On Tuesday, February 12th, the North Carolina House committee voted down the Democratic proposal to expand Medicaid coverage within North Carolina. The expansion plan would have used federal dollars to expand coverage to almost 500,000 low-income residents for three years. Republicans rejected the expansion proposal on the grounds that once the federal money stopped, North Carolina would be unable to scale back the expansion and face substantial costs.
Governor Pat McCrory agrees with the decision and made the statement that, “North Carolina is not ready to expand the Medicaid system and that we should utilize a federal exchange.”
While the final vote has not yet passed, North Carolina seems to be heading in the direction of a federal health exchange which will allow residents to purchase private insurance through an online marketplace. Legislatures need to realize that this would not be in the best interest of North Carolinians. Setting up a federal health exchange would mean that North Carolina would have no voice in how the exchange works within the state, leaving all the decisions up to bureaucrats in Washington.
Effects To Current Private Insurance Plans in North Carolina
A federal exchange wouldn’t mean changes simply for those without insurance, it will affect those already covered by private insurance as well. Risk pools are one of the ways insurance companies assess the risk of insuring a group of people, which affects rates. Under a federal exchange, risk pools for individuals and small groups could be combined. Normally risk pools for individuals and small groups are separate because risk pools are more accurate when used with people who are the most similar. This could cause rates to raise, especially for small groups.
Provider networks and pricing could also be affected by a federal exchange. Insurance providers use geographic rating areas to define their networks and pricing. Obamacare limits the geographic rating to 7 contiguous areas where most plans now are 6 to 23 geographic rating areas. The limit means that North Carolinians could see their rates go up to 10 percent. Setting up a state partnership exchange will allow North Carolina to negotiate components of the plan to minimize negative effects within the state.
In addition, a federal exchange could change regulations on the size of small groups, raising the limit from 50 to 100. This will have a direct effect on how small businesses choose health insurance. Ultimately, North Carolina will want a say in what is best for the state. Leaving the federal government in charge of the health insurance exchange welcomes policy that is not tailored to North Carolinians.
Options Moving Forward
Carolina Insurance Professionals is an advocate for North Carolina residents. We want to help North Carolinians stay ahead of the Obamacare changes and influence legislators to makes decisions that will result in the best outcome possible for North Carolina. While a federal exchange will require less up-front work for legislators, it will also silence the voice of North Carolinians in regards to their healthcare.
Contact Us if you have questions about how your coverage may change!