting eighty-five cents on the dollar is more than what hospitals get paid for many uninsured patients now, which is often nothing.

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  • Gary Gartner

    Rose – spot on and incredibly timely! There are many organizations that are waiting on this decision as it will have an impact on their ability to serve the uninsured. I know of one that will have to implement a claims/payment system if Medicaid is expanded; currently they are cash-only. Interesting times!

  • Pingback: States, Especially GOP-Controlled Ones, Facing Crucial Decisions On Health Insurance Exchanges, Medicaid | Health Care

  • Allison Rice

    Excellent article. One additional point is that if NC doesn’t expand Medicaid, its federal tax dollars will be heading out to California, New York, Washington, and all the other states that do expand. Might as well bring those dollars back here to NC where they can help struggling hospitals, stimulate the economy, and improve the health of our citizens.

  • Amy

    I am like most others awaiting to see how all this pans out. I know that I do not have any insurance and with my slight health problems, I could see a doctor, get medication, and feel better. If I felt better, I know that I could work more than I am able now. Maybe if more of us were able to see a doctor, get help, and even get better, then we would be able to work better jobs and not need the services any more. I do see a doctor and pay out of pocket for my visits. Only my children qualify for Health Choice, however if something is wrong with them and one would not, I would pay myself. I do not believe in waiting until you would find a doctor that would take it. My children are more important than the cost of a bill. I would not care to keep doing this, if even something could be done to get people a lower rate, maybe even the medicaid rate. I have a few other test I need to have done, but who on a fixed budget can afford a 3,000 CT scan?

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