ACCESS
A managed care Medicaid program administered by the Division of Medical Assistance. The Division of Medical Assistance uses Carolina ACCESS to buy preventive care and treatment from primary care physicians for Medicaid enrollees. The division also runs ACCESS II, a managed care program that provides treatment programs for such diseases as asthma and diabetes. More specifically, ACCESS links Medicaid patients with primary care providers. These providers are the gatekeepers of the Medicaid system. Under ACCESS, all Medicaid patients must see their primary care provider before they may see a specialist. It is incumbent upon the primary care provider to show fiscal restraint in deciding whether or not a patient should see a specialist. Another result of this gatekeeper system is that it prevents patients from seeing the specialist of their choice.
AFDC (Aid to Families with Dependent Children)
Welfare program for needy children and their caretakers. AFDC was the backbone of the federal welfare program that ended with the welfare reform of 1996. AFDC was prone to cost inflation because it did not provide adequate incentives for enrollees to obtain suitable employment. A work incentive law of 1968 even allowed AFDC enrollees to work and earn up to 150 percent of their AFDC basic benefits without losing such benefits. The 1996 welfare reform ended AFDC and replaced it with TANF, Temporary Assistance for Needy Families.
Budget Appropriation
Money authorized by the Legislature to be spent on a particular program or line item; an unexpended appropriation is one that could have been spent, but was not; an unappropriated balance refers to cash reserves that have not been allocated for any purpose.
Budget Bill
The session laws that appropriate funds for the next biennium (or fiscal year). In sections called special provisions, the budget bill enumerates the total budget appropriated to each agency, salaries of government officials and other public employees, and the legal language that specifies how agencies and other entities may or may not spend their money and report on their expenditures.
Coverage Mandate
A coverage mandate is a legal requirement that dictates that all health insurance policies sold in North Carolina cover certain services, providers, and groups of people. Mandates are the result of laws passed by the General Assembly as a means of regulating the insurance market. North Carolina has 46 mandates, which together have increased the price of health insurance an estimated 41 percent.
Department of Health and Human Services (DHHS)
The department conceives of itself as being “responsible for ensuring the health, safety and well being of all North Carolinians.” This mission also entails providing human services for “fragile populations” and “helping poor North Carolinians achieve economic independence.” Given the ambitious goals of DHHS, it should come as no surprise that it is the single largest executive agency, with more than 19,000 employees. The department’s operating budget exceeds $14 billion. The majority of this spending is allocated to three divisions:
• Division of Medical Assistance ($9.7 billion)
• Division of Social Services ($1.2 billion)
• Division of Mental Health, Developmental Disabilities and Substance Abuse Services ($1.1 billion)
Disproportionate Share Reserve
A reserve account established in 1993 (S.L. 1993-321) to hold excess payments dispersed by the Medicaid Disproportionate Share Hospital (DSH) program to hospitals that serve a “disproportionate number of low-income patients with special needs.” Throughout the 1990s, federal policymakers expressed concern that many states were taking advantage of the DSH program to decrease their own contributions to Medicaid and subsidize general spending initiatives.
DSH (Disproportionate Share Hospitals)
Hospitals with at least 25 percent low income patients and a higher-than-average rate of Medicaid patients. To qualify as DSH, Medicaid revenues, bad debt allowances, and charity care must comprise 20 percent or more of a hospital’s total revenues. Five percent of all Medicaid expenditures in North Carolina go to DSH. In 2003, the state auditor censured the Division of Medical Assistance, a branch of the DHHS, for misappropriating millions of dollars of DSH funds. The auditor found that the division had effectively ceded control over DSH payments to the largest Medicaid hospital provider in the state. The division also violated federal regulations by paying DSH compensation to an association of 41 public hospitals, instead of directly to the providers. In addition, the division channeled $240 million over six years to hospitals not eligible for DSH payments. In all, the state auditor found $660 million in questionable or wrongful spending: $414 million of that amount in federal funds; and $246 million in state funds.
Executive Organization Act(s)
The 1971 and 1973 statutes that created the Department of Human Resources (DHR) – now the Department of Health and Human Services (DHHS).
1971. The state Legislature passed the Executive Organization Act of 1971 to consolidate the state’s numerous executive agencies and departments under broad categories. At this time, the state created the Department of Human Resources (DHR), which combined several independent departments, such as mental health and human services, under DHR.
1973. The 1973 Executive Organization Act solidified the bureaucratic growth of the executive branch. This act restructured DHR by creating a Board of Human Resources to advise the DHR secretary on various matters. In 1989, DHR was restructured again by transferring several departments out of DHR to other agencies, such as the Department of Environment, Health and Natural Resources. In 1997, the Department of Human Resources was renamed the Department of Health and Human Services (DHHS).
FPL (Federal Poverty Level)
FPL is the income threshold below which an individual or a family is defined as poor. The federal and state governments use FPL to determine income thresholds for programs such as Medicaid – eligibility for which is capped by the federal government at 133 percent of FPL. North Carolina employs a higher income cap of 200 percent of FPL, which makes approximately 100,000 more children eligible for Medicaid SCHIP than under the federal cap. This extra enrollment costs taxpayers an estimated $144 million per year. North Carolina state taxes pay 25 percent of this cost; the rest is subsidized by federal taxes. A recent provision in the FY2007-2009 House budget would also expand taxpayer-funded health coverage to some 12,000 children from families with income between 200 percent and 300 percent of FPL. Currently, the FPL for a family of four is $20,650; 300 percent of FPL is $61,950, an income level that includes half of all families in North Carolina.
Fiscal Year (FY)
The 12-month period covered by the state budget: July 1 to June 30.
General Fund
Funds general needs, as opposed to specific or restricted purposes. The General Fund accounts for about half of the state’s total budgetary financing and is supplied by revenue from a wide variety of taxes and fees, as well as money from court fees, disproportionate share receipts, investment earnings and bonds, the tobacco settlement, the Highway Fund, and the Highway Trust Fund.
Healthcare
Services and products that provide medical examinations, treatment and preventive care. Healthcare includes services such as hospital care, physician and dental services, and nursery and home care. It also includes products like prescription drugs and medical equipment. Personal healthcare consists of the treatment of individuals with specific medical conditions. Public healthcare costs are driven by public health programs and program administration.
Health Check
According to the Division of Medical Assistance, “Health Check is Medicaid for children. Health Check covers complete medical and dental check-ups, and provides vision and hearing screenings and referrals for treatment.” More specifically, Health Check is North Carolina’s Medicaid program for state residents aged 0 through 20. Health Check is for children in the poorest families in the state; as such, it requires no enrollment fees or copays. Primarily because of expanding eligibility, Health Check enrollment has grown steadily over the past 15 years. For FY2004-05, for example, the N.C. Department of Health and Human Services reports that 567,000 children were eligible for Medicaid, an increase of 161 percent in 10 years.2 In 2005, 257 per 1,000 children in North Carolina were Medicaid eligible. In 1995, only 140 per 1,000 children were Medicaid eligible.North Carolina has contributed to the growth of Health Check expenditures, in particular, by expanding the federal Early and Periodic Screening, Diagnosis and Treatment (EPSDT) program to all North Carolinians through age 20. Since EPSDT entitles enrollees to be treated for any health problem found during screening, the state has experienced cost containment problems with the program. Moreover, while NC Health Choice has an absolute enrollment cap, Health Check is open to all eligible enrollees. In an attempt to curb expenses, North Carolina has implemented managed care and also cut physician reimbursement rates. Managed care restricts patients’ rights to choose a health provider while reimbursement cuts discourage health providers from accepting Health Check patients. Neither measure focuses on eligibility, which is the primary driving force behind Health Check cost inflation.
Health Disparity
A difference in health status between individuals or groups of individuals. The Office of Minority Health and Health Disparities devotes a large part of its budget to researching and attempting to reduce health disparities. In doing so, the office has adopted specific socioeconomic views regarding what a health disparity is and what causes such health disparities. In particular, the assumption is made that all people, regardless of specific lifestyle choices (for example, drug use or sodomy), ought to be equally healthy. This assumption is related to other socialist-style agendas that promise equal access to all resources (food, housing, transportation) for all people, regardless of individual choice.
Health Expenditures
The sum total of all healthcare outlays. There are two primary types of health expenditures:
Total Health Expenditures. The sum of personal health expenditures, plus government expenditures on public health programs and administration costs for health programs. In 2004, total health expenditures in the United States were $1.9 trillion. Taxpayers pay 45 percent – $847 billion – of that amount. In North Carolina, total health expenditures were $53.6 billion for 2004.
Personal Health Expenditures. Outlays for treatment of individuals with specific medical conditions. Personal health expenditures are 83 percent of total health expenditures. In 2004, personal health expenditures in North Carolina were $44.5 billion. The largest health expenditure items in North Carolina are hospital care (37 percent) and physician services (24 percent). Spending on prescription drugs is also rising fast, accounting for 15 percent of personal health expenditures by state residents.
Health Savings Account (HSA)
A tax-exempt account established through a qualified trustee (e.g., a bank or insurance company) that enables a consumer to purchase healthcare. An HSA is essentially a savings account that can be used to pay for health expenses using pretax dollars. In order to qualify, the consumer must enroll in a High Deductible Health Plan (HDHP). HDHPs cost less than traditional insurance plans but do not provide coverage until the consumer has spent at least $1,000 on health expenses (their deductible). Consumers can use pretax money deposited in an HSA to pay for HDHP and other medical expenses.
Healthy Start Foundation
A private, nonprofit contractor funded by the Division of Public Health. The Healthy Start Foundation runs the First Step Campaign which educates the public on parenting. Healthy Start was established in 1990 with $5 million in seed money from pharmaceutical giant, Glaxo, Inc. Healthy Start also coordinates the Medical Home Campaign, as well as several other initiatives related to reducing infant mortality and improving children’s health.
Long Session
With elections held in November of each even-numbered year, the General Assembly convenes from January to July (but often even longer) of each odd-numbered year for what is called the long session. The biennial budget is crafted and adopted during the long session.
Managed Care
A cost containment measure used by health insurance providers to restrict a patient’s right to choose a physician or caregiver. State Medicaid agencies use managed care to funnel their enrollees to a limited number of health providers. As a result, the unit cost for providing healthcare is lower and the Medicaid agencies can cut reimbursement rates. North Carolina DHHS credits managed care and reimbursement cuts for holding down Medicaid costs.
Medicaid
A national health insurance system funded jointly by the federal government and the states. Beyond certain basic thresholds, Medicaid eligibility differs from state to state. In some states, such as North Carolina, key terms counties also pay for a small fraction of the program. Medicaid was created in 1965 as a program for low income families, but has expanded considerably over the years. According to the Division of Medical Assistance, the program “is the largest source of funding for medical and health-related services for America’s poorest people.” In 1987 one out of twenty North Carolinians were enrolled in Medicaid; by 2004, this number had jumped to one in eight. As enrollment has increased, so have expenditures. In 1987, Medicaid personal health expenditures in North Carolina were $918 million. By 2004, this number had increased to $8 billion. The state pays 32 percent of that, or $2.56 billion. Counties pay 6 percent, or $480 million.
Medicare
A national health insurance program that primarily covers the elderly and younger citizens with certain disabilities. Unlike Medicaid, Medicare is a strictly federal program. Medicare was founded in 1965 and opened for enrollment a year later. In 2005, total Medicare expenditures reached $336 billion. By 2015, Medicare costs are expected to more than double, reaching a record $792 billion.
NC Health Choice for Children
An SCHIP program that provides health insurance for children of low income families. The program covers children in families that earn too much to qualify for Health Check/Medicaid, but whose income does not exceed 200 percent of the federal poverty level. Because the funds for NC Health Choice are set prospectively, i.e., prior to the start of each budget year, the number of children eligible for the program is capped for each fiscal year. When the number of eligible children exceeds the enrollment cap, children are put on a waiting list. Benefits provided under NC Health Choice are equivalent to those provided under the state employees and teachers’ health plan, except that NC Health Choice kids also get vision, hearing and dental coverage. NC Health Choice has been promoted as a tax-paid alternative for children without health insurance. The continued expansion of NC Health Choice, however, seems to have done little to reduce the rate of uninsured children in North Carolina. U.S. Census data, for example, shows that the number of uninsured children has risen since the inception of Health Choice, going from 242,000 in 1998 to 262,000 in 2005. See also SCHIP and Health Check.
Office of Minority Health and Health Disparities (OMHHD)
A public health office within DHHS that researches and attempts to reduce real or perceived health disparities among minority groups. The OMHHD was established in 1992 by the North Carolina Legislature in order to eliminate health disparities, with the implication being that every racial (and socioeconomic) group should have equal health outcomes. The office defines leading health indicators that allegedly cause health disparities. Two of these indicators are poverty and median family income. Via the Minority Health Advisory Council, the OMHHD lobbies for initiatives, such as community-based syringe exchanges, that it believes will serve minority groups. The office also provides cultural diversity and interpreter training to health professionals. See also Health Disparity.
Public Health Expenditures
As opposed to paying for individual healthcare, public health expenditures are used on research and to provide the public with health information. For FY2006-07, the Legislature appropriated $177 million for public health activities. According to a 2005 Public Health Improvement Plan, one of the primary goals of the state’s public health policy is the elimination of health disparities. In order to implement this goal the report recommended significant spending increases for several programs, such as: increasing funding for school nurse services from $11.4 million to $48.7 million over a four-year period; expanding the state’s chronic disease prevention program to $27 million; and allocating $747,000 for interpreter, language and cultural competency training for medical professionals. The report also suggested that the state assume responsibility for all Medicaid expenditures not funded by the federal government. In return, North Carolina’s counties would be required to use their share of the Medicaid burden to fund public health programs.
SCHIP (State Children’s Health Insurance Program)
Created by the U.S. Congress in 1997 as a supplement to traditional Medicaid (§ XXI of the Social Security Act), SCHIP is a health insurance program for children in low income families. The program is jointly funded by the federal government and the states. Each state is operationally responsible for the program and can set its own eligibility rules at or above federal minimums. North Carolina exceeds federal rules for SCHIP, allowing families who earn up to 200 percent of FPL to qualify. The federal cap is 133 percent. Over the past five years, enrollment in North Carolina’s SCHIP programs – NC Health Choice and Health Check – has rapidly expanded, going from 104,000 children in 2000 to 196,000 in 2005. The N.C. Department of Health and Human Services acknowledges, however, that the number of children on SCHIP is generally underestimated. Total 2005 SCHIP expenditures in North Carolina were $283 million, with the state paying 25 percent, or $70.8 million, of this amount. See also NC Health Choice for Children and Health Check.
Short Session
The legislative session that convenes in even-numbered years. The session meets from May to July (and often longer) in order to make adjustments to the biennial budget adopted during the long session.
Single-payer Healthcare/Insurance
Under a single-payer healthcare system, the government, rather than individual patients or insurance companies, pays all healthcare costs. The cost of such a program can be approximated by looking at total national health expenditures, which were $1.9 trillion in 2005, or a different year converted to 2005 dollars. The U.S. Department of Health and Human Services reports that taxpayers pay for 45 percent of these expenditures today. If Congress created a single-payer health insurance system the additional cost to taxpayers would thus be at least $1.05 trillion. A statewide universal healthcare program in North Carolina would cost taxpayers $53.6 billion. In many countries, such as Canada, Great Britain and Sweden, universal health insurance has resulted in a lower quality of care, as well as supply shortages. Under such a program, state authorities would decide what benefits the single-payer insurance plan would provide. To guarantee that the government has full control over health resources, universal health plans not only outlaw private health insurance, but also often ban the private practice of medicine. Such a ban was a controversial feature of the 1994 “HillaryCare” plan, which would have forced all employers to provide health insurance to their employees.
Smart Start
A social program whose stated goal is to “assist parents in their role as the primary caregivers and educators of young preschool children” by providing daycare services that help children enter school meeting minimum health and education preparedness standards. Unlike the federally funded Head Start program, which is open to low income 3- and 4-year-olds, Smart Start has broader eligibility and age requirements (up to age 6). While Smart Start explicitly claims it is not a childcare center, the program “helps make child care centers better through educational opportunities.” Smart Start is primarily funded by the state, but local public-private partnerships have been given operational responsibility. A statewide nonprofit organization, the North Carolina Partnership for Children, exercises oversight over 79 local Smart Start partnerships, which operate in all 100 of North Carolina’s counties. Under state law (cf. G.S. 143B-168.11-143.168.15), 70 percent of Smart Start funding must be used to provide direct childcare and educational services, with 30 to 50 percent being used for childcare subsidies. Each public/private partner is also required to raise at least 10 percent of its public funding. For FY2006 the state allocated $203.6 million for Smart Start.
TANF (Temporary Assistance to Needy Families)
TANF is a cash assistance and work opportunity program for low income families. Persons who qualify for TANF also qualify for Medicaid, although North Carolina has stricter eligibility rules for TANF than for Medicaid. Under the 1996 Welfare Reform Act, TANF replaced AFDC, the previous federal welfare program. TANF provides temporary cash assistance to needy families with children while encouraging adult providers to find employment. (TANF, for instance, imposes a five-year cap on welfare throughout a person’s lifetime; albeit states are allowed to exempt 20 percent of their caseload from this five-year cap.) Unlike AFDC, TANF also encourages couples with children to marry and stay married. Although TANF is federally funded, each state pays administration costs of the program. Each state is also able to set eligibility requirements for TANF. In 2005, TANF cost U.S. taxpayers $14 billion. Of this, $251 million went to North Carolina, which allocated an additional $19.3 million to administer the program for 2005. Congress reauthorized TANF with the Deficit Reduction Act of 2005 while also strengthening incentives for states to reduce TANF caseloads.
Universal Health Coverage/Insurance
Universal health coverage, as opposed to universal healthcare, makes it illegal not to have health insurance coverage, much the same way as it is illegal not to have car insurance. Unlike car insurance, the government subsidizes healthcare coverage for anyone who can’t afford private insurance. Under such a program, the government would likely enjoy a monopoly as a health insurance provider. (In effect, then, universal health coverage ultimately leads to universal healthcare.) In April 2006, Massachusetts implemented a universal health coverage mandate that requires every person in the state to purchase health insurance by July 2007.