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Life After Obamacare  – Part III

Life After Obamacare – Part III

Implications for North Carolina Medicaid


Health Care Law Note
(January 10, 2017)

In the wake of the 2016 presidential election, the healthcare industry is coping with the uncertainty of a new administration, especially in light of the President-Elect's repeated pledges to repeal and replace the Patient Protection and Affordable Care Act ("PPACA" or "Obamacare"). A repeal could affect every corner of healthcare in the United States, and those implications will become clearer in the coming months. This article is Part III of a multi-part series anticipating what form a repeal might take, and implications for healthcare providers.  

Read part one and part two of this series.

Part III - Implications for North Carolina Medicaid

Although North Carolina's newly elected governor Roy Cooper has very recently submitted a proposal to CMS to expand Medicaid to hundreds of thousands in North Carolina who are not currently covered, existing state law and the prospect of a partial or full repeal of Obamacare makes it highly uncertain that Medicaid will be expanded here as it has been in other states.  Further, a repeal would probably not affect the ongoing transition to Medicaid managed care.

As background, PPACA's terms included an expansion of Medicaid to a broad range of persons under age 65 with incomes at or below 133% of the federal poverty level1, and provided for increased Federal funding to the states, including 100% of most states' Medicaid costs for 2014-2016, and at lesser amounts thereafter.  However, in June 2012, the US Supreme Court's decision in NFIB v. Sebelius,2 held that PPACA's Medicaid expansion provisions were unconstitutionally coercive of the states, in part because states stood to lose all federal Medicaid funding if they did not comply.3  As a result, the Medicaid expansion provisions and increased Federal funding remain in the law, but the states' decisions whether to expand Medicaid effectively became optional since the federal government cannot withhold existing Federal matching funds to enforce the expansion.

Since then, the North Carolina General Assembly passed legislation forbidding the administrative agencies from attempting to expand Medicaid under PPACA4 and the McCrory administration declined any attempt to expand Medicaid in North Carolina, which Governor Cooper has long criticized.5  Despite Cooper's victory in the Governor's race, Republicans have strengthened their control of both chambers of the General Assembly, likely preventing the passage of any bill to expand Medicaid during 2017, and a repeal of Obamacare would likely cut off the option for states to expand Medicaid in the future. 

Despite these obstacles, the North Carolina Department of Health and Human Services announced within days of Governor Cooper's inauguration that a Medicaid State Plan Amendment would be submitted expanding Medicaid, and taking the position that the prior legislation to block an expansion was beyond the authority of the General Assembly.  As of this writing, a 10-day public notice of the proposed expansion has been posted on NC DHHS' web site,6 after which the proposed amendment will be submitted for CMS's review and potential approval.  In response to the Governor's move, the Republican leadership in the General Assembly wrote to CMS on January 5th urging it to deny the proposed amendment as illegal. 

The impending change in the federal executive administration may well slow down the review of the proposed expansion and a partial or full repeal of PPACA in the meantime could eliminate the option of an expansion.  Moreover, even if CMS ultimately approves the expansion (proposed to take effect January 1, 2018), litigation to block the expansion is almost certain, including requests for an injunction to preserve the status quo until the courts can fully decide the issues.  The General Assembly could also refuse to fund the state expenditures needed to expand Medicaid in North Carolina and add to the stalemate. Therefore, a Medicaid expansion could be defeated  by a court decision that the Governor lacks the authority to override the General Assembly lack of state funds or by a PPACA repeal that eliminates that option.  Therefore, any expansion of Medicaid in North Carolina is very uncertain, and that uncertainty may not be resolved for months at least.

On the other hand, a repeal of any kind would probably have little effect on our state's ongoing transition to Medicaid Managed Care, which was mandated by the General Assembly in September 2015.7  North Carolina's Medicaid reform legislation is independent of Obamacare, and in fact, a primary purpose of transferring Medicaid to a capitated system administered by private contractors was to ensure budget predictability, which has long been a priority of the General Assembly. 

Details of the program could be affected by a PPACA repeal. For example, PPACA included new regulatory requirements for Medicaid managed care that were incorporated in CMS's recent Medicaid Managed Care final rule.8  Further, North Carolina's implementation of Medicaid Managed Care may be delayed somewhat, since CMS's consideration of North Carolina's pending Section 1115 Waiver application (submitted June 1, 2016) will likely be delayed pending the confirmation of the incoming administration's appointees to lead HHS and CMS.  Consequently, an Obamacare repeal is unlikely to change North Carolina's direction toward a fully managed care Medicaid program, and the proposed Medicaid expansion will not take effect before January 2018, if at all.

1  See 42 USC 1396a(a)(10)(A)(i)(VIII).

2  National Federation of Independent Business, et al. v. Sebelius, et al., 567 U.S. _____, 132 S.Ct. 2566 (2012).

3  See FN 2, above; see also Kaiser Family Foundation, A Guide to the Supreme Court's Decision on the ACA's Medicaid Expansion (https://kaiserfamilyfoundation.files.wordpress.com/2013/01/8347.pdf).

4  See N.C. Session Law 2013-5, section 3.

5  See http://www.roycooper.com/issues/.

6  See https://dma.ncdhhs.gov/2017-state-plan-amendments.

7  See N.C. Session Law 2015-245 (http://ncleg.net/EnactedLegislation/SessionLaws/PDF/2015-2016/SL2015-245.pdf).

8  See 81 Fed. Reg. pp. 27498-27901.

Authors
Marcus C. Hewitt
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