Raleigh, N.C. — Gov. Pat McCrory is backing a move by the legislature to block the state from expanding its Medicaid program or participating in the state health insurance exchanges created by the federal Affordable Care Act.

McCrory has held back his thoughts on the issue during his first weeks in office, although he did express concern that the Medicaid portion of the bill could keep North Carolina from drawing down federal funding to improve a key computer system. That concern seems to have taken a less central role in deliberations as the bill has gained momentum in the legislative process.

"Our Medicaid system is broken, and I cannot expand a broken system," McCrory said Tuesday. "It would be unfair to the taxpayers, unfair to the citizens currently receiving Medicaid and unfair to create a new bureaucracy to implement the system."

He cited a recent state audit that found North Carolina has high Medicaid administrative costs because of mismanagement and lax oversight, and he noted that some counties have had problems with a new software program that will handle Medicaid and other social service benefits.

His administration looked at "our existing systems, operations, potential new administrative costs and barriers and the amount of control and flexibility North Carolina will have to reform the system." They concluded that North Carolina's current Medicaid system is in such disarray that it would be hard to build on top of it.

House Speaker Thom Tillis expressed similar thoughts during a morning news conference, saying the bill is "setting the tone" for how North Carolina funds Medicaid in the future.

"Before we have a discussion about really increasing the funding to Medicaid, we need to make sure that the process we're putting it into is going to make it more likely that those dollars are going to people who need help versus just being churned through an inefficient and wasteful department," he said.

"This (bill) puts the emphasis back on fixing Medicaid," Tillis added.

Although the federal government promised to pick up the costs for the Medicaid expansion for the first three years and the bulk of costs for several years after that, McCrory said the cost overruns in North Carolina's Medicaid program in recent years make him unsure about putting more people on the rolls.

"I've got to look at the long-term cost, and right now, those costs aren't being clarified by Washington," he said.

McCrory faced a Friday deadline to declare North Carolina's intent on both Medicaid and the health exchange, but the General Assembly took the decision out of his hands to some extent. The Senate has already passed the bill, and  Tillis said his chamber could vote on it as soon as Wednesday.

Partisan politics is also at play. The Affordable Care Act, sometimes called Obamacare, is a key Democratic initiative. McCrory and legislative leaders are Republicans.

The North Carolina Democratic Party quickly criticized McCrory's decision, saying that his appointment of an Affordable Care Act opponent to run the state Medicaid program was a sign he never intended to expand it.

"This is just the latest push by Gov. McCrory to create a smaller government – just small enough fit in between a patient and affordable health care," Democratic Party spokesman Clay Pittman said in a statement.

The Los Angeles Times recently reported that some GOP governors like John Kasich of Ohio and Jan Brewer of Arizona have embraced Medicaid expansion, if not the exchanges.

The North Carolina House passed a bill last session to set up a state health exchange – the online system would allow people who don't have employer-sponsored health coverage to shop for their own insurance – but Tillis said lawmakers and business interests now know more about the costs and benefits of such a system.

"We don't want to confuse the complexities and challenges of national health care by having some of that delegated down to the state and then causing future problems for us," he said.

The previous bill died in the Senate.

Insurance Commissioner Wayne Goodwin said he's disappointed with the legislation, saying his department and the Department and Health and Human Services have already laid the groundwork to implement Affordable Care Act provisions.

"Having a federal exchange in North Carolina will no doubt limit our ability to resolve consumers’ health insurance issues at the state level," Goodwin said in a statement. "People who have questions, concerns or complaints about health insurance will have to seek out help from the federal government rather than from trusted regulators in our own state."

McCrory said he would prefer to have a state-run exchange if the federal government could ensure North Carolina would have the flexibility to handle its own programs, but he said too many issues under the Affordable Care Act remain cloudy.

"This is not an easy decision," he said, noting that he and his advisers have been in office for only five weeks.