Bill to extend health insurance benefits to low-income workers finally gets started - North Carolina Health News

By Rose Hoban

After years of waiting, advocates for extending health insurance to hundreds of thousands of low-income North Carolinians finally saw a bill cross the starting line at the state legislature.

House Bill 655 would allow for people who earn too much to qualify for Medicaid and too little to receive subsidies on the health insurance online marketplace to get access to insurance through the Medicaid program. The Health Care for Working Families Act would charge people who fall into the “coverage gap,” earning between 50 and 133 percent of the federal poverty level (from about $6,200 to $16,611 per year for an individual) to pay small premiums and copays in order to receive coverage.

Rep. Donny Lambeth (R-Winston-Salem), the bill’s main sponsor at the General Assembly, has long argued that this is a way to get more people covered.

“There are certainly aspects of this that look like [Medicaid] expansion,” he said. “I’ve tried to be pretty consistent saying there’s also a lot of aspects of this that are not the traditional expansion.”

Lambeth argues his program is not “traditional Medicaid expansion” because people would have to work and pay a small premium in order to get coverage. In many states, Medicaid expansion simply added more low-income people to the program’s rolls without those requirements.

Rep. Donny Lambeth (R-Winston-Salem) talks about how he’s framed his plan for adding low income workers to the Medicaid program. Video credit: Rose Hoban

North Carolina Medicaid currently covers more than 2.1 million people, mostly low-income children, plus some of their parents. About 19 percent of Medicaid beneficiaries are low-income seniors and people with disabilities whose care comprises close to two-thirds of the program’s expenditures. The federal government usually pays about two-thirds of the $14.8 billion tab for North Carolina Medicaid beneficiaries.

By the third year of Lambeth’s plan, close to 600,000 additional people would have gained health insurance coverage with the federal government picking up 90 percent of the cost. Financing for the program would come via federal Medicaid payments, and the program needs to be approved by the federal Centers for Medicare and Medicaid Services.

Premium could be burden

Lambeth said that the way he’s designed the program gives low-income workers more “skin in the game;” they would pay about 2 percent of their annual income in premiums, in addition to small copays.

He said that’s okay with many of the low-income workers he’s spoken to.

“[They’ve] said to me, they want to pay something,” Lambeth told reporters after Wednesday’s meeting of the House Health Committee, which passed the bill by a unanimous vote. “They just … can’t afford to pay six or $700 a month for health insurance.”

Beneficiaries would also be required to participate in wellness activities, such as getting an annual checkup, routine screenings such as mammograms and colonoscopies, weight management programs and immunizations.

“I’m really not happy with the premium at all,” said Democratic Rep. Verla Insko (Chapel Hill), who proposed an amendment to the bill to remove the annual premium. “To think that people might end up with bill collectors coming to their house … I mean, these are really poor people.”

“Two hundred dollars is a lot of money for a family like that,” Insko said, referring to a theoretical mother with two children earning poverty wages. “I think they’re already choosing between food and gas, things like that.”

Nonetheless, Insko said she is likely to vote for the bill when it comes to the floor of the House in the coming weeks.

“It would be sinful, in my view, for me to vote against the bill,” she said. “It would be really dumb of us to lose this opportunity … We would be denying 500,000 people health care.”

No new funding

To pay for the 10 percent of the cost required of North Carolina, HB 655 adds a new assessment on the state’s hospitals, which have long said they’d be willing to pick up most of the state’s costs. Another portion of the price would be covered by a new tax levied on managed care companies that will start running big portions of Medicaid starting early next year.

The most recent version of the bill, which was first introduced in April, contains so-called “poison pills,” requirements that need to be met or else the program comes to a hard stop. For instance, if the money collected from the hospitals and managed care companies doesn’t cover the costs, the program would terminate. Another stumbling block would be if Congress cuts federal reimbursement down from 90 percent or if CMS doesn’t approve the premiums or work requirements.

Already working

To be eligible, beneficiaries would have to work or perform volunteer service at least 80 hours each month, except if they are caregivers for a relative, are in school, are in a substance use treatment program, or are pregnant. Native American tribe members who receive care from the Indian Health Service are also exempted from the employment requirement.

In guidance sent to state Medicaid directors in early 2018, the federal Centers for Medicare and Medicaid Services, which regulates both programs wrote: “CMS will support state efforts to test incentives that make participation in work or other community engagement a requirement for continued Medicaid eligibility or coverage for certain adult Medicaid beneficiaries,” in expansion populations.

“Some states are interested in pursuing demonstration projects to test the hypothesis that requiring work or community engagement as a condition of eligibility, as a condition of coverage, as a condition of receiving additional or enhanced benefits, or as a condition of paying reduced premiums or cost sharing, will result in more beneficiaries being employed or engaging in other productive community engagement, thus producing improved health and well-being,” wrote Brian Neale, director of the program.

If other states’ experience serves as an example, many of the potential beneficiaries are likely already working. In Montana, about two-thirds of that state’s Medicaid expansion population was already working, with another 29 percent in school, drug treatment or performing caregiving.

A number of states including Arkansas, Kentucky, New Hampshire, Indiana and others added work requirements similar to HB 655’s into their Medicaid expansion programs, but they’ve been controversial.

And the work requirements have run into trouble in court. Earlier this year, DC District Court Judge James Boasberg rejected the work mandates in Arkansas’ and Kentucky’s programs.

In a ruling handed down in March, Boasberg noted that in Arkansas, since the work requirement went into effect in 2017, more than 16,900 beneficiaries had lost their coverage, mostly because the reporting requirement was too cumbersome. He criticized that state for creating work requirements that were “both arbitrary and capricious.”

“In both of those cases, the judge simply found that CMS had exceeded its authority in approving those requirements and had not properly considered things such as coverage losses,” said Elizabeth Edwards, a lawyer in the North Carolina office of the National Health Law Program which represented the plaintiffs in those cases.

However, another one of the “poison pills,” contained in HB 655 stipulates that if a judge blocks the premiums or the work requirement, then all work on North Carolina’s program needs to grind to a halt.

Edwards said people in her organization would consider their options if North Carolina’s bill merits final approval.

Rocky road ahead

But that’s a long way off.

Lambeth said on Wednesday he would consider some of the concerns raised by Democrats during the morning’s committee meeting. They proposed amendments around counting unpaid job training programs in the work requirement, streamlining the collection of premiums, and exempting veterans, people experiencing natural disasters, and those in domestic violence shelters from the work requirements.

Both the House and the Senate are taking breaks until Sept.30, and Lambeth said he’d take that time to make tweaks to the bill.

Advocates, for their part, said they’ll be using the coming two weeks to gather up all the votes they need for passage through the House, which would be a milestone.

“There are a lot of conversations that continue to need to be had,” said Erica Palmer Smith, who heads Care4Carolina, which was created several years ago to push for some kind of Medicaid expansion. “But I think that we’re seeing a lot of positive momentum.”

After that, the bill would have to make its way through the Senate, where the environment for passage is less favorable.

“I have had a lot of discussions with Speaker (Tim) Moore about this,” Lambeth said. “Basically what Speaker Moore has said to me was, ‘You know, don’t worry about the Senate, do what you believe is right for the House, and we’ll deal with the Senate.’

“If we get to that point.”

Clarification: North Carolina’s annual Medicaid budget is a total of $14.8 billion of which the federal government pays two-thirds of the cost of medical care and various other matching funds. North Carolina’s total budgeted cost for 2019-20 is $3.9 billion. The story originally only noted North Carolina’s share as the cost for Medicaid.  

Also, we have included an additional phrase in the citation from a CMS guidance letter  which clarifies the point. At the time, Brian Neale was the Director of Medicaid and CHIP Services at CMS.