North Carolina Health News
North Carolina Health News. News. Policy. Trends.

Featured

Hospitals, Patients To See Red Ink Without Medicaid Expansion

As North Carolina lawmakers move forward on a bill that would reject the expansion of Medicaid allowed under the Affordable Care Act, patients and hospital administrators are expressing dismay.

By Rose Hoban

After decades of going without health insurance, Grace Engel was looking forward to getting coverage so she could take care of some health problems. But after this week’s votes in the North Carolina General Assembly, it looks as if she’ll have to wait longer.

Grace Engel, 46, with her 16-month-old grandson AJ Junior.

Grace Engel, 46, with her 16-month-old grandson AJ Junior. Engel cleans houses for a living and, except for a few months, has been uninsured for decades. Photo courtesy Grace Engel

Engel, 46, has been working cleaning houses for close to two decades, and except for a few months when she was married she’s been uninsured the whole time.

“I’ve been watching to see what’s going on,” Engel said. “I’m anxious, I want to get help and I wish I could afford insurance. I might be able to afford to pay a monthly premium, but they require these huge deductibles and I don’t have that.”

Last year, Engel made less than $15,000; that would make her one of the 500,000 of the state’s 1.5 million uninsured people who would be covered by an expansion of the Medicaid program as provided for in the Affordable Care Act.

The expansion would cost North Carolina about $900 million over six years and bring in at least $15 billion of federal dollars over the same time period to cover the bulk of expenses.

But this week, lawmakers voted to reject extending the program, passing the bill along mostly party lines.

They also rejected the establishment of a health insurance exchange that would have been run as a state-federal partnership. The move requires North Carolina to refuse any federal planning grant dollars that could have come to the state. Instead, the state will pay about $180 million each year to federal authorities to run the exchange for North Carolina.

“We need to get over our addiction to just taking federal money whenever it’s offered to us,” said Rep. Justin Burr (R-Albemarle), who introduced the bill on the House floor. “There’s no such thing as free money.

There’s this idea that we get free money with the Medicaid expansion. This is not money that gets sprinkled down from Washington; this is the taxpayers’ money. This is money we’re borrowing from other countries, money we don’t have at this time. And we certainly don’t need to be giving our taxpayers … this burden.”

Who would be eligible?

In North Carolina now, Medicaid is available to disabled people, children under 18 and low-income pregnant women for a short time before and after delivery. But childless low-income adults are never able to qualify for the program.

According to a study done by the North Carolina Institute of Medicine, about 500,000 previously uninsured people would have become eligible for benefits as a result of expanding the program (see table).

In a letter to the editor published in the Raleigh News & Observer Thursday, Senate leader Phil Berger (R-Eden) cited a study done by researchers at Boston University that showed many of the new people on Medicaid would be coming from the ranks of already insured.

Berger wrote that “as many as 400,000 people [would be] leaving private insurance and going to the government plan.”

But study author Steve Pizer said Berger “selectively quoted from our work and didn’t take the estimates that are most relevant to North Carolina’s situation.”

Eligibility for Medicaid would be for families earning less than 133% of federal poverty guidelines.
 Household Size  100%  133%  150% 200.00%
 1 $11,490 $15,282 $17,235 $22,980
 2 $15,510 $20,628 $23,265  $31,020
 3 $19,530  $25,975 $29,295 $39,060
 4 $23,550  $31,322 $35,325  $47,100
The 100% column shows the federal poverty level for each family size. The percentage columns that follow represent income levels that are commonly used as guidelines for health programs.

In states like North Carolina, with high levels of uninsured and fairly restrictive Medicaid eligibility, “the proportion that would drop private coverage and pick up Medicaid will be much smaller than that,” Pizer said, especially when combined with a mandate to be insured like the one in the federal Affordable Care Act.

“A substantial fraction of the uninsured will end up being covered,” he said in a telephone interview Thursday.

Pizer also pointed out that those low-income workers who might actually move from an employer-sponsored insurance policy to Medicaid would be better off, because they would no longer be paying large premiums for policies with high co-pays and deductibles.

And he said moving people to Medicaid actually benefits taxpayers.

“We are financing this stuff through charity, bad debt and free care now, and through putting people through bankruptcy,” Pizer said. If states push many people onto the health insurance exchanges, including people who could be covered by Medicaid, “the taxpayer gets a worse deal, because private coverage is more expensive than Medicaid, so the taxpayer ends up paying more.”

Engel, who has been struggling with mental health issues since childhood, said treatment for her problems has always been too expensive. At times, she tried buying private plans on the market.

“I could afford to pay a monthly premium, but they require these huge deductibles, and I don’t have that,” she said. “It would be enough for me to be able to pay the co-pays, but then by the time you pay the deductible … it’s too much.”

Engel’s mental health issues make it hard to be around others, and that’s made holding down a job tough. So she’s coped by working solo in empty houses.

“It’s been difficult for me to hold down a regular job,” she said. “I’m making an honest living. I go out there and clean houses and pay my taxes, and it would be nice to be able to take care of myself.”

Rural hospitals worried

About a third of North Carolina’s hospitals operate in the red, said Don Dalton, spokesman for the N.C. Hospital Association. Another third operate with margins between zero and 5 percent and another third do better than that.

Southeastern Regional Medical Center main campus in Lumberton.

Southeastern Regional Medical Center main campus in Lumberton. Image courtesy SRH.

Dalton said many hospitals are worried about the loss of disproportionate share (DSH) dollars that they receive from the federal government to care for large numbers of uninsured patients. The DSH money is due to be decreased, and eventually disappear altogether, as the Affordable Care Act rolls out over the next 5 years.

“The idea was that throughout this expansion of Medicaid it would allow us to offset the reductions we’d realize,” said Thomas Johnson, chief financial officer for the 325-bed Southeastern Regional Medical Center in Lumberton.

The center also operates 33 clinics throughout the southeastern part of the state, where about 210,000 patients were seen last year. Two-thirds of its patients have Medicaid or Medicare and about 10 percent are uninsured.

Johnson said Southeastern Regional operated with a 3.5 percent margin last year, about $11 million. He said its DSH payments account for between $12 million to 14 million annually.

“If we lose DSH, we lose our margin,” he said. “We’re actually larger than most community hospitals; the smaller the hospital, the more at risk they are, particularly in a rural setting. That’s where hospitals are most at risk.”

Some have argued that hospitals like Southeastern could make up losses from DSH payments by shifting costs to privately insured patients or to Medicare patients.

“There are significant reductions that are coming to hospitals for treatment of Medicare patients,” Johnson said. “And insurance companies are pushing back. The opportunity to cost-shift to commercial payers has stopped. If we get significant reductions in DSH, there’s not place to turn to.”

Johnson also took issue with the idea being floated through the legislative debate this week that hospitals would be better off if the state refuses to expand Medicaid, because the program doesn’t pay well.

“Any coverage is better than none,” Johnson said.

Tagged , , , , , , , , ,

Share this story

Related Posts

3 Comments

  1. In Various States, Groups Battle Over Expanding Medicaid | Health CareFeb 19, 2013 at 2:00 pm

    […] North Carolina Health News: Hospitals, Patients To See Red Ink Without Medicaid Expansion As North Carolina lawmakers move forward on a bill that would reject the expansion of Medicaid allowed under the Affordable Care Act, patients and hospital administrators are expressing dismay. … The expansion would cost North Carolina about $900 million over six years and bring in at least $15 billion of federal dollars over the same time period to cover the bulk of expenses. But this week, lawmakers voted to reject extending the program, passing the bill along mostly party lines (Hoban, 2/15). […]

  2. In various states, groups battle over expanding MedicaidFeb 20, 2013 at 2:49 am

    […] North Carolina Health News: Hospitals, Patients To See Red Ink Without Medicaid Expansion As North Carolina lawmakers move forward on a bill that would reject the expansion of Medicaid allowed under the Affordable Care Act, patients and hospital administrators are expressing dismay. … The expansion would cost North Carolina about $900 million over six years and bring in at least $15 billion of federal dollars over the same time period to cover the bulk of expenses. But this week, lawmakers voted to reject extending the program, passing the bill along mostly party lines (Hoban, 2/15). […]

  3. DooApr 30, 2013 at 2:39 pm

    What

Please consider a holiday gift!
Newsletter Subscribe
Sign up to receive a monthly newsletter with headlines from North Carolina Health News
be-our-sponsor http://www.sph.unc.edu/
Tweets from @NCHealthNews