June 29--North Carolina risks losing control of the health insurance marketplace it has to establish under the federal law the U.S. Supreme Court upheld Thursday if it hesitates to authorize it much longer.

The state is also assessing the financial impact of adding more than half a million people to the Medicaid program as a result of the court's ruling.

States have a deadline of Jan. 1 to have their insurance exchanges certified by the federal government. Those that don't will be required to have federally run exchanges, although they can apply to transition to state-run programs in subsequent years.

The benefits exchanges are supposed to begin operation in January 2014, providing people without insurance and small businesses a regulated marketplace to shop for coverage.

Last year a bill authorizing the benefits exchange sped through the House, where members were told that, even if they didn't like President Obama's health-care law, they had to do it to retain state control. But Senate President Pro Tempore Phil Berger delayed consideration in his chamber, saying he wanted to see what the U.S. Supreme Court did.

On Thursday, Berger said the Senate doesn't plan on taking up the health care exchange bill in the few remaining days of this session. When the legislature adjourns early next week it isn't scheduled to be back in session until January. It could call a special session and return before then.

Pam Silberman, president and CEO of the N.C. Institute of Medicine, which has been working with the state to help set up a plan for the benefits exchange, said next year will be too late for the state to decide whether it wants to run its own exchange starting in 2014. But Berger said his staff tells him there is still time.

"We think the prudent thing to do is read the decision from the Supreme Court, study that in the context of what we may need to do as a result of how that decision interprets the law, and then we can act," Berger said. "But we will not forfeit the ability to do a state-based exchange."

Republican leaders in the General Assembly last year were reluctant also to give the state Department of Insurance the go-ahead to apply for the first round of federal funding available to help states prepare for a benefits marketplace.

In November, a joint legislative committee authorized the department to receive $12.4 million in federal grant money. Insurance Commissioner Wayne Goodwin said he had been waiting for the green light for 3-1/2 months, and told legislators the state couldn't wait indefinitely without losing control.

Deadlines for additional federal grants must also be met by states trying to establish their own marketplaces. Insurance department spokeswoman Kerry Hall said Thursday that the funding deadlines have become more flexible, with the next one anticipated to be Aug. 1. Grants will be available through 2014, according to the U.S. Department of Health and Human Services.

The Supreme Court's ruling also upheld expansion of Medicaid for low-income people, which would allow more than half a million North Carolinians to gain coverage, Silberman said.

After the federal law passed, the institute brought together 260 experts to look at its impact on North Carolina. The state Medicaid office estimated that about 560,000 people would gain Medicaid coverage by 2019, Silberman said.

The federal government initially would pay the entire cost for about 80 percent of those new enrollees, with the reimbursement to drop to 90 percent by 2019. Typically, Medicaid pays two-thirds of the state's Medicaid costs, and the state pays the rest.

The state Medicaid office estimated that adding 560,000 people to Medicaid would cost the state $830 million over six years and bring in $15 billion in federal money over that time, Silberman said.

The state Department of Health and Human Services, which houses the Medicaid office, referred inquiries to Gov. Bev Perdue. Perdue's office said only that the governor would review the ruling to determine how it might affect Medicaid, and that she had spoken to U.S. Secretary of Health and Human Services Kathleen Sebelius.

Although the ruling says the federal government cannot withhold money from states that refuse to expand Medicaid, state Rep. Nelson Dollar, a House budget writer with expertise in the Medicaid budget, said the federal government has other ways to coerce states to go along.

The state must receive federal permission for changes its Medicaid program. The federal Medicaid office could withhold permission for state changes if North Carolina declines to expand the program, Dollar said. "They can't use direct levers," Dollar said. "They can use indirect levers."

Had the Supreme Court's ruling gone the other way -- or at least if the mandate that everyone have health insurance had been struck down -- House Majority Leader Paul "Skip" Stam of Apex was willing to try to revive the first bill that Gov. Bev Perdue vetoed last year. House Bill 2 would have prohibited requiring insurance coverage.

Jarvis: 919-829-4576

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