News: CJ Exclusives

New DHHS Secretary Wos Will Oversee Medicaid, Obamacare Exchanges

McCrory has not announced plans for Medicaid expansion or future of exchange

The day before the Obama administration’s deadline for states to declare whether they will create a state health insurance exchange to comply with the president’s national health reform law, Gov.-elect Pat McCrory named a new secretary of the Department of Health and Human Services who eventually will guide that policy-setting process.

McCrory announced Greensboro resident and former U.S. ambassador to Estonia Aldona Wos (pronounced “vosh”), a practicing physician, to the post at a Thursday news conference.

Lame duck Democratic Gov. Bev Perdue already signed up North Carolina for a federal-state partnership to create a health insurance exchange — an online clearinghouse that will offer federally approved coverage plans to uninsured individuals who earn too much to qualify for Medicaid — but McCrory, a Republican, said Thursday he has yet to decide whether to leave the partnership in place, create a state exchange, or opt out, having North Carolina join an exchange run by the federal government.

Nor has McCrory determined whether he will add 568,000 uninsured North Carolinians to the Medicaid rolls under other provisions of the Patient Protection and Affordable Care Act, as Obamacare is better known. The U.S. Supreme Court has ruled that states cannot be forced to expand Medicaid enrollment, and expansion could cost North Carolina $3.1 billion over the first 10 years.

“Regarding getting down in the weeds on those specific issues, we have not had that opportunity. We’re right now at the 10,000-foot level trying to get the [incoming administration’s] leadership assigned, but we know of the issues,” McCrory said. “We have the unemployment compensation issue, we’ve got the health care exchange issue, we’ve got the Medicaid expansion issue, the list goes on and on and on.”

McCrory said he had “a line of applicants” to be considered for the HHS job.

“One thing I needed was someone coming in from the outside who wasn’t directly aligned with any of the interest groups that right now are lobbying me and others regarding these tough decisions that we have to make,” he said.

Wos “has that outside ability to not be tied down to any one of the agendas that so many groups are now talking to us about,” McCrory said.

“I’m also asking her to work with me … as my right-hand person to help advise me as we have first-hand dialogue with other governors and with the White House, especially in regard to the health care exchange issue and the Medicaid expansion issue,” McCrory said. “There’s no one better for this job.”

“We will have challenges in respect to the new health care law,” Wos said. “In reference to possible expansion of Medicaid, and in reference to the medical issues that we have in reference to the health care, and even the IT problems we have right now in our government and in our departments.”

Neither McCrory nor Wos indicated how soon Medicaid expansion and health insurance exchange decisions would be made.

“The governor isn’t sworn in until Jan. 5,” said Ricky Diaz, a spokesman for McCrory. “I don’t have a timetable at this point” for those decisions.

Meanwhile, Twila Brase, president of the Citizens Council for Health Freedom, based in St. Paul, Minn., has been studying the effects of the Obamacare law and warns against states jumping on board.

“The majority of the Medicaid expansion is expected to happen through the exchanges,” she said. Some exchanges may cost a state like New Jersey between $10 million and 15 million a year to operate, and could cost California up to $300 million annually, she said.

“The way that they’re going to find these people is that they’re going to enroll online and people will actually be forced into Medicaid” if they meet a set of criteria, including earning incomes as high as 138 percent of the federal poverty level, Brase said.

“Obamacare requires insurance companies to take everyone,” even those with terminal illnesses who had no health coverage, Brase said. Rather than insurance, she calls Obamacare a third-party payment system with the government which insurance carriers will get preferential treatment.

“The biggest ones win,” she said “They will get all the money from the government and they will be doling it out, but they won’t be private entities anymore,” but more like regulated utilities.

She also cautioned against North Carolina creating the federal-state partnership.

“These so-called state-federal partnerships are nothing more than a facade,” Brase said. “In addition to having states provide funding for these exchanges that has not yet been approved by Congress, pursuing a partnership authorizes insurance premium subsidies to be allocated to the state, threatening employers with penalties if employees receive subsidies on the exchange.”

“At the core, state-federal partnership exchanges are stealthy and deceptive,” Brase said. “Pursuit of such exchanges is another way that the federal government is attempting to control health care without footing the bill. In the end, such exchanges cost states and employers millions in operating expenses and penalties, and still invade the privacy of public citizens by sharing their health data with multiple government agencies.”

Despite that line of opposition, some physician and hospital groups support the exchanges. In a statement issued on Thursday regarding creation of health care exchanges, the North Carolina Hospital Association appears to embrace the Obamacare provisions.

“North Carolina hospitals are in favor of greater access to reduced-cost health insurance for all uninsured. Details regarding the creation of a state exchange and how it would differ from a federal exchange are murky at this time,” the statement said.

“While we wait for the details that are necessary for our policy consideration, hospitals continue to provide almost a billion dollars annually in charity care. We remain eager to serve and eager for clarity about the future of healthcare financing,” the statement said.

Brase said many hospitals and hospital organizations support the health care exchanges and Medicaid expansion. It is “a short-sighted hospital or administration” that does so, she said.

“Medicaid hasn’t been very good in its payments, and all its money is going to go into health plans” that haven’t been very effective, Brase said.

Indeed, Don Dalton, vice president of public relations for the North Carolina Hospital Association, earlier told Carolina Journal that government insurance plans can pose financial challenges for hospitals.

“For hospitals, our reimbursement has historically run over the last few years somewhere below 80 percent, somewhere in the mid- to upper 70s of our costs … to deliver treatment,” Dalton said.

“Even at those reimbursement rates, that gap has to be filled by someone. The reduction in government payments for both Medicaid and Medicare over the last 14, 15 years, has been borne by the business community and it is a hidden tax” under the Balanced Budget Act of 1997, Dalton said.

Obamacare promises to pay 100 percent of Medicaid costs for new enrollees for three years, scaling back incrementally to 90 percent over a 10-year period, but Brase calls that a ruse.

“Hospitals are just dreaming if they think the feds are going to keep up this kind of funding long-term,” Brase said. “The realities of the federal budget are that it is in the red by trillions of dollars.”

And she warned of other dangers inherent in the health care reform law.

“Eventually, the hospitals will find that they, too, will be told exactly what they can and can’t do, that they, too, will be government contractors,” Brase said. Laws that now require treatment of all comers to emergency rooms regardless of ability to pay will expand to other hospital services, she predicted.

“So the hospitals, when they advocate for more people to be in a government program, they are advocating for their own demise,” Brase said.

Dan E. Way (@danway_carolina) is an associate editor of Carolina Journal.