RALEIGH, N.C. (AP) -- Republicans in control of North Carolina's General Assembly introduced legislation Wednesday that would block the expansion of Medicaid under the health care overhaul and leave it to the federal government to build the state's online marketplace for health insurance.
Under the health overhaul championed by President Barack Obama, the federal government offered to pay the full cost for expanding Medicaid coverage the first three years and 90 percent thereafter. About 648,000 state residents who currently lack insurance would be eligible for Medicaid coverage if North Carolina expanded the program to include those making up to 138 percent of the federal poverty line.
But lawmakers say they are wary after spiraling Medicaid costs have poked multimillion-dollar holes in the state budget in years past.
"I think there's a great deal of concern that we have from the fact that the federal government could come up at any point and change their mind, change the percentage," said Rep. Justin Burr, R-Stanly, a primary sponsor of the House version of the bill.
Senate and House lawmakers filed identical bills on the opening day of this year's legislative session that also direct state agencies to quit working on a website to help people buy affordable health insurance. If North Carolina doesn't create the online marketplace, the federal government will run an exchange scheduled to open in October that's required under the health care overhaul law.
GOP lawmakers say participating doesn't make sense because Washington regulators will make the key decisions.
"What we're saying is if the federal government has the idea, let them run it, and that's how it should be. We're not getting in with them," said bill sponsor Sen. Tom Apodaca, R-Henderson. "You never know what's going to happen with the federal government. They're with you one day and the next day they pull out and leave you holding the bills."
A Senate committee is expected to hold a hearing on the legislation Thursday, followed by a vote planned later in the day.
In November, former Gov. Beverly Perdue set North Carolina on course for an exchange run jointly by the state and federal governments. The former Democratic governor said she consulted with incoming Republican Gov. Pat McCrory before acting.
McCrory has since said he was revisiting the issue. Asked Wednesday whether the governor thought the Legislature is now trying to make that decision in his place, McCrory spokeswoman Crystal Feldman said he continues to analyze all options.
About 715,000 North Carolinians are expected to buy coverage through an exchange in 2014, growing to more than 900,000 people by 2016, according to the North Carolina Institute of Medicine.
About 300,000 of those projected to buy coverage through the exchange are among the 1.55 million residents under 65 currently uninsured, according to Milliman Inc., a consulting firm hired by the state Insurance Department to forecast how the exchange would be used. About 51,000 people are expected to be covered by small businesses purchasing insurance for employees and their dependents, the Milliman study said.
A lobbying group for small businesses, the National Federation of Independent Business, wants North Carolina officials to manage the exchange rather than leave it to federal authorities, NFIB state director Gregg Thompson said.
"I think that the state needs to be in control of its destiny on health insurance," said Thompson, a former Republican legislator from Mitchell County. "Anytime that the feds are involved, it's just one additional layer of bureaucracy and if the state has an opportunity to be in control of the health care program proposed in Obamacare then the state should be in control."
North Carolina this month was awarded $74 million by the U.S. Department of Health and Human Services to keep working on the state's exchange. The state previously got $13.4 million to pay for planning, salaries and information systems.
The proposed legislation directs the state Insurance Department to return unspent taxpayer funds to Washington since it won't be needed for prepping an exchange.
Emery Dalesio can be reached at https://twitter.com/emerydalesio
AP Writer Gary D. Robertson contributed to this report.