McCrory opposes state run health exchange in NC

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RALEIGH, N.C. (AP) — North Carolina lawmakers refused Tuesday to expand Medicaid for an estimated 500,000 poor residents for three years while the federal government fully pays their medical care bills, with opponents saying it was unlikely the state could drop the new additions once it begins shouldering 10 percent of the cost in 2017.

A Democratic legislator who proposed the temporary expansion fully paid by Washington said it would allow some of North Carolina's sickest residents to receive care, for hospitals to worry less about emergency room treatment patients can't pay, and lower health insurance rates for all as hospitals seek to recoup their costs for unpaid treatment.

"It would treat our sickest people during those three years at no cost to the state. There is no reason for us not to do this," said Rep. Verla Insko, D-Orange.

But a House committee voted along party lines with majority Republicans rejecting the idea.

"You're telling me that we're going to expand this to 500,000 people, which is the estimate that would be covered, for three years and then we're just going to throw them off the boat at that time?" asked Rep. Marilyn Avila, R-Wake.

The committee then approved legislation blocking any Medicaid expansion and leaving the federal government to operate an online marketplace for private health insurance. The legislation rejecting state involvement with the federal health overhaul law appears headed toward House passage this week. The Senate approved an earlier version last week.

Gov. Pat McCrory said after considering the state's options, he's decided the General Assembly is right. Repeating earlier explanations by lawmakers, McCrory said there was no guarantee the federal government would live up to the law's promise to pay 100 percent of the cost of expanding Medicaid between 2014 and 2016, then 90 percent of the cost after that.

"The results of our findings make it abundantly clear that North Carolina is not ready to expand the Medicaid system and that we should utilize a federal exchange," McCrory said in a statement.

McCrory and legislators also cited a recent state audit of the Medicaid program that found administrative spending is significantly higher in North Carolina than nine states of similar size. The audit also found state Medicaid administrators used flawed or incomplete budget forecasting methods, helping contribute to a $418 million shortfall with the program last year.

"When you've got a house in shambles, you don't build onto it," said Rep. Justin Burr, R-Stanly, a primary sponsor of the House version of the bill.

Medicaid provides health coverage for more than 1.5 million North Carolina residents — most of them poor children, older adults and the disabled. The program spends about $13 billion in state and federal funds.

Expanding Medicaid would generate 23,000 new jobs in North Carolina through 2021 and increase disposable income by $1 billion a year statewide as doctors and hospitals increased hiring to meet increased demand for compensated treatment, an outside consultant for the state Department of Health and Human Services estimated.

The North Carolina chapter of the American Association for Retired Persons decried the House committee's vote. Medicaid expansion was needed "to help those who work hard, but still can't afford the medical coverage they need," AARP state director Doug Dickerson said.

McCrory also joined GOP lawmakers in saying North Carolina should wash its hands of running a health benefit exchange, an online marketplace for private health insurance for those who now have the hardest time finding coverage. Many of the policies sold would be government-subsidized. If North Carolina doesn't create an exchange, the federal government will run it.

"There has been a lack of preparation within state government during the past year to build necessary and reliable systems to implement a state exchange," McCrory's statement said.

The deadline for running a North Carolina-based exchange passed last year. States must tell federal officials by Friday if they will partner with Washington and locally run some functions like consumer help lines and making sure insurance policies sold on the exchange comply with federal rules.

After lawmakers last year failed to pass legislation creating an exchange, the Legislature directed the state's health and insurance agencies to keep working on the details. The North Carolina Institute of Medicine spent more than two years developing a detailed roadmap for operating an exchange with input from groups representing hospitals, doctors, consumers, foundations, and employers.

"To say we are not ready for a partnership exchange is deeply misleading. We are absolutely ready to run a partnership exchange," said Adam Linker, a policy analyst with the Health Access Coalition, part of the liberal-leaning North Carolina Justice Center.

McCrory's spokeswoman did not respond to a request for clarification of the governor's statement.

McCrory and GOP lawmakers including House Speaker Thom Tillis, R-Mecklenburg, held out the possibility that North Carolina could expand Medicaid or operate a state-based health exchange in the future if conditions change.

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Emery Dalesio can be reached at http://twitter.com/emerydalesio

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