On the final day of its 2012 Term, the U.S. Supreme Court issued its highly anticipated ruling on the constitutionality of the Patient Protection and Affordable Care Act (see National Federation of Independent Business v. Sebelius).  As a surprise to many on both sides of the political aisle, the Court upheld the individual mandate to purchase health insurance, widely seen as the anchor of the bill.

The Court also ruled that the ACA provisions expanding Medicaid unconstitutionally coerced states to participate because the law allowed the federal government to withhold all of a state’s existing federal Medicaid funds if the state chose not to expand its Medicaid program.  Instead of striking down the Medicaid expansion entirely, the Court’s ruling essentially converted the ACA’s Medicaid expansion into a purely optional program for the states.  To read more on the decision see Supreme Court Upholds Mandate, Limits Medicaid Expansion – June 29, 2012 NCMS Bulletin.

Now that the issue of constitutionality of the Affordable Care Act is resolved, the State of North Carolina is left with two big questions. Does the state establish its own Health Insurance Exchange, and does it expand Medicaid eligibility?

Health Insurance Exchange

The ACA calls for the creation of American Health Benefit Exchanges where, beginning in 2014, uninsured individuals and small businesses can shop for health insurance coverage.  Federal subsidies will be available for people with incomes between 100-400% of the Federal Poverty Level ($23,050 – $92,200 for a family of 4 in 2012) who purchase coverage through the exchange.  Under the law, states can choose to establish exchanges on their own in place of a federally run exchange program. Thus far, 15 states and the District of Columbia have taken this option.

In 2011, Governor Perdue signed HB 22, which indicated the General Assembly’s intent to establish a North Carolina Health Insurance Exchange. Last year the state also received a $1 million exchange planning grant as well as a $12.4 million Level One Establishment grant for the purposes to moving toward the creation of an exchange.  This money has been accepted by the Department of Insurance and is now being used to staff the analysis and development stages of the exchange as well as to engage stakeholders in the process. Related vendor contracts run through December 31, 2014.

Although legislation has yet to pass specifically establishing an exchange, several bills to do so were introduced in 2011, and discussions among interested parties are expected to continue.  If North Carolina elects to operate its own exchange it must submit a blue print for doing so by November 16, 2012.  The state will then have until January 1 of the following year to create an operational exchange.

Medicaid Expansion

Due to the nature of the Supreme Court’s ruling state lawmakers will now have a second important decision to make regarding implementation of the ACA – whether to expand North Carolina’s Medicaid role.

The Medicaid program is currently funded jointly by the federal government and states, but is voluntary for states (although all 50 participate).  In North Carolina Medicaid enrollment is an option for:

• Pregnant women, for services related to pregnancy, with a monthly income limit of $2,333 – 3,554 depending on family size.
• Parents with dependent children with a monthly income limit of $362 – 594 depending on family size.
• Infants and children with a monthly family income limit of $931 – 4, 502 depending on the age of the child and size of the family.

According to the Kaiser Family Foundation report, Medicaid Coverage and Spending in Health Reform, North Carolina will spend at least $1 billion from 2014-2019 to expand the state’s Medicaid program to those required by the Act – including a large number of childless adults.  In addition to state funding, the federal government will spend at least an additional $20 billion during those years to support the mandated expansion – if the state agrees to expand.

So while the constitutional challenge has been decided, a number of burning questions for our state still remain. Lawmakers will answer these questions in the coming months and/or years and it is imperative that the physician community weigh in on the important decisions that will affect the ability of NC patients to access affordable, high-quality care.  The NCMS will continue to offer resources here on our website and through our health policy staff to answer your questions and to help be a part of the solution for North Carolina’s two newest dilemmas.