The Daily Tar Heel

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Thursday May 26th

State may opt out of health care exchange

North Carolina could soon join more than 20 states in opting out of creating a health care exchange — a potential move that has generated vigorous debate among state legislators.

N.C. Senate Bill 4, introduced when the N.C. legislature reconvened last week, would exempt the state from running a health care exchange and grant control of the program to the federal government. The bill would not seek an expansion of the state’s Medicaid program.


$648 million
administrative costs in 2011

6.3 percent
of the total cost of Medicaid in North Carolina devoted to administrative costs

5.4 percent
of the total cost of Medicaid in New Jersey devoted to administrative costs

An exchange allows small businesses and individuals to compare health care plans and determine eligibility for tax credits to lower the cost. The system aims to cover more than 30 million uninsured Americans.

The bill demonstrates the Republican Party’s commitment to improving health care’s efficiency, said Senate President Pro Tempore Phil Berger, R-Guilford, in a statement.

“Saddling our citizens with the enormous costs of a new federal bureaucracy and entitlements is simply not the way to achieve this goal,” he said.

The bill would also return to the federal government some grant money that was issued to the state under former Gov. Bev Perdue to set up a joint federal-state-run exchange, which she wanted to implement.

Rep. Verla Insko, D-Orange, said the money is already being used to set up a computer system for health care.

“They are asking us to send it back,” Insko said. “That’s going to cost us.”

Dallas Woodhouse, state director of the right-leaning Americans for Prosperity, said he supports the bill because it makes the federal government, not the state, accountable for the Affordable Care Act.

But Sen. Ellie Kinnaird, D-Orange, said North Carolina would be missing out by not having a local exchange.

“We understand our needs, and the federal government doesn’t,” she said. “If there’s no local expert for someone on the federal level, we have done a great disservice to our citizens.”

Expanding Medicaid per the Affordable Care Act became optional after the U.S. Supreme Court’s ruling on the act last summer. It has been a point of contention among legislators.

Under the act, the federal government would cover the cost of an expansion for three years before the state shoulders a portion of the cost.

But the Senate bill also rules out an expansion of Medicaid.

“It’s a positive thing for state policymakers to view (Medicaid expansion) not as free money,” Woodhouse said.

He pointed to a recent state report that found inadequate oversight of the state’s Medicaid program by the Department of Medical Assistance, resulting in a shortfall of more than $400 million last year.

But Kinnaird said the bill could indirectly close rural hospitals that rely on Medicaid money.
“If investors don’t get money they want, they will get rid of the hospital,” she said. “They are throwing away valuable funds.”

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