As the federal government and states around the county gear up for the October 1 rollout of the Affordable Care Act’s health insurance marketplaces, North Carolina is finalizing the shutdown of what would have been one of the most extensive outreach and assistance plans in the country.

The state Department of Insurance confirmed this week it is preparing to send Health and Human Services Secretary Kathleen Sebelius formal notification that the state is ending the programs and will no longer tap millions in federal grants it received earlier this year to pay for them.

The closeout of the grants, mandated by legislation passed this session by the General Assembly, ends an ambitious, two-year effort by a coalition of providers, health experts and policy makers to increase awareness and guide individuals and small businesses through the new insurance system. It comes at a time when studies show that awareness of the soon to open insurance marketplaces is dropping. According to a recent tracking survey by the Commonwealth Fund, 74 percent of young adults don’t know about them.

Among the programs planned for North Carolina ended by the legislature’s action were:

• Television, radio, web and social media advertising and statewide public awareness campaigns;
• An in-person assistance network in all 100 counties with 600 counselors available to work on-on-one with consumers;
• Extensive coordination with local agencies to do outreach and explain benefits and plans to vulnerable and hard to reach populations.

The programs were terminated as part of Senate Bill 4, which rejected expansion of Medicaid offered under ACA and put the state on record as opposing both a state-run exchange and a state and federal partnership to run its healthcare exchange. The move put North Carolina among the 27 states leaving operation of the exchanges — now called marketplaces — almost entirely to the federal government.

The bill went one step further adding a direct requirement that the state’s Department of Insurance and Department Of Health and Human Services “cease all expenditures” funded by the federal grants it had been recently awarded.

That not only affected the outreach program, but also millions in IT upgrades and other infrastructure designed to handle the new program.

Adam Linker, a health policy analyst with the NC Health Access Coalition, said what is astounding about what the legislature did is that at this point in the phase in of the Affordable Care Act, it was entirely unnecessary.

Linker said even if the legislature decided the state would not run its own exchange, it was entitled to use the planning grant money for the outreach and technology improvements.

“We have this big program that not many people know about and we as a state are saying ‘we’re not going to tell you about it,’” he said, adding that many of the roughly 1.5 million North Carolinians under 65 uninsured, would be eligible for some kind of break in their premiums. “This is going to offer a subsidy to 1 million North Carolinians and we’re actively trying to keep people in the dark about it.”

There’s a stark difference in state participation between ACA’s rollout and the introduction of federal benefits, Linker said, including most recently the Children’s Health Insurance Program (CHIP) and the Medicare prescription drug benefit. “We’ve never had a big rollout where we weren’t involved.”

The unfortunate result, he said, is more confusion about the program and less people and small businesses taking advantage of the benefit. It’s a scenario that by design is likely to reinforce the anti-Obamacare talking points. “A lot of people are going to blame the Affordable Care Act, when actually it’s North Carolina.”

The state will not be completely left in the dark, though. The federally-sponsored Navigator program will provide some on-the-ground assistance as well as non-profits and the insurance industry. But what will happen in terms of outreach is nothing like what was planned and for now, by law, the main source of ACA information will be a federal call center and web site.

“We had $20 million to help people understand the benefits and get their questions answered,” Linker said. “Now we have about $2 million.”

Grant awarded then rejected

The federal grants — known in ACA lingo as Level I Planning Grants — were awarded while the state was still officially planning a state-run health care exchange, but during the transition between the McCrory and Perdue administrations and at a time when new districts redrawn at the direction of the GOP leadership swept in a much more conservative majority in the legislature.

Under ACA rules, the state was entitled to apply for federal grants ahead of setting up the legal framework for a state run exchange. The so-called Level I Planning Grants typically allow states to build the IT infrastructure and set up assistance and outreach programs. The design for North Carolina’s program was guided by an extensive study of the state’s uninsured and the work of a task force assembled by the North Carolina Institute of Medicine that studied ACA’s impact and outlined specific needs for state involvement.

NC Institute of Medicine — Examining the Impact of the Patient Protection and Affordable Care Act in North Carolina

In January 2013, the North Carolina was officially awarded a $74 million grant to do just that, putting roughly $45 million toward a DHHS IT system that would handle qualifications for federal health care subsidies and more than $20 million into helplines, outreach and a network of trained “assisters” in the field to handle questions in person. The planned called for 583 assisters to be hired on for the first year.

But by the end of January, the newly-reorganized General Assembly reconvened and quickly announced its intention to move in an entirely different direction.

On January 30, three members of the Senate leadership — Sens. Tom Apodaca, R-Henderson, Harry Brown, R-Onslow and Bob Rucho, R-Mecklenburg — introduced Senate Bill 4, which bore the short title “No N.C. Exchange/ No Medicaid Expansion. The long title read like this:

“AN ACT (1) to clarify the State’s intent not to operate a State-Run or “Partnership” health Benefit Exchange, (2) to provide that FUTURE medicaid eligibility determinations will be made by the State rather than the Federally facilitated Exchange, AND (3) to Reject the Affordable Care Act’s optional medicaid expansion.”

Senate Bill 4 Text and Main Page

Much of the coverage of the legislature’s action at the time focused on its refusal — joined by McCrory — to reject the expansion of Medicaid offered under ACA, a move that would have added roughly 500,000 North Carolinians to the program at almost no cost to the state for the first three years. (In later years, the state would cover 10 percent of the cost and the federal government 90 percent.)

But Senate Bill 4 also contained several other provisions, among them the repeal of the authority it granted two years before to the state insurance commissioner to administer and enforce provisions of ACA and authorization for Department of Insurance and the state Department of Health and Human Services to “collaborate and plan” for ACA requirements. The bill reserved decisions about the state’s interaction with ACA to the General Assembly and prohibited both a state-run exchange and a state and federal partnership model in no uncertain terms:

The General Assembly reserves the authority to define the State’s level of interaction, if any, with the federally facilitated Health Benefit Exchange that will operate in the State. No department, agency, or institution of this State shall enter into any contracts or commit any resources for the provision of any services related to the federally facilitated Health Benefit Exchange under a “Partnership” Exchange model, except as authorized by the General Assembly. No department, agency, or institution of this State shall take any actions not authorized by the General Assembly toward the formation of a State-run Health Benefit Exchange. It is not the intent of this section to prohibit State-federal interaction that does not pursue a State-run Exchange or “Partnership” Exchange model.

The bill did allow the state to maintain a $3.9 million premium review grant to evaluate insurance plans and regulations and allowed DHHS to draw down some of the grant to cover work on NCFAST, a new benefits IT system that was having its own shaky start and will be the backbone of the state’s interface with the federal system for determining North Carolina residents’ eligibility and subsidies.

In the next installments of this series, we’ll look at how the infrastructure is progressing, what North Carolina consumers can expect and the set up of the federal Navigator assistance program in the state.

Here’s the agreement between North Carolina and the feds on the $74 million planning grant detailing the program the state envisioned.

November 2012 Level One Exchange Establishment Cooperative Agreement Application