S.L. 2013-5 (S 4). No N.C. Exchange/No Medicaid Expansion
S.L. 2013-5 limits North Carolina’s participation in implementing the federal Affordable Care Act (ACA) in two ways: by declining to expand Medicaid eligibility to adults who are ineligible under categorical Medicaid programs, and by directing state agencies and institutions not to participate in the implementation of a health benefits exchange in North Carolina. The law became effective March 6, 2013.
S.L. 2013-5 limits North Carolina’s participation in implementing the federal Affordable Care Act (ACA) in two ways: by declining to expand Medicaid eligibility to adults who are ineligible under categorical Medicaid programs, and by directing state agencies and institutions not to participate in the implementation of a health benefits exchange in North Carolina. The law became effective March 6, 2013.
Medicaid. The ACA included an expansion of Medicaid, the health insurance program for low-income individuals. Medicaid is a voluntary program, but states receive large amounts of federal funding to support it and no state declines to participate in it. At present Medicaid coverage extends only to people who fit into particular categories, such as pregnant women, families with children, or individuals with disabilities. The expansion authorized by the ACA would make individuals with incomes up to 138% of the federal poverty level eligible for Medicaid regardless of whether they fit within a category.
Under the ACA as written, a state that did not comply with this expansion of Medicaid would have been at risk of losing all its federal Medicaid funding – not just funding for the expansion, but also federal funds that are used to support current programs. However, in June 2012 the United States Supreme Court held that the Medicaid expansion exceeded Congress’ authority under the spending clause. While Congress may use its spending power to create and regulate voluntary state-federal programs such as Medicaid, it may not coerce states into participating in them. Chief Justice Roberts described the threat of loss of very large amounts of federal funding as “economic dragooning” that left states with no choice but to go along with the Medicaid expansion – in other words, it amounts to the coercion that is not constitutionally permitted. However, the Court prescribed a remedy: The constitutional violation is cured by prohibiting the federal government from withholding all Medicaid funds from a state that declines participating in the expansion. Instead, it may withhold only those funds necessary to pay for the expansion. National Federation of Independent Business v. Sebelius, 132 S. Ct. 2566 (2012). The effect of this decision was to make Medicaid expansion optional for states.
This legislation states that North Carolina will not expand Medicaid under the ACA. Further, no state agency, department, or institution may attempt to expand the Medicaid eligibility standards provided in the 2011 Appropriations Act (S.L. 2011-145) and other state laws unless directed to do so by the General Assembly.
Health Benefits Exchange. The ACA calls for states to set up health benefits exchanges for individuals who are not insured through other means, such as employer-provided insurance. If a state does not set up a health benefits exchange, the federal government will provide an exchange for the state’s residents. In 2011, the General Assembly stated its intention to create a state-based exchange in the budget technical corrections act (S.L. 2011-391, sec. 49). Legislation that would have created the exchange passed the state House but was never taken up by the Senate. On November 15 2012, former Governor Beverly Perdue announced that the state would participate in a state-federal partnership to operate the exchange. However, on February 12 2013, Governor Pat McCrory released a statement concluding that the state should utilize a federal exchange.
S.L. 2013-5 prohibits state agencies and institutions from taking actions toward forming a state-run health benefits exchange and from entering any contracts or committing any resources for the provision of services related to the federal exchange under a federal-state partnership model, without the express authorization of the General Assembly. It reserves to the General Assembly the authority to define the level of state interaction, if any, with the federal exchange that will operate within North Carolina. It directs the Departments of Insurance and Health and Human Services to cease all expenditures under federal grants designed to support the exchange, but to draw down funds to reimburse expenses already incurred to the extent possible.
NC FAST. NC FAST (North Carolina Families Accessing Services through Technology) is an information technology system that is used to determine eligibility for a number of public assistance programs, including Medicaid. Section 2 of S.L. 2013-5 directs the Department of Health and Human Services to ensure that NC FAST can and will be used to provide Medicaid eligibility determinations for the federally operated health benefits exchange in North Carolina. It further directs the Department to seek federal funding at the 90/10 match rate to fund the eligibility determinations, if funds for the state’s share are available from existing appropriations for NC FAST and the total amount of the state match does not exceed $5 million.