NC Health Insurance

Who’s to blame for increasing costs?

by: Mauricio Barreto

Health insurance costs for college students are rising, and they are rising quickly. President Obama’s healthcare law, known as the Affordable Care Act (ACA), is going to experience its largest implementations in the coming year, and the effects can already be seen.

Tom Ross, president of the University of North Carolina System was the first to mention any impact this would have on students in the UNC university system in a letter he wrote to the board of governors about health insurance cost increases. In the letter Ross writes, “Based on more than three semesters of actual claims experience, as well as the new provisions of the Affordable Care Act, we are facing large increases in premiums for our students.“ Further on in the letter Ross describes how the average costs would rise over 50% in order to continue to provide the same “quality coverage” at “comparatively low rates”. In essence Ross described the beginning of the ACA’s direct effect on a typical student, but there is still so much about the new law that has not been fleshed out.

On June 28, 2012 the Supreme Court redefined the original proposal Obama had hoped in the passing of the Affordable Care Act. While the original mandate of making the purchase of healthcare a requirement for all was upheld, the Supreme Court changed the law by making the expansion of the Medicaid program under the Affordable Care Act a state option. What this essentially means is that each individual state can now choose whether or not to accept responsibility for the ACA Medicaid enrollment requirements coverage, or choose to opt out of it, which would mean the federal government would have to assume responsibility.

Under the Medicaid expansion anyone 133% above the deferral poverty line will be able to claim coverage, meaning that 17 million uninsured would gain Medicaid coverage under the ACA. With the intended state option, the federal government hoped that the states would share the costs of implementing the plan with the states, but now that states can choose to overturn it, this is no longer a guarantee. Now each state has the choice to accept this provision to expand Medicaid, in which the federal government will cover the total cost for three years, then slowly decrease in how much it pays over time as the state begins to claim more and more responsibility. With the Supreme Court decisions however, states can now opt out, and North Carolina is one of the states that is considering such an option.

The big push behind such opposition to the ACA runs under one clear argument. If states choose to set up exchanges, then they are essentially assuming the costs and responsibilities of the ACA without any of the autonomy over it. In essence the states would be acting as co-owners of the ACA for better or for worse, and in the case that things go awry the state officials will have to take some of the heat. For this reason many states have decided to opt out completely, or devise alternative plans to allow the federal government to control the plan they so preciously wanted to enact, even though hardly anyone knows what it will do.

Prior to the November elections, former Governor Bev Perdue stated that she wanted to choose a state-federal partnership method to introduce the ACA into the state of North Carolina.  This made North Carolina one of the six states to choose such option, and join the ranks of an additional 18 states that completely denied to have a state exchange whatsoever. As more and more states decline to set up the state run exchange, the more responsible the federal government is for the Medicare expansion, which they will have to set up and run on their own.

In the state-federal partnership method that Bev Perdue threw support for, the state of North Carolina would divide the responsibilities of expansion of the ACA with the federal government. This will mean that the federal government will essentially perform all the functions of exchange management in the ACA while the state is something the consumers merely interact with. Essentially the government has to do all the heavy work and the states can oversee “customer service”. This is the plan that Bev Perdue, our prior governor who adamantly supported the ACA, decided to go with. Basically she wanted to support the bill, without assuming any responsibility for it.

Interestingly enough in November, with the election, North Carolina made its voice heard and Pat McCrory was elected governor. As someone opposed to the ACA the current stance that North Carolina has taken on healthcare might see a shift in the coming months. Pat McCrory in his campaign was in favor of completely opting out of the expansions in the ACA and this is something that we might see occurring in the coming weeks. In this transition phase however, Pat McCrory hasn’t made any final decisions yet.  He has made it known that he will look at the implications of the Medicaid expansion and make a decision from there, as any responsible leader should do.

According to the Congressional Budget Offices most recent annual report, “continued growth in spending for health care and retirement programs will cause mandatory outlays to increase faster than the economy, reaching 14.4 percent of GDP in 2022”. On top of this, the report described that Social Security, Medicare, and Medicaid will account for about 55% of all federal spending within the next decade with the influence of the ACA. While the federal government hoped that the new state requirement expansion of Medicaid would remove some of the financial burden put into place by the ACA, the states simply won’t have it. North Carolina, along with over 20 other states have all taken a stand against the government placing this financial burden on them, under a law that no one has yet to been able to completely understand.

Even Bev Perdue, in support of the ACA wouldn’t allow North Carolina to claim ownership of the expansion requirement, and Pat McCrory will presumably take an even stronger approach against it. The states do not want to be overhauled with new regulations, requirements, and financial burdens under a law that is simply not sustainable.

Medicare and other welfare programs are growing at an unprecedented rate, almost making up half of the CBO’s projected federal spending within the next ten years. North Carolina is one state among many to take a stand against assuming ownership of the irresponsible spending of the federal government, and they have done so without trying to cover it up. So the next time you wonder why the bill for your student health insurance is so large, it is not the University, the state governor, or even the state of North Carolina that is to blame, it is the federal government. North Carolina has taken its stand against the Affordable Care Act, as it begins to take full effect this year.

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