Cost of Care
Healthcare Leaders React to Legislators’ Stance on Obamacare
Hospitals, advocates and people involved with the insurance industry disagree with legislators’ decision to reject aspects of the Affordable Care Act.
By Rose Hoban
Robeson County has 134,000 residents and is one of North Carolina’s poorest counties, with an unemployment rate greater than 12 percent and some of the worst health outcomes in the country.
“Our emergency room in Lumberton sees about 77,000 people at the back door of that hospital every year,” said Sen. Michael Walters (D-Fairmont), addressing the state Senate insurance committee Thursday morning. He said the hospital’s mix of payment was about three-quarters Medicaid, Medicare or uninsured.
“I want to know if, as a state, are we prepared to protect these rural hospitals” if there is no expansion of the Medicaid program, Walters asked committee chair Sen. Tom Apodaca (R-Hendersonville).
Walters’ voice was one of the chorus of those expressing concern in the past day over the decision by House and Senate Republicans to sponsor bills that would have North Carolina opt out of the Medicaid expansion allowed for under President Barack Obama’s Affordable Care Act.
The bills, introduced in both houses on the first day of the legislative session, would also prohibit North Carolina from establishing a state-federal partnership for creating a health benefits exchange and forbids state agencies from taking any federal grants to organize the exchanges that are provided for in the law.
Hospitals could lose big
“I serve on that local hospital board and I talked to the CEO yesterday afternoon,” Walters told the insurance committee. “We still have that need for care that we have to look at.”
Other hospital leaders were expressing concern over the prospect that North Carolina would not expand the Medicaid program, said Don Dalton, spokesman for the North Carolina Hospital Association.
“Insurance coverage opens access to care for our patients that’s more cost effective and leads to better health,” Dalton said. “No matter which unit of government sponsors the exchange, it’s important that people have access to individual coverage.”
But Dalton expressed concern over the phase out of incentives paid by the federal government to help hospitals that care for a disproportionate share of patients who are uninsured or have Medicaid.
When asked about that Wednesday afternoon, Sen. Bob Rucho (R-Charlotte) said he thought hospitals would not have a problem.
“Hospitals are not covering the charity care. … We who pay insurance premiums pay that, not hospitals,” Rucho said. “That doesn’t come from them; they’re just using another source, somebody else’s money.”
But Dalton said hospitals’ ability to shift costs to insured people is rapidly coming to an end. He also said that planned cuts to Medicare would affect hospitals’ ability to shift costs.
“We’re scheduled to take more than $5.6 billion in cuts to Medicare related to the Affordable Care Act over the next six years,” Dalton said. “In addition to that, there is another $2.5 billion they’re going to take in Medicare cuts from other pieces of federal legislation.
“So if Medicaid is not expanded, hospitals in our state are going to take these big Medicare cuts and not get the offset that the ACA envisioned from the Medicaid expansion.”
“We could easily be looking at service cuts and layoffs and even potential closures of hospitals as a result of an act that was intended to get more people insured,” Dalton said.
He said hospital CEOs around the state have been talking to legislators and were surprised that members of the General Assembly filed the bills so early in the session.
“If you look at the bill, while it pulls the state out of the exchanges … it gives the legislature the responsibility of making the decisions on expansion,” Dalton said. “Our reading of the bill at present is that it does not completely close the door on expansion.”
Loss of local control
Department of Insurance general counsel Rose Vaughn Williams told the insurance committee that Insurance Commissioner Wayne Goodwin was concerned about the loss of local control if the state completely rejects partnering with the federal government to create health insurance exchanges.
“We want to maintain state sovereignty and keep the federal government out of our lives as much as possible and keep state sovereignty,” Williams said. “But this bill does the opposite; it gives the federal government more control than they already had and concedes what little control we had left over our health insurance market in North Carolina.”
Williams said an initial federal grant has paid for 10 people in a call center who have answered more than 6,000 calls since last August from consumers with questions about the ACA.
“As the bill gets closer to implementation, we expect the calls to increase,” she said. She also said that forming a state-federal partnership exchange could create up to 500 jobs across the state for consumer counselors.
Williams’ biggest concern was the “deluge” of new plans available to consumers once the exchanges are up and running. She said the Department of Insurance will still have to provide consumer advice, but that if the state gives up federal grants to pay for that part, North Carolinians pay twice.
“Our federal tax dollars will go to other states that are using the federal grants, and then the state will have to pay again in our tax money to pay the amount we’d have to pay to hook it up,” Williams said.
Pay once, pay twice
Ben Money from the N.C. Association of Community Health Centers said he was surprised legislators rejected the Medicaid expansion.
“When the study that DHHS commissioned showed the number of jobs that would be created by Medicaid expansion, especially when the state is still in a deficit of job creation, it really looked to be a win-win: health care for folks who are uninsured and jobs created the Medicaid money from the feds would provide,” Money said.
“After all, it is our tax dollars.”
Money pointed out that people without insurance will still get care in community health centers, free clinics and emergency departments, and that those costs will get shifted, primarily to those who have insurance.
“We have to pay the bill somehow. Why not take the money we’ve already paid the federal government and bring it back to help address some of those costs? So now we’re paying twice,” Money said.
Late Thursday afternoon, the N.C. Institute of Medicine came out with estimates of the costs of expanding the Medicaid program, and according to its numbers the state saves money within the first two years.
“By year two , there’s some other programs that we save money in because all of those people are now covered,” explained Dr. Adam Zolotor, vice president for policy at the institute. “The growth in the state’s GDP is $382 million, which generates approximately $17 million in new taxes.”
“We understand the state’s obligation will be zero to cover all those newly insured, and it’s a savings of $37 million that we would have spent otherwise,” Zolotor said. “We create 5,000 jobs in year one and insure 500,000 new people. And it’s a huge infusion of federal dollars.”
According to the analysis, after three years of the expansion the federal payment for the new Medicaid patients drops from 100 percent to 90 percent and the state will see some costs by the end of the sixth year of implementation.
“In fiscal year 2021, that will be about $118 million for insuring an additional 536,000 people,” Zolotor said. “It looks big, but relative to the state budget, it’s about half a percent.”