Buoyed by Gov. Pat McCrory’s announcement that he does not support expanding Medicaid rolls or creating a state-run health insurance exchange, a state House committee voted Tuesday over Democrats’ objections in favor of Senate Bill 4, legislation that rejects those same provisions of Obamacare.
“This is the right direction for the state of North Carolina. The federal government created this monster” and should be responsible for operating the health care exchanges, said state Rep. Justin Burr, R-Stanly, a vice chairman of the Health and Human Services Committee.
The exchanges are online marketplaces of federally approved insurance plans from which individuals who do not get employer-provided health plans would choose their preferred coverage. (See Editor’s Note at end of story.)
Burr called it “an illusion” to believe the state would control how a state exchange is run because the federal government would dictate the guidelines. He and other Republican committee members said the federal government has a poor track record of keeping funding promises, and worried that the Affordable Care Act is just another expensive, bait-and-switch program.
“This bill seems to be really an attack on poor people” and a “shrinking middle class,” said state Rep. Verla Insko, D-Orange, the Democrats’ point person on the bill.
She attempted unsucessfully to attach amendments to what she called “a very misguided bill” and to slow its progression to a floor vote by asking that it be re-referred to the House Insurance Committee.
The bill, a new House version of legislation already passed by the Senate, “will hurt, not help, the hard-working low- and middle-income people of North Carolina” and small business owners, Insko said.
Under Obamacare, small business owners who have 50 or more workers will be required to pay health insurance for those employees or pay a fine, she said. Expanding Medicaid coverage would relieve those business owners of that burden while helping to create a healthier work force, she said.
“These are working families. They are not people who are not responsible,” Insko said. But they don’t earn enough to buy health insurance, and are falling behind “through no fault of their own.” Newly eligible recipients would include some of the state’s underserved mentally ill population, she said.
In his statement today, McCrory said an administrative review on the Medicaid issues that included discussions with the White House, other governors, health care providers, and legislative leaders concluded it is “abundantly clear that North Carolina is not ready to expand the Medicaid system, and that we should utilize a federal exchange.”
Recent Medicaid audits show North Carolina Medicaid “is broken and not ready to expand without great risk to the taxpayers and to the delivery of existing services to those in need,” McCrory said.
Long-term costs cannot be projected because of insufficient information from the federal government, he said, and the state failed to prepare for participation in Obamacare the past year by building “necessary and reliable systems to implement a state exchange.”
And because of “ongoing political uncertainty of the federal budget deficit,” the state has no assurance the federal government would meet its matching fund promise for Medicaid expansion, McCrory said.
House Speaker Thom Tillis, R-Mecklenburg, offered similar comments at a news conference shortly before he entered the committee room to watch the debate over S.B. 4.
He said the House version of the bill was crafted with McCrory’s cooperation and “supports the governor’s position” that a federal exchange is best for North Carolina.
The bill includes three technical amendments to address McCrory’s concerns about funding for the NC FAST information systems technology needed to speed up work processes and reduce administrative time, and tweaks language in other areas.
Tillis said there is “no material difference” in language between the bills. He expects the Senate to approve the changes and said the bill could reach the House floor as early as Thursday.
Defending the decision not to pursue the federal health law reforms, Tillis said State Auditor Beth Wood, a “duly elected Democratic auditor, has said hundreds of millions of dollars have been wasted either through just outright wasteful practices and policies or through wasteful management” in Medicaid. “It’s fairly well documented.”
The present system needs to be fixed before it can be expanded, he said.
“I don’t want you to blame the auditor’s report” or the federal budget uncertainty for not approving Medicaid expansion and a state-run exchange, Insko said during committee debate.
She said the $1.4 billion cost overruns cited in the audit included only $375 million in state funds; the balance was federal money. Although the audit cited systemic disarray throughout Medicaid, Insko said she’s been told those problems could be fixed before the year is out. She blamed the overrun on the General Assembly directing the agency to meet an unreasonable savings number.
Rep. Beverly Earle, D-Mecklenburg, said the state Department of Health and Human Services typically has repaid the federal government for cost overages, and that shouldn’t be used as an excuse to limit coverage now.
“If the problem is how the federal government operates,” sending North Carolina residents to a federal health exchange instead of a state-run system “seems like the opposite of what we should be doing,” said Rep. Nathan Baskerville, D-Vance.
“The money is coming from our taxes that we pay to the federal government,” and will instead be used by other states for their programs, Baskerville said.
Rejecting Medicaid expansion “will risk people from having jobs in the health care profession,” said Rep. Jean Farmer-Butterfield, D-Wilson.
“This is a jobs bill,” Insko agreed. “All that federal money goes to the private sector in the form of jobs.” She unsuccessfully offered an amendment to accept just the first three years of federal funding at 100 percent for Medicaid expansion, and then allowing the bill to sunset.
“Then we’re just going to throw them off the boat?” Rep. Marilyn Avila, R-Wake, said of those added to the rolls for three years.
“We’re $16 or $17 trillion in debt,” said Rep. Pat Hurley, R-Randolph. “Where’s the money coming from?”
“This is exactly what’s wrong with this country,” Burr said.
When the feds dangle “free money,” in front of states, “we think we instantly have to grab it,” he said. “We forget there’s all kinds of strings attached to it.”
“I believe there’s a great chance you will see premiums on North Carolinians rise” under Medicaid expansion because hospitals would shift costs from an increasing level of Medicaid patients onto those with insurance, Burr said.
“A lot of the Affordable Care Act, or Obamacare … is still being written,” said state Rep. Nelson Dollar, R-Wake, “and it is constantly being changed and massaged.”
He said “people are going to be shocked in 2014 when they see how much money is taken out of the Medicare program” and shifted to Medicaid. And federal money that now goes to hospitals treating a disproportionate share of indigent patients is going to be cut back under the new health reform law, Dollar said.
“This is not just some grand flood of new money out there” that will pay for the programs, he said.
Dan E. Way (@danway_carolina) is an associate editor of Carolina Journal.
Editor’s note: This story was corrected after initial publication to clarify the role of the Obamacare exchanges.