Supreme Court ruling brings Medicaid expansion for NC into focus

State leaders have said they didn't want to consider expanding North Carolina's Medicaid program until the U.S. Supreme Court ruled on the latest challenge to the Affordable Care Act. Now that the case is decided, lawmakers and the governor are looking ahead.

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Mark Binker
RALEIGH, N.C. — The U.S. Supreme Court decision to uphold a key provision of the federal Affordable Care Act means Gov. Pat McCrory has a big health care decision of his own to make: whether to expand North Carolina's Medicaid program.

McCrory's administration has been mulling expansion since last year but has declined to stake a position on what path North Carolina would take until the ACA case was settled. McCrory told reporters Thursday that his administration is studying the experiences other states that have decided to expand.

"I don't want a Washington plan. I want a North Carolina plan," he said. "We must give doctors, hospitals and all health care providers the flexibility to provide their patients the highest quality care possible."

Like many Republican leaders, McCrory says he does not want to simply expand the fee-for-service system that covers those already on Medicaid but would like to look at changing how the program might work for newly covered patients.

However, expansion is not up to McCrory alone. He would need support from lawmakers who are skeptical of the idea.

"Expanding Medicaid is not the right decision," House Speaker Tim Moore said. "We're grappling with trying to control Medicaid spending we already have. Creating more expense doesn't seem the prudent course."

Court ruling lifts one road block, leaves others

The Supreme Court ruling settles a dispute over whether states that relied on the federal government to run their health exchanges – online marketplaces where individuals can buy insurance and get help paying for that insurance – were allowed to offer those subsidies. If the court has sided against states such as North Carolina that chose not to set up their own exchanges, thousands of people would have found their insurance coverage more expensive – and likely unaffordable.

According to the U.S. Department of Health and Human Services, exchange subsidies average $272 per month and cover about three-quarters of the average premium for those who buy through the exchange. In North Carolina, some 460,000 people are covered through a policy bought on the HealthCare.gov exchange and receive slightly higher than average subsidies, about $316 per month.

When the Affordable Care Act was originally drafted, it was designed to work in concert with Medicaid, a state-run and federally overseen program that provides insurance to the poor and disabled. The original ACA law required states to expand Medicaid coverage to those who earned less than 138 percent of poverty level.

A 2012 Supreme Court decision struck down that requirement, saying that states could choose whether to expand Medicaid or not, but the federal government could not require them to do so. North Carolina opted not to, and the legislature passed a law prohibiting McCrory from moving forward with expansion without permission from the General Assembly.

That decision left two groups of people in North Carolina without coverage. Roughly 357,000 people are too poor to shop for insurance on the exchanges but don't qualify for coverage under Medicaid. Another 143,000 are estimated to earn between 100 percent of the federal poverty rate and 138 percent of poverty. They may shop on the exchange, but many, if not most, would find it unrealistic to afford even subsidized insurance.

"State leaders should now present a plan to extend the benefit of affordable health insurance to the 500,000 individuals and families left in the Medicaid gap," Adam Linker, co-director of the Health Access Coalition based at the liberal-leaning North Carolina Justice Center, said in a statement. "University researchers estimate that closing this coverage gap would create 43,000 jobs in North Carolina, boost tax revenues for local governments and stabilize rural health care."

Leaders still uncertain expansion is affordable

But lawmakers don't appear ready to embrace an expansion. Republican leaders of the House and the Senate are already debating how to change North Carolina's existing Medicaid system with an eye toward controlling costs. While expansion would largely be paid for by the federal government in the early years, state lawmakers say they're unsure the system can handle more patients and are unsure what might happen further down the road.

"Nothing has changed to address the multitude of concerns with Medicaid expansion. We cannot afford our current Medicaid system, much less an expanded one," Senate President Pro Tem Phil Berger said.

Sen. Ralph Hise, R-Mitchell, one of the Senate's committee chairmen who handles health matters, says lawmakers would want to see the federal government change some Medicaid rules first.

"Unless the federal government is willing to change its offerings and not let us go to the full 138 percent of poverty or be able to cover them with private insurance options ... I don't think there's any interest at the General Assembly in moving forward," Hise said.

The state, he said, would like to impose co-pays and other requirements on Medicaid recipients if they were over the federal poverty level to both control cost and make sure that individuals weren't being lured away from purchasing private insurance. There are states that do this, Hise acknowledged, but the rules aren't as flexible as lawmakers would like.

In any case, Berger said, the problem with expanding Medicaid is North Carolina's Medicaid system itself.

"From where we are now, I cannot see a circumstance where Medicaid expansion will make sense for North Carolina," he said. "We cannot contemplate adding more people to the Medicaid rolls at a time when we are having difficulty sustaining the Medicaid system we currently have. That situation is exactly as it was before this decision."


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