CHARLOTTE, N.C. -- Charlese Frazier lost her income and her health insurance in 2011 when she got laid off as a mortgage retention specialist by a Charlotte bank.
After looking briefly for another job, she decided to stay home and care for her 84-year-old father, who has dementia, diabetes, Parkinson’s disease and prostate cancer.
She doesn’t get unemployment benefits because she’s not looking for work, and she can’t afford to buy her own health insurance.
Last month at a forum about the Affordable Care Act, Frazier, who is divorced and has a 22-year-old daughter, learned she would have been eligible for Medicaid in January if North Carolina had expanded that government program for the poor and disabled.
But North Carolina, like 25 other states, rejected that option. And Frazier became one of the half-million N.C. residents – some of the poorest of the poor – left without insurance despite the national health-system overhaul that was intended to drastically reduce the number of uninsured Americans.
Frazier, 58, earned more than $30,000 a year in her bank job, but because she has no income now, she got hit with a double-whammy. Not only doesn’t she qualify for Medicaid, she also isn’t eligible for government subsidies to buy insurance through the new online marketplace.
“All of this is new to me,” she said. “I’ve worked hard all my life and never had to depend on any type of assistance at all. … I’m taking care of my father 24/7. I just don’t know where to go.”
The Affordable Care Act, commonly called Obamacare, requires almost all Americans to buy health insurance or pay a fine.
It was designed to provide insurance for people who don’t have access to coverage through their employers. It created an online exchange where low- and middle-income earners can buy private insurance with government subsidies.
The law called for the poorest of the uninsured to be covered by expanding Medicaid. Instead of letting the states pick up the tab, the federal government promised to cover all of the cost of the expansion for the first three years and no less than 90 percent in later years.
But last year, when the Supreme Court upheld the constitutionality of the law, it also decreed that states couldn’t be mandated to expand Medicaid.
Every state in the Deep South, except for Arkansas, rejected the Medicaid expansion. Like North Carolina and South Carolina, most of those states are led by Republican governors who are philosophically opposed to the Affordable Care Act.
Because so many states rejected the expansion, two-thirds of poor blacks and single mothers and more than half of low-wage workers who are currently uninsured in the United States are left without insurance, according to an analysis by the New York Times. The government has said people who would have been covered by Medicaid in states that aren’t accepting the expansion will not face fines.
Adam Linker, a policy analyst at the North Carolina Health Access Coalition, a nonprofit that advocates for the poor, has been traveling the state talking about the new law and meeting many of those people who will fall through the cracks.
“They’re always very shocked that they won’t qualify for anything,” Linker said.
Republican legislators in North Carolina and the new Republican governor, Pat McCrory, agreed to reject the Medicaid expansion earlier this year, citing concern about the cost of offering Medicaid to a half-million more people.
Medicaid makes up 15 percent of the state’s $20 billion budget. The $3 billion cost to the state in the 2012 fiscal year compares to $2 billion a decade ago. The federal government pays about two-thirds of the cost for current participants, or about $11 billion.
McCrory also expressed concern about whether the federal government would pay its share of the cost to expand in light of the U.S. budget deficit, which has exceeded $1 trillion in each of the past four years.
Medicaid in North Carolina currently covers children under 18, some pregnant women, disabled people, select low-income parents and elderly poor.
Advocates for the poor are hoping that state officials change their minds. “You’re going to have more and more people realizing that this was a state-level decision to deny them access to health insurance,” Linker said.
Based on interviews with two leaders of the state House Health and Human Services committee, North Carolina’s decision will not be reversed any time soon.
Rep. Justin Burr, a Republican representing Montgomery and Stanly counties and co-chairman of the committee, said he’s “very skeptical about any future expansion.”
“So much of our state revenue has been eaten away by the Medicaid budget,” he said. “I certainly don’t think we need to expand an entitlement program.”
Rep. Nelson Dollar, a Republican from Wake County, said the current state Medicaid program, which has experienced cost overruns and chronic billing delays, needs fixing “before consideration can be given as to whether you add an additional 500,000 people to the system.”
He added that the people who would be covered under Medicaid expansion are “relatively healthy and not the ones in most need. If somebody has an emergency and they go to the emergency room, they will always get care.”
Linker, from the Health Access Coalition, said insurance companies have repeatedly found that the people who would be covered by the Medicaid expansion are less healthy than those with private insurance. Also, he said it’s a myth that “anyone can stroll into an emergency room and get free, comprehensive care.”
Hospitals are obligated to stabilize patients who are acutely ill or injured, he said, but they can also pursue patients for payment, which can wreak havoc on the finances of the uninsured.
“Expanding Medicaid boosts the bottom line for medical providers and ensures that people can seek appropriate care at the right place at the right time,” Linker said.
A half-million uninsured
In North Carolina, about 1.5 million residents are uninsured, and about half of them will qualify for subsidies to buy insurance through the online exchange.
The other half – about 630,000 – would have qualified for Medicaid under the expansion, according to census figures. That’s because they have household incomes of less than 138 percent of the federal poverty level; that’s $15,856 for a single person and $32,499 for a family of four.
Of those eligible for Medicaid expansion, about 200,000 qualify for premium subsidies on the insurance exchange because they earn between 100 and 138 percent of the poverty level.
But the poorest of the uninsured, who earn less than 100 percent of the poverty level – $11,490 for a single person and $45,960 for a family of four – are not eligible for subsidies. That’s because authors of the Affordable Care Act assumed they would be covered by the Medicaid expansion.
Mostly these people who earn too little to get subsidies are non-disabled adults without children. They are “literally too poor to be eligible,” said Madison Hardee, a lawyer with Legal Services of the Southern Piedmont.
Legal Services is one of three Charlotte agencies that received federal grants to train “navigators” to help consumers use the online insurance marketplace. Because the website hasn’t been working properly since enrollment started Oct. 1, Hardee has been helping clients file paper applications or use North Carolina’s ePASS website to see whether they are eligible for other benefits.
Among those she helped is Lisa Knight, 52, whose household income from her husband’s disability checks is about $15,700 a year.
Uninsured now, Knight has multiple pre-existing conditions, which under the new law can no longer prevent her from getting affordable insurance. She takes medicines for emphysema, chronic obstructive pulmonary disease, arthritis pain, depression and anxiety. Her prescriptions cost more than $150 a month. Her doctor prescribed another drug called Spiriva for her breathing problems, but it costs $500 a month.
“I have quit taking it because I can’t afford it,” she said.
Based on her household income, Knight would have qualified for the Medicaid expansion. She also qualifies for a subsidy to buy insurance on the exchange because her income is between 100 and 138 percent of the poverty level.
Knight could buy a “silver” plan – the second least expensive plan on the exchange – for a premium of $5,317 a year, according to the Kaiser Family Foundation eligibility calculator for North Carolina. She would be eligible for a subsidy that reduces her premium payment to $314 per year, or 2 percent of her income. Her out-of-pocket maximum for other medical expenses can be no more than $2,250, according to the calculator.
Knight is excited about the chance to enroll: “This is what I’ve been waiting for.”
Hospitals want expansion
Hospitals across the Carolinas had expected the Medicaid expansion would provide insurance for millions of patients who now receive medical care without paying for it.
“This was integral to implementation of the Affordable Care Act,” said Joe Piemont, president and chief operating officer of Carolinas HealthCare System.
In exchange for getting more insured patients, hospitals were also slated under the law to take cuts in other areas, such as Medicare reimbursement. But that delicate balance was thrown off when North Carolina didn’t expand Medicaid. That means millions of patients who have been uninsured will remain so. And they’ll continue using hospital emergency departments without the means to pay.
The annual cost to North Carolina’s hospitals of not expanding Medicaid is estimated to be as much as $660 million, based on an analysis conducted for the N.C. Institute of Medicine by the N.C. Division of Medical Assistance.
Carolinas HealthCare estimates it would have received about $50 million a year in new Medicaid revenues for Charlotte-area hospitals alone if the state had expanded Medicaid. The system also owns hospitals outside this region and doctors’ offices across the Carolinas that will be affected.
Bob Seehausen, senior vice president of Novant Health, said the Winston-Salem-based hospital system estimated it would have received $37 million a year in new Medicaid revenues “to cover people we’ve been treating on an uninsured basis.”
Citing the state’s decision to reject Medicaid expansion, Vidant Health System recently announced plans to close its 60-year-old community hospital in Belhaven in eastern North Carolina.
“Many of these institutions operate close to the margin,” Piemont said. “You just wonder how much they can absorb.”
Expanding Medicaid would have given more patients access to routine doctors’ visits, medicines and hospital care so they wouldn’t have to wait until problems develop into emergencies. “We want people to have access to good, regular health care to help them stay healthy instead of having to treat them at the last minute,” Seehausen said.
Don Dalton, spokesman for the North Carolina Hospital Association, said the group is “having some very intense discussions with our members” about how best to persuade state leaders to reverse their decision.
Mecklenburg County commissioners will also weigh in at their meeting Tuesday night. Democratic commissioner Dumont Clarke and two other commissioners have sponsored a resolution asking legislators to reconsider their decision to reject the Medicaid expansion.
“One of my concerns,” Clarke said, “is the adverse impact this will have on our two big hospital systems. We’re really cutting off our noses to spite our faces.”
Free clinics still needed
Providing nearly universal insurance coverage to Americans – the goal of the Affordable Care Act – might have come close to putting free medical clinics out of business. But the Medicaid coverage gap means those clinics are as important as ever.
Amy Carr, executive director of the Matthews Free Medical Clinic, said most of her clinic’s 700 patients are working people with incomes below the poverty level, which means they would have qualified for Medicaid under an expansion, but make too little to get subsidies on the exchange.
“They remain patients at the clinic,” she said. “We’re just doing business as normal.”
The same is true at North Carolina MedAssist, a Charlotte-based nonprofit that provides free prescription medicines for low-income patients.
Of 10,000 served in a year, 72 percent have incomes below the poverty level. “They will not be helped because their income is too low,” said Lori Giang, executive director of MedAssist.
At a Rotary Club meeting last week, Giang said she described this predicament, and “people were amazed.”
Rizzie Baldwin, of south Charlotte, was also surprised when she began researching the new law’s provisions. Her daughter, Sarah-Hamlin, turned 26 this year and is no longer eligible to stay on her parents’ health insurance.
A hair stylist, Sarah-Hamlin Baldwin works fulltime, bringing in about $12,000 a year. This year, her parents are paying her $200 monthly insurance premiums plus other medical expenses before she reached the $5,000 deductible.
Next year, because her income is more than 100 percent of the poverty level, she’ll qualify for a subsidy on the health insurance exchange. According to the Kaiser calculator, she could get a $2,947 “silver” plan for $240 a year after the subsidy. The maximum out-of-pocket costs for other medical expenses would be $2,250, according to the calculator.
If the state had expanded Medicaid, the federal government would have paid 100 percent of the cost for the first three years.
“I didn’t know exactly how the new law was going to work, but I thought the whole purpose was to get low-income working people like Sarah-Hamlin insured,” Rizzie Baldwin said. “It is our own state legislature that is leaving our daughter out in the cold. This makes no sense to me.”