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Answers on Medicaid expansion waiting on Supreme Court

Posted February 5, 2015 1:50 p.m. EST
Updated February 5, 2015 1:53 p.m. EST

— Gov. Pat McCrory did his best in Wednesday's State of the State speech to talk about expanding the state's Medicaid health insurance program for the poor and disabled without actually saying the words "Medicaid" or "expansion."

That rhetorical aversion has to do with both the dicey politics and uncertain legal future of any North Carolina effort to provide health insurance to those who make too much money to currently qualify for Medicaid but too little to qualify for subsidies on the health insurance exchanges set up by the federal Affordable Care Act, what some people call "Obamacare."

"As we continue to review health care options for the uninsured, we are exploring North Carolina-based options that will help those who can’t help themselves while also encouraging those who can," McCrory said during his address before the General Assembly. "If we bring a proposal ... to cover the uninsured, it must protect North Carolina taxpayers, and any plan must require personal and financial responsibility from those who would be covered. I will only recommend a North Carolina plan, not a Washington plan." 

When Congress passed the Affordable Care Act in 2010, federal lawmakers and President Barack Obama assumed that all states would be required to expand their Medicaid programs to cover people whose families earn up to 138 percent of the federal poverty mark – $27,310 for a family of three people. But a 2012 U.S. Supreme Court decision struck down the requirement, saying states had the option of expanding Medicaid in response to Obamacare but that the federal government could not require expansion.

The following year, North Carolina lawmakers acted to prevent McCrory or any other governor from expanding Medicaid without the legislature's permission. Since then, top legislative leaders have remained staunchly opposed to expansion.

However, that has left a coverage gap in the state. According to a recent Kaiser Family Foundation report, 357,000 North Carolinians are both ineligible for Medicaid but earn too little to shop for health insurance on the state's health exchange, which offers income-based subsidies to purchase health insurance. Other studies put that number closer to 500,000. Of those in the coverage gap, 62 percent are in what the foundation defines as a "working family." Three-quarters are adults without dependent children. 

When expansion isn't expansion

Democrats and progressive groups have continued to pressure McCrory to call for expansion. Federal tax dollars, they say, are leaving North Carolina and going to pay for Medicaid expansion in other states. Covering more people, they argue, would help the broader economy as well as doctors and hospitals, who currently end up writing off millions of dollars worth of care provided to those without insurance. 

"I wish he would have been more emphatic about that," Sen. Mike Woodard, D-Durham, said of McCrory's expansion-related remarks. "Maybe that would have nudged some folks, particularly in the Senate, to work toward expansion. But he didn't get quite there."

If McCrory does "get there," it's unlikely he'll couch his proposal as a Medicaid expansion. Just as Obamacare is unpopular with national Republicans, chronic budget problems with the state's Medicaid system have frustrated GOP legislative leaders over the past six years. Many still see the system as deficit-plagued and inefficient. 

"Until we get it under control, I'm not a big fan of expanding what we have," said House Majority Leader Mike Hager.

That may explain why Health and Human Services Secretary Aldona Wos went to great pains following McCrory's speech to say that the administration wasn't contemplating "Medicaid expansion" per se.

"What that would mean is that what we have now, you're making it larger," Wos said.

Instead, the McCrory administration is pondering a "different model" that would use federal Medicaid expansion money in a different way. The Affordable Care Act offered to pay 100 percent of expansion costs in the first three years of the ACA, and will pay 90 percent of expansion costs through 2022.

"What we're proposing is something different," Wos said. "It's providing health care to the uninsured – or an opportunity for that." 

She did not lay out specifics of what the proposal might be, but there are examples of alternatives to Medicaid around the country. 

For example, in Indiana, Gov. Mike Pence recently reached a deal with the Obama administration to allow Medicaid to function more like private health insurance for those earning 100 percent of poverty. That plan would require premiums and co-payments. Other states, such as Arkansas, have used expansion money to subsidize private health insurance for those who would otherwise have found themselves in the coverage gap. 

Court rulings could change McCrory's plan

But McCrory has not tipped his hand as to what sort of approach he might prefer, and top lawmakers say they've heard nothing to change their minds on expansion.

"He's not brought us and did not tonight say he was proposing Medicaid expansion," Senate President Pro Tem Phil Berger said after McCrory's speech. "If he brings that to us, then I think my position has been clear on that. I think the position of the Senate is clear." 

Don't expect to see those specifics until sometime this summer. 

A court case pending before the Supreme Court, King v. Burwell, would not only keep North Carolina from filling the existing coverage gap but would likely blow that gap wider. The plaintiffs in that case argue that North Carolina and other states that relied on the federal government to handle their health insurance exchanges – rather than creating their own state-based exchanges – should not be allowed to offer insurance subsidies. That argument is based on what is likely a drafting error in the complex and highly technical bill that was rushed through Congress. 

"We'll find out nothing until the Supreme Court rules, because that really will determine whether whatever we're proposing is a viable option," Wos said when asked for specifics on North Carolina's plan. 

Even if that ruling should leave federally run state exchanges intact, don't expect lawmakers to jump on the expansion bandwagon. While Obamacare promises to pay 90 percent of the expansion costs until 2022, Republicans say they want some assurance as to what will happen after that.

"Once the federal government quits paying for it ... who pays for it after that?" asked Hager, R-Rutherford.

If the state were forced to pick up more of the tab, he argued, that could put more pressure on North Carolina's budget.