The state has scheduled a Sept. 3 “informal administrative conference” on the sales, which sparked questions and criticism from Charlotte advocates for the homeless and national experts on the health care act. That session will be closed to the public, spokeswoman Kerry Hall said this week.

Agent Will Kennedy told the Observer last month that he encouraged homeless people to estimate their 2015 income from barter, panhandling and illegal activity at $11,700, the level that gets the maximum federal ACA subsidy. He sold hundreds of high-deductible plans in North and South Carolina, with the federal government paying the entire premium. However, those plans left people who have no reliable income responsible for a $5,000 deductible, and in some cases made them ineligible for free or low-cost medical care and prescriptions.

Kennedy insisted he had found a legal way to help people work around the Medicaid gap in North and South Carolina. The ACA was designed to provide subsidized private health insurance to low- and moderate-income people who don’t get workplace coverage, with Medicaid expanding to cover the most impoverished adults. But the Carolinas are among about two dozen Republican-led states that refused the Medicaid expansion money, leaving the poorest residents with no access to health insurance.

“What I have done, and what I make no apology for, is to work diligently to inform low-income individuals about their rights under the ACA and to help those who qualify obtain the health insurance for which they are eligible,” Kennedy said in June.

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If she would give him her name and Social Security number, she would get free health insurance and he would earn $5.

Huggins, who was sleeping on a friend’s floor, says she handed the man her Social Security and ID cards and he filled out a form.

Her form, along with 600 others from across the Carolinas, went to Charlotte insurance agent Will Kennedy. Almost all the applications he submitted had an estimated annual income of $11,700, and many of the addresses were the Urban Ministry Center and other homeless help centers, according to a complaint filed with the N.C. Department of Insurance.

Today Huggins is among dozens in Charlotte who are learning that their “free” coverage requires them to cover a $5,000 deductible and costs them eligibility for some of the free medical services they’ve relied on.

“We have people who really need their medicine, and we can’t give it to them,” said Susan Royster of Charlotte-based , which provides free prescription drugs for the uninsured.

Normally, the Carolinas’ most impoverished residents don’t qualify for help under the Affordable Care Act. In states that didn’t expand Medicaid, as the act intended, people who fall below the federal poverty line get nothing while those who earn just above $11,700 can get hundreds of dollars a month in federal aid.

Kennedy, 43, a turned insurance agent, says he found a legal, risk-free way to work around that. He encourages the homeless to estimate income from barter, panhandling and “street hustling” at $11,700 a year, which, he says, can get the federal government to foot the entire bill for high-deductible insurance. It’s not ideal, he says, but it’s better than having no insurance.

The N.C. Department of Insurance has been trying to sort out the arrangement since April 20, when a San Francisco-based software executive reported “suspected fraud” based on the large volume from one agent in two days, with identical incomes and many repeated addresses. George Kalogeropoulos, president of HealthSherpa Insurance Agency, told the state his company immediately disabled Kennedy’s access to the ACA enrollment software.

Because questions about subsidies involve the ACA marketplace and IRS rules, the state sought federal guidance, says N.C. Department of Insurance spokeswoman Kerry Hall. The investigation is ongoing, said Hall and Aaron Albright, spokesman for the federal marketplace.

Aetna also launched an inquiry after the Observer asked about Kennedy’s sales to the homeless. “Aetna takes the allegations against this broker very seriously,” said spokesman Walt Cherniak.

National experts on the ACA say they’ve never heard of anything like this mass enrollment, though they’re well aware of the coverage gap in North Carolina and 20 other states that have refused federal money to expand Medicaid.

“Wow. Unbelievable,” said Sabrina Corlette, a senior research fellow with Georgetown University’s . She said plans that require the homeless to make big out-of-pocket payments aren’t real coverage: “You might as well ask them to fly to the moon.”

Dozens of homeless people who get their mail at Charlotte’s Urban Ministry Center are now getting letters from the marketplace demanding documentation of their income. Three of them, including Huggins, told the Observer they did not provide anyone an income estimate.

 “I really don’t know what’s going on with this,” said Steven Cherry, 49, a recovering substance abuser who said he learned he had insurance when he was denied medication at MedAssist.

A patchwork system

When congressional Democrats approved the ACA in 2010, the plan was for Medicaid to cover the most impoverished people. The federal government designated billions to pay for expanding Medicaid.

But when the Supreme Court ruled that Congress couldn’t force states to participate, the Carolinas and about two dozen other Republican-led states refused the money (a handful have since approved their own plans), leaving most people below the poverty line with nothing.

That’s the gap that Kennedy stepped into.

Kennedy got a North Carolina license to sell health insurance on Sept. 27, 2013, just days before the marketplace began taking applications for 2014 subsidized insurance. He used to have an office on North Tryon Street, in the area just north of uptown Charlotte where many services for the homeless are provided. Kennedy said that when a homeless person approached him in 2014, he assumed that people with little or no income were out of luck. He says he researched the health care law and discovered that he could get them covered.

The ACA subsidies are actually advance tax credits based on a person’s projected income. For workers who rely on hourly wages, temp work, tips, commissions and other variable pay, that projection can be a guess.

If that estimate proves wrong, the person getting the subsidy settles up with the IRS at tax time. Generally, lower-than-expected income brings a refund, while higher pay means the taxpayer owes the government. If income falls below the poverty line, the person loses eligibility for any subsidy.

Rather than impose a , the ACA specifies that people who fall below that mark won’t be asked to repay subsidies if they made a good-faith estimate.

What is income?

Kennedy found a 2013 about the strategy of estimating income high enough to get a subsidy, even if there’s a good chance the person will actually fall below the cutoff.

The article focused on the working poor, but Kennedy says he concluded he could help the unemployed and homeless by offering them a different way to think about income. He says the IRS considers all kinds of income taxable that aren’t traditionally reported, from handouts, barter and under-the-table cash payments to money earned from prostitution and drug sales.

When the 2015 ACA enrollment season opened, Kennedy says he had developed a message and recruited a team to take it to homeless people: If you think you bring in $33 a day from any such sources, you can get free Obamacare at no risk.

“It was all under my direction. I believe in what I’m doing,” Kennedy said. He would not, however, provide any details about who worked for him, how they were compensated and how many policies he sold. He would not comment on Huggins’ report about her dealings with Jeff, but Coventry confirmed to Huggins that the sale went through Kennedy.

Kennedy says he filed “a large number” of applications from homeless people projecting they would earn $11,700 in 2015. They used the subsidy to buy a Coventry “bronze plan,” with the federal government paying the full monthly premium. For a 27-year-old nonsmoker, the government pays Coventry $213 a month, or $2,556 a year. For a 60-year-old smoker it’s $621 a month, or $7,452.

Kennedy acknowledges there’s a tradeoff to the low-premium plan: People must pay $15 for primary care visits, $75 for specialists and $250 for emergency room visits. Checkups, health screenings and other preventive services are fully covered. But for other care, the plan has a $5,000 deductible, the amount that must be paid before insurance kicks in, and a $6,600 out-of-pocket cap, the maximum allowed under the ACA.

Other plans are available with little or no out-of-pocket spending, but they require a small monthly payment, Kennedy says. He said that’s not realistic for people who don’t have bank accounts or debit cards.

Helping or hurting?

In Charlotte, an array of free and low-cost clinics and medical programs serve the uninsured.

NC MedAssist, for instance, is a nonprofit pharmacy that relies on pharmaceutical company donations. The staff runs each patient’s name through the computer every time a prescription is filled to verify that he or she doesn’t have insurance.

In May, staff members started noticing that people they considered destitute suddenly had insurance. One of them was Rick Harper, who says he lived at the Men’s Shelter and panhandled before getting into a residential treatment program and sobering up about six months ago. He says he went to get prescription eye drops and was told he was no longer eligible because he had CoventryOne insurance.

“I said, ‘What?’ I didn’t sign up. I hadn’t gotten a card or bill,” says Harper, 61. He and Cherry both say they don’t have income, didn’t tell anyone they make $11,700 a year and don’t file taxes.

In June, letters from Coventry and the federal marketplace started pouring in at Urban Ministry Center. More than 800 people use it as their mailing address, ranging from those who live on the street to those staying in temporary quarters.

Urban Ministry staff said they asked a couple of people picking up mail, known as “neighbors,” to open the letters and let them see what was going on. That’s when they learned about people being signed up for ACA coverage, said Budget Director Rich Hoard.

Hoard said he and other staffers were concerned because the insurance meant neighbors lost access to services such as MedAssist and the free . When Urban Ministry staff members helped neighbors cancel their insurance, Kennedy showed up twice urging them to stop.

Kennedy said that even with the out-of-pocket costs, the homeless are better off with insurance because they can get expensive hospital procedures such as artery-opening stents, which are not considered emergency care and wouldn’t be provided to the uninsured.

Hoard agrees that can be a problem but said the trade-offs of losing regular care and medication aren’t worth it.

“He certainly has interfered substantially with the ability of our neighbors, of the chronic homeless, to obtain medical care,” Hoard said.

Sorting it out

The Urban Ministry Center and MedAssist have been helping people cancel policies that keep them from getting care. Those who don’t take any action will lose their insurance if they fail to provide documentation of income to the marketplace.

Even if the policies are canceled, those who bought them could still face problems, said Madison Hardee, a health care navigator and lawyer with Legal Services of Southern Piedmont, and Jen Tolbert, an ACA expert with the , which analyzes health care policy.

The applications require buyers to vouch that the information provided is correct under penalty of perjury. While it might be difficult to prove, applicants who provide false income estimates could face a penalty up to $25,000, Tolbert said. And those who fail to file tax returns for 2015 could be banned from receiving ACA subsidies in the future, even if they start earning legitimate income, Tolbert and Hardee said.

Kennedy said he’s working with everyone who bought policies to help them provide documentation, which can include a self-reported statement of income.

He attributed the Urban Ministry Center’s concerns to a “turf war” and said staff members are telling his customers they could get in trouble and coaching them to say they weren’t fully informed about the purchase. He said he had checked with MedAssist and hadn’t been informed that the prescription drugs were only available to the uninsured. However, MedAssist’s Web page is topped with the slogan “Dispensing hope for the uninsured” and lists eligibility requirements that exclude people who qualify for insurance.

Kennedy said charities that help the homeless would serve them better by helping him provide better coverage. For instance, he said, a nonprofit could create a fund to pay monthly premiums that would let homeless people get policies with lower out-of-pocket costs.

He said people concerned about the poor should focus on Medicaid expansion rather than his sales.

“I really did my due diligence,” he said. “I wish they would expand Medicaid. That would solve the problem.”

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Lang, a 49-year-old resident of Fort Mill, S.C., has bleeding in his eyes and a partially detached retina caused by diabetes.

“He will lose his eyesight if he doesn’t get care. He will go blind,” said , the Lancaster ophthalmologist who examined Lang.

Lang is a self-employed handyman who works with banks and the federal government on maintaining foreclosed properties. He has done well enough that his wife, Mary, hasn’t had to work. They live in a 3,300-square-foot home in the Legacy Park subdivision valued at more than $300,000.

But he has never bought insurance. Instead, he says, he prided himself on paying his own medical bills.

That worked while he and his wife were relatively healthy. But after 10 days of an unrelenting headache, Lang went to the emergency room on Feb. 25. He says he was told he’d suffered several ministrokes. He ran up $9,000 in bills and exhausted his savings. Meanwhile, his vision worsened, and he can’t work, he says.

Lang, a Republican, says he knew the act required him to get coverage, but he chose not to do so. But he thought help would be available in an emergency. He and his wife blame President Barack Obama and congressional Democrats for passing a complex and flawed bill.

“(My husband) should be at the front of the line, because he doesn’t work and because he has medical issues,” Mary Lang said last week. “We call it the Not Fair Health Care Act.”

Anyone who’s remotely familiar with insurance knows there’s no system that lets people skip payments while they’re healthy and cash in when they get sick. Public systems tax everyone. Private ones rely on the premiums of the well to cover the costs of those who are ailing.

And Democrats might point out that the ACA was designed to provide Medicaid coverage for people whose income falls below the poverty line. The federal government pays 100 percent of the ACA expansion to cover low-income, able-bodied adults, but 21 Republican-led states, including North Carolina and South Carolina, .

For now, Lang qualifies only for a South Carolina Medicaid plan that covers checkups and family planning. The aged (65 and older), blind and disabled get more extensive coverage. Lang says he hasn’t applied for Social Security disability benefits because it takes too long.

The S.C. Department of Health and Human Services is still reviewing whether he might qualify through a vocational rehabilitation program. If so – and if he can find a surgeon who takes Medicaid – South Carolina taxpayers will share the cost with the federal government.

Last week, Lang went back to Dr. Edwards, who had previously provided injections to control the bleeding in his eyes at a discounted rate. That’s when he learned that his problem had worsened, including the detached retina.

“He’s in a very bad situation,” Edwards said after Lang signed a privacy release. “The longer he waits, the poorer his results will be.”

Edwards said he would provide care at no cost, but Lang now requires surgery and follow-up treatment that is beyond his expertise. His Eye & Laser Center has a network of specialists who work on a sliding scale and organizations that sometimes help with donations. But Lang requires such extensive and ongoing work that there’s no way to guarantee there won’t be significant bills, Edwards said.

Lang says he has called charities that work with diabetes and blindness, but he doesn’t seem to fit anyone’s cause. “I’m either too young or too old,” said Lang, who has launched a page in hopes of garnering donations.

There’s a lot of talk about personal responsibility in health care reform, so it’s probably fair to note that Lang is a smoker who has, by his own account, been inconsistent in his efforts to control his diabetes. Edwards says it’s not uncommon to see patients who don’t take the treatment regimen seriously until they’re facing major problems. Bleeding in the blood vessels of the eyes often foretells similar problems with the kidneys and feet, he said.

When I started covering health care last summer, Newsday columnist Lane Filler wrote that was striking in its candor. He argued for employers to get out of the health insurance business, shift the money they spend on premiums into employee wages and give everyone the freedom to decide whether they’ll spend it on insurance.

“If I were just free, I could buy no health insurance, instead banking the money to pay medical bills as they came due,” Filler wrote. “But ‘just free’ societies must have onerous consequences for the imprudent and the unlucky. If we want to be allowed to buy health insurance or not, we must be willing to let folks who choose wrong be bankrupted by medical bills. Worse, we must be willing to let them die for lack of care, and listen to them wail from the gutters.”

That kind of argument can be easy to defend in an intellectual debate and hard to hold on to when you’re face to face with someone who’s going to die – or go blind – when they could be saved.

On the other side, you have who say it’s time to stop arguing over who deserves to be denied coverage or care. Instead, they say, it’s time to treat health care like fire and police protection: Tax everyone and provide the aid when it’s needed.

Lang’s story drew national attention after it was posted on charlotteobserver.com Tuesday morning. Liberal bloggers across the country blasted him for blaming Obama for problems created by his own actions and South Carolina legislators. His fundraising page, which had gotten no donations in the first 24 days, raised more than $2,000 in the first 11 hours after the post went online. Most of it was small amounts from self-identified liberals and ACA supporters, who urged him to change his views.

“You’re a poster child for what you claim to be against, and like most of the donors here, I don’t believe ANYone deserves to suffer without proper medical care,” wrote Andrew Knight, who gave $5. “I wish you all the best. I hope you’ll come to see ACA and healthcare for all as a basic right.”

A staffer with the U.S. Department of Health and Human Services emailed the Observer to say Lang’s case had been “discussed here in DC at a fairly high level” in hopes of finding a solution. If the family income were to rise above the poverty level ($15,730 for a couple), he could qualify for special enrollment, the staffer said.

For Lang’s doctor, the overwhelming feeling is frustration at knowing that one of his patients could lose his sight for lack of a way to pay for care that’s readily available in modern American society.

“That’s probably the worst thing that can happen to someone outside of death,” Edwards said. And he added that if Lang doesn’t get help now, he’s likely to end up dependent on the government: “It’s extremely costly to let a person go blind.”

This blog post comes from , produced in partnership with KHN.

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It was a controversial mandate from the state. County officials wanted to keep local control. Clients and their families feared the focus on cost control would erode care.

A year later, many Mecklenburg officials, mental health professionals and advocates say the managed care group, which already had roots in the region, is winning their confidence.

“Oddly enough, I think things are going well,” said county commissioner George Dunlap, who fought the takeover but later became of Cardinal’s board.

Rough spots remain, including disputes over paying for some of the most complex and expensive cases. Managed care demands a document-heavy, data-driven approach, and some clients have conditions that make progress tough to measure.

They’re people such as 12-year-old Bewlay Koury of Matthews, who has profound autism. Medicaid pays more than $73,000 a year for support that lets Bewlay, who needs constant supervision and help with everyday tasks, live at home.

Her parents, Christy and Ken Koury, went into mediation with Cardinal after wrangling over the hours and type of service she needs (see accompanying story). They reached a compromise, but Christy still worries about her daughter’s future.

“The issue is that the legislature has cut all this funding, and they’ve brought Cardinal in to be the bad guy,” she said. “It’s an impossible task.”

But several professionals and advocates say Cardinal is serious about enforcing high standards and working through startup bumps.

When there are concerns, “all we have to do is pick up the phone and (Cardinal) people will come to our support groups. That has been well-received,” said Ellis Fields, executive director of the, an advocacy group for people with mental illness.

Cardinal, which is charged with providing care while keeping costs under control, says it has saved enough to extend services to almost 900 people in Mecklenburg so far this year. The not-for-profit organization is monitored by the N.C. Department of Health and Human Services, which regulates how much can be spent on administration and how savings can be used.

In the past year, Cardinal staffers have met with clients, advocacy groups and representatives of schools, courts, law enforcement and other agencies, trying to get a handle on local needs and issues.

It didn’t – but many who work with Cardinal say there were bumps and snarls as the new group took over.

Who pays the bill?

Among the challenges: finding appropriate placement for teens who are in custody of Mecklenburg County’s Department of Social Services because they’ve been victims of abuse and who need intensive, constant care because of violent or self-destructive behavior.

Charles Bradley, director of Youth and Family Services for Mecklenburg County, says local facilities that can handle such needs are often full. For teens who have landed in psychiatric emergency rooms or juvenile detention, that means their only options for discharge are going back to parents who are unable to care for them or being placed in foster families that aren’t trained for such intense needs, he said.

In October 2014, the county signed a contract with New Hope treatment center in Rock Hill, which provides intensive therapy and constant monitoring at a daily rate of $429 per resident.

Because New Hope isn’t in Cardinal’s network, Medicaid doesn’t pay. And because it’s across the state line, North Carolina money isn’t available, leaving Mecklenburg County with the bill, Bradley said. The 20 youths who have been placed so far have run up about $200,000 in charges.

County and Cardinal staff have been trying to resolve the issue, both organizations say. If Cardinal doesn’t agree to pick up the costs, the county expects to spend another additional $500,000 in the.

County Manager Dena Diorio, who was a skeptic about the Cardinal takeover, said in most cases the transition has gone well. But in this situation, “Cardinal’s going to go with the lowest level of services they can get away with,” Diorio said Wednesday.

Cardinal Chief Operating Officer Will Woodell said Thursday that it’s the county’s responsibility to provide “safe placement for these children until the best-practice, long-term treatment for the child can be determined.” The teens at New Hope haven’t had the assessment for their long-term needs, he said. Only after that is done will Medicaid pay for “medically necessary treatment services.”

Woodell and Diorio both say they’ll continue working together on long-term solutions to keep teens and adults out of jails, emergency rooms and life on the streets. This fall, Cardinal and , a Stanly County nonprofit that provides behavioral health services, will open a Charlotte crisis center for children and youth.

Worth the hassle?

The new approach to doling out Medicaid money comes with tougher scrutiny of social workers, psychologists, counselors and other care providers.

Some have opted out or been dropped. When Cardinal took over, MeckLINK passed along a list of 557 authorized providers. But Cardinal officials say they were unable to reach many of them, and it was unclear whether they were active with MeckLINK.

Cardinal declined to offer contracts to 18 of the MeckLINK providers. After the handoff, eight more providers chose to drop their contracts and two were involuntarily terminated, according to Cardinal numbers.

“They kind of cleaned house when they first came in,” said Johnson, the Council for Children’s Rights lawyer. The auditing that thinned the ranks is likely to be a good thing in the long run, she said, but it left the county with service gaps Cardinal is still trying to fill.

Cardinal’s McKinney disagrees: “We can comfortably say that we have the necessary services.”

Kristin Rogentine-Lee, a Charlotte psychologist who does testing and therapy for children, is one of those who opted out. She said Cardinal reviewed paperwork from 10 sessions and demanded that she repay $700. The errors they cited were minor, she said, such as failing to note a patient’s progress toward goals on one form. For children with deeply troubled lives, each session doesn’t necessarily bring measurable gains.

“It’s quantifying something that’s nonquantifiable,” Rogentine-Lee said. “I can see accountability and oversight, but nitpicking over these little things?”

When she appealed, Cardinal reduced her penalty to $350, Rogentine-Lee said. But Medicaid payments are already low, she added, and in January she asked to be dropped from Cardinal’s roster.

Sally Cameron, executive director of the , said the demands of managed care are causing Medicaid patients to lose the services of “very seasoned, valuable practitioners.”

“That’s not a Cardinal/Mecklenburg thing,” she added. “That’s an across-the-state problem.”

Dammeon Chisholm, who spent seven years as chairman of the Mecklenburg County Providers Council before handing off leadership this year, says he was worried about the transition. But he says Cardinal has worked with providers to resolve problems and help them understand the new requirements.

Chisholm is executive director of Charlotte’s , which provides services for people with intellectual and developmental disabilities. Like Cameron, he said the increased demands aren’t exclusive to Cardinal.

“It’s just something that’s part of the business,” he said. “There’s a lot of money at stake.”

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The move by the Charlotte area’s largest employer spotlights a trend that’s sweeping the country: As more people get health insurance, more people with insurance face potentially devastating medical bills.

The cost-sharing shift has been building for years. Now it’s snowballing to include some of the region’s biggest employers, from hospitals to banks to public schools.

Proponents say greater cost-sharing promotes healthy behavior and drives down medical spending. Some employers contribute to savings accounts for medical expenses and pay workers for such actions as avoiding tobacco and getting health screenings.

The federal Consumer Financial Protection Bureau that medical debt is the biggest factor in negative credit reports – and about half of the people turned over to collectors for medical bills have otherwise clean records.

Costs creep up

This all took root over the past decade. Medical costs and insurance premiums kept growing while the economy crumbled. Employers shifted costs to employees, even as wages stagnated.

One option was to bump up deductibles – the amount a customer must pay before insurance kicks in. Beyond that, the consumer may pay a per-visit fee and/or a percentage of the bill. The total exposure can add up to thousands, especially for family coverage.

“I thought these (high-deductible plans) would never fly because of the employee resistance,” said Cathy Graham, benefit services director for , a Charlotte-based human resources firm. “I’m still a skeptic. It penalizes those who don’t have the money to go to the doctor or get that prescription filled.”

Ideally, having “skin in the game” pushes patients to make smarter choices, such as having elective procedures done in a doctor’s office instead of a hospital or going to an urgent care center instead of an emergency room for minor ailments.

cost-sharing reins in spending, but patients are as likely to skip valuable treatment, such as drugs and doctor visits for chronic conditions, as they are to pass up unnecessary or overpriced care.

Stacie Dusetzina, an assistant professor in UNC-Chapel Hill’s schools of pharmacy and health policy, did a that found about one in six leukemia patients stopped potentially life-saving medication during the first six months because they couldn’t afford it.

“When they’re initially getting treatment, (cancer patients) can easily rack up $10,000 in a very short amount of time,” she said. And for leukemia patients taking , those costs continue for years.

ACA shapes change

The Affordable Care Act, approved in 2010, changed the landscape. It mandates that preventive services such as checkups, cancer screenings and immunizations be fully covered regardless of deductibles. Since subsidized policies kicked in last year, more than 16 million uninsured Americans got coverage – some of them getting aid with out-of-pocket costs as well as premiums.

Other aspects of the act helped drive up insurance costs. Insurance companies can no longer deny coverage or boost rates for people with costly conditions, and all policies have to meet federal standards for coverage. Employers must keep adult children on parents’ policies longer. And a “Cadillac tax” that takes effect on high-cost plans in 2018 prompted many companies to trim spending in advance.

Even on traditional plans, out-of-pocket costs have been creeping up. Most employers in the Charlotte region now offer high-deductible plans alongside other options, said Graham of The Employers Association.

Often they’re coupled with accounts that let employees save for out-of-pocket costs. Some companies contribute, either as straight payments or as a reward for participating in activities designed to improve their health.

The popularity of these plans varies. At Duke Energy, which has been promoting high-deductible plans with savings accounts and incentives for five years, 64 percent go that route, said spokesman David Scanzoni. That’s partly because the difference in premiums is significant – up to $6,500 a year for a family plan.

But when the State Health Plan, which covers almost 577,000 teachers and other government employees, rolled out a high-deductible option this year, only about 3 percent signed up. In Charlotte-Mecklenburg Schools, with more than 15,000 employees covered by the state plan, fewer than 700 took the new option, or just under 4.5 percent, says Vincent Smith, an executive director in the district’s human resources department.

The traditional plan covers 70 percent of expenses and carries a high out-of-pocket risk. Almost half of all state employees instead opt to pay higher premiums for an alternative that pays 80 percent and sets a lower cap on out-of-pocket spending.

CHS takes plunge

When Carolinas HealthCare introduced its high-deductible plan in 2013, only about 5 percent took it. This year it’s up to 25 percent, with the rest choosing a traditional plan with higher premiums and lower out-of-pocket costs, said human resources Vice President Mick Fisher.

During open enrollment for 2015, the company informed its employees they’d no longer have that choice starting in 2016. Nationally, 30 percent of employers said a high-deductible plan would be the only option offered to their staff in 2015, double the rate in 2014, according to a Towers Watson/National Business Group on Health .

“There’s a clear trend of that happening in all industries,” Fisher said. “We feel it’s a better option. It puts more skin in the game for them to make good decisions.”

Compared with CHS’ traditional plan, premiums are $1,054 a year lower for individuals and $1,542 lower for family coverage. The system encourages employees to put that money into a health savings account. CHS also contributes at least $350 per employee or $1,100 per family to that account, with the chance to earn another $1,000 for wellness activities.

For workers who earn less than $30,000 a year, CHS pays a bigger share of premiums and adds $100 to the savings account.

The financial impact on CHS remains to be seen. Because the system is self-insured, the drop in premiums will reduce income. But if employees are motivated to save money by using care wisely and staying healthier, the move could eventually help control costs, said spokesman Kevin McCarthy.

What’s the future?

Experts agree: The days when a good job meant never having to worry about medical bills are gone.

As the cost-shifting trend continues, the question becomes what to do about people who don’t get the care they need because they can’t afford a few hundred – or thousand – dollars in medical bills.

CHS is not just an employer trying to cut costs. It’s also a health-care provider that absorbed in unpaid bills and charity care last year. Officials say some of that comes from people who have insurance but can’t pay their share.

Novant Health, the Charlotte area’s other big health-care system, has used what it calls a hybrid plan for the last five years: A high-deductible medical plan paired with traditional co-pay coverage for medications. Benefits director Shannon Nevergall said the company realized that making employees pay large amounts for drugs made it less likely they’d fill prescriptions, which can worsen their health.

Some experts hope to see insurance companies and/or the government refine the approach to out-of-pocket spending. For instance, treatment for asthma, diabetes and other chronic conditions might be exempted from deductibles in the belief that it will save money in the long run. But employee costs for medical care with less obvious value might continue to rise.

Dusetzina, the UNC cancer researcher, says she considers the approach promising. But when it comes to something such as cancer treatment, she adds, there’s always going to be tension over what it costs, how much good it does and who should pay.

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Also at stake is the financial stability of the insurance companies, medical professionals and others that have come to count on the federal money the act provides to help low- and moderate-income people who don’t have workplace health coverage.

The court is scheduled to hear arguments Wednesday in . The plaintiffs argue that four words in the complex law preclude the federal government from setting up the health insurance exchange that and 210,000 in South Carolina used to buy policies this year. Roughly 90 percent got federal aid.

A ruling won’t come until late spring or early summer. But it could rock the Carolinas if the subsidies are cut off.

Experts say that would quickly lead to rate spikes, with the healthiest people dropping their coverage while the sickest struggle for ways to keep their insurance.

“This would trigger a classic … ‘death spiral,’ where insurers would seek very large premium increases, which in turn would cause the healthier of the remaining enrollees to drop coverage.”

The impact would be felt far beyond the Carolinas.

“The doomsday scenario could materialize, and it does impact everyone” in the about three dozen states that use the federal exchange, said Christopher Condeluci, an attorney who worked for Iowa Republican Charles Grassley on the Senate Finance staff during the drafting of the law.

Precarious position

N.C. Gov. Pat McCrory said last week the potential overturn of the subsidies puts the state in “a very precarious position.” He urged the president and Congress to work together “in anticipation of (a) potential court decision, as opposed to reacting to a court decision.”

Last week, Health and Human Services Secretary Sylvia Burwell told Congress the administration has no backup plan. “We know of no administrative actions that could, and therefore we have no plans that would, undo the massive damage to our health care system that would be caused by an adverse decision,” a spokesperson for her department said.

U.S. Sen. Richard Burr, a North Carolina Republican, is a leader in the push to and replace it with a more market-driven approach. His Patient Choice, Accountability, Responsibility, and Empowerment Act (), co-authored with Sen. Orrin Hatch of Utah and Rep. Fred Upton of Michigan, would repeal the act’s coverage mandate and revamp the subsidized marketplace.

A Burr spokesperson said Friday that Burr would work to provide “relief” if people lose subsidies because of the Supreme Court ruling but did not provide specifics.

Partisan firefight

All of this is part of a fiercely partisan battle over health care reform. It started long before the ACA passed in 2010 without a single Republican vote, and it has continued ever since.

The law’s current challengers point to four words in the act that say subsidies shall be distributed through marketplaces “established by the state.” Many Republican-led states, including the Carolinas, resisted creating such exchanges. Their residents are served by the federal.

Supporters of the law contend it’s clear from the overall bill that Congress intended for the subsidies to be available through both federal and state-run markets.

The King suit was filed by four Virginians who dislike the act and do not want to buy insurance. They’re asking the court to strike down the IRS regulation making subsidies available through the federal marketplace.

If that happens, it’s unclear whether the decision would prove a victory or debacle for Republicans. Some say it would hobble Obama’s plan and clear the way for GOP efforts to repeal it and start fresh.

Burr’s office, for instance, sent a statement saying the loss of subsidies would represent one of “Obamacare’s broken promises.” That statement touted the Patient CARE act as a long-term replacement that “empowers individuals, families, and states in their health care choices instead of the federal government and actually lowers health care costs.”

On the flip side, more than 8.8 million people across the country got their 2015 coverage through the federal exchange, and most got subsidies.

If subsidies are canceled, most insurers could not drop plans without giving one to three months’ notice. But the companies remaining in the market would likely seek sharp increases in premiums for the following year, anticipating that the consumers most likely to hold onto their plans would be those needing medical care.

One projects that unsubsidized premiums could increase by almost half – an average annual increase of about $1,600 for a 40-year-old – and that 70 percent of consumers both inside and outside the federal marketplace would cancel their policies.

Those price increases, in turn, would drive more people to drop coverage, spurring further price hikes.

“It’s not the subsidy market that will fall apart, it’s the whole market” for people who don’t get job-based insurance coverage, said Robert Laszewski, a consultant for the insurance industry who is no fan of the health law. “There will be millions of Republicans who are not subsidy-eligible who are also going to get screwed.”

Short-term unity

Experts say Congress could apply “fixes,” such as voting to allow subsidies to continue through the rest of the year. But whether a Republican-controlled Congress that has pledged to repeal the law would agree to that is uncertain.

Aetna spokeswoman Cynthia Michener said the insurer is talking with lawmakers from both parties “about how to make a grand bargain should the Supreme Court decide against federal exchange subsidies.” A decision to strike the subsidies would likely “spur bipartisan action to resolve the issue promptly,” she added.

At the state level, officials could decide to establish state-run marketplaces, but they would have to move fast before the start of open enrollment for 2016, tentatively set to begin Nov. 1. And lawmakers in many GOP-led states are likely to resist such steps, citing opposition to the law.

N.C. Senate President Pro Tem Phil Berger’s office declined the Observer’s request for an interview or statement about preparations.

“With the court case not yet underway, we wouldn’t feel comfortable speculating on what might happen at this very early stage,” said spokeswoman Shelly Carver.

Julie Appleby of Kaiser Health News contributed to this article.

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When she recently read about a new from Blue Cross and Blue Shield of North Carolina, she checked the average reimbursement for those surgeons. One of them averaged about $1,500 less in total costs associated with the arthroscopic surgery she’s having. And Blue Cross pays about twice as much if the same doctors do the procedure in a hospital – costs that pass through to her with a high-deductible plan.

She used that data to schedule her surgery.

“You don’t have to legislate medical costs to come down,” Goldfarb said. “All you have to do is make the information available.”

That’s the idea.

Until recently the cost of medical care had been a closely guarded trade secret and patients had little reason to care when health insurance covered most of the expense. Now, however, as patients for more of their medical costs, such information is seeping out through online tools.

How that will play out in the medical marketplace remains to be seen, but Blue Cross’ North Carolina disclosure is creating national buzz. A on Forbes.com said it could “represent the dawn of a new age in health care.”

Like other Charlotte health executives, Murrey has mixed feelings about the value of the Blue Cross public data. They say it starts a good conversation but can be misleading.

For Cary radiologist Stephen Loehr, it provides evidence that his costs are lower than most of his competitors. His typical reimbursement from Blue Cross for an angioplasty for vein blockage performed at his Cary facility is $2,494.

Many outpatient facilities collect two or three times that amount, and hospitals can cost even more. For example, the Duke University Hospital system takes in $12,123.

“I still work at Duke Regional and do the same procedures there,” Loehr said, explaining that the hospital is a better option for high-risk patients. “It’s the same procedure except the price. In a hospital, the patients stay overnight – it’s a $1,000 hotel room.”

Pulling the veil

Blue Cross, the state’s largest insurer with about 4 million customers, is the latest to pull back the secrecy veil by publishing costs for more than 1,200 nonemergency procedures.

Rather than cite average prices for procedures as other sites do, Blue Cross lists prices tied to reimbursement rates it has negotiated with individual providers. The data show tremendous price variation within the state for some procedures. For example, the cost of a hammertoe correction in North Carolina ranges from $404 to $6,864 for doctor’s offices and surgery centers. Hospital costs for the procedure range from $4,518 to $13,252.

Murrey, whose practice recently opened an ambulatory surgery center in Charlotte, says the numbers illustrate how much some patients can save by having procedures done in an outpatient setting. Patients may be scheduled for a more expensive hospital setting based simply on location or their surgeon’s next available slot, he said.

However, patients with risk factors, such as heart trouble, high blood pressure or diabetes, may need to be in a hospital where help is at hand if complications occur.

“It will force us to have a real conversation about whether it’s worth it to go to one facility over another,” he said.

But Murrey, like executives from and , says the numbers can be misleading. Even within a category, such as hip replacement, some cases will be more complex than others, which contributes to differences in average reimbursement.

For instance, two doctors who are partners in a Carolinas HealthCare practice and receive the same payments from Blue Cross are listed as having significantly different averages for the same procedure, said Dr. Roger Ray, Carolinas’ chief physician executive. That could only happen if one had more complex cases than the other.

And while the surgeon’s name is attached to some procedures, the totals listed include everything associated with it, such as anesthesiologists’ fees, medication and facility fees.

But Goldfarb, a Blue Cross customer, says the public database she found through in the Observer was more helpful than anything the company provides on its member website. Her concern is that Blue Cross is focusing on public relations moves, such as the North Carolina database, while falling short on the demand for basic customer service.

Competitive pressure

While the Blue Cross-negotiated rates don’t directly apply to those who are insured by other companies, such as Aetna and Cigna, the data is a benchmark. Health care advocates say that having access to a procedure’s cost could change the way patients and doctors make decisions.

“This is the direction that we’re going in,” said Lynn Quincy, associate director of health reform policy at , the advocacy arm of Consumer Reports magazine. “We’ll see more and more of this, and consumers will get used to it.”

Less clear is what impact pricing transparency ultimately will have on medical costs and health care premiums.

“Our goal is that those on the lower end – providing good health care at an affordable price – will be proud of that,” said Blue Cross spokeswoman Michelle Douglas. “And the providers who are at the higher end will … get more in line.”

One high-priced North Carolina provider has already contacted Blue Cross to request a reduction in its insurance payments, Douglas said, declining to provide more details.

The site has had 8,000 unique visitors and nearly 18,000 price searches since it was released three weeks ago, Douglas said.

Quincy said the tool could be revelatory to physicians as well because they typically refer patients to one another without regard to price.

Accessing medical prices has not been feasible, or even legal, because contracts between insurers and providers are confidential. Doctors are prohibited by federal antitrust law from sharing their private insurance payment terms with other doctors.

“Doctors almost never know the cost,” she said. “The patient eventually sees a bill, but the doctor is almost worse off because they never see what the patient is charged by other doctors.”

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Executives at Ìý²¹²Ô»å say they’re pondering those questions in the wake of last week’s  by Blue Cross and Blue Shield of North Carolina.

They joined national experts in calling the public disclosure of payments to doctors and hospitals across North Carolina unusual, confusing and potentially misleading. Leaders of both Charlotte systems said they, too, have been exploring the new online search tool –  – and trying to make sense of what they see.

Blue Cross officials described the decision to disclose payments that have long been a closely guarded trade secret as a move to help consumers hold down costs. “We are getting consumers literally begging us for this information,” Susan Weaver, Blue Cross’ chief medical officer, told journalists last week.

Each insurance company negotiates payments with hospitals, doctors and other medical providers. It’s not unusual for insurance companies to help their own customers compare costs, but it’s rare to see them voluntarily disclose numbers to the public. Novant and Carolinas Healthcare executives said Friday this is the first time they’ve gotten a peek at what their competitors get from Blue Cross.

The database is also unusual in combining bills from providers to tally the full cost of a procedure. For instance, a patient having surgery can expect separate bills from the surgeon, the anesthesiologist and the hospital; the Blue Cross list combines them.

“It’s one of the more comprehensive efforts that we’ve seen and that we’re aware of,” said Bob Seehausen, Novant’s senior vice president of business development and sales.

Perplexing gaps

The gaps between payments for the same procedure are huge.

For instance, the average reimbursement for a kidney transplant at CMC-Main is $106,764, compared with $159,847 at Duke University Hospital in Durham.

The payments listed for a coronary bypass without cardiac catheterization in the Charlotte and Raleigh regions range from about $49,000 at UNC Hospitals in Chapel Hill to more than $79,000 at CMC-Northeast in Concord.

But why? National experts and local health executives say that’s not clear – and that makes the numbers confusing and potentially misleading.

“It’s absolutely appalling that they do not have a clear disclaimer on what the information is,” said Lynn Quincey, associate director for health reform policy at , the policy and advocacy arm of Consumer Reports magazine.

Some differences are easy to deduce. For instance, screening colonoscopies done in doctor’s offices can come in under $1,000, while those done in hospitals can be $5,000 or more.

Healthy patients generally have the procedure done in an office, while those who are medically fragile or have a history of problems with anesthesia may go to a hospital, where they’re paying to have experts on hand in case of complications.

Officials at Carolinas Healthcare say their rates also reflect a high volume of uncompensated care, costs for staying open around the clock and a high level of clinical expertise.

Who benefits, and how?

Carolinas Chief Financial Officer Greg Gombar and Chief Physician Executive Dr. Roger Ray said Friday they’re still trying to make sense of numbers that went public with no warning. Novant’s Seehausen said the same.

“We were kind of caught by surprise,” Gombar said.

In the past, reimbursement negotiations have taken place in private. Seehausen said the Blue Cross disclosure is “absolutely” intended as a tactic to put pressure on those at the high end of the scale.

But he, Gombar and Ray said Blue Cross is just as likely to face questions from those at the low end. “It’s hard to tell yet what role a tool like this might have,” Ray said.

Blue Cross touted the new data as a tool for consumers. They emphasized that the prices listed are only “one data point” for comparison shopping, and acknowledged that they tell nothing about what patients pay out of pocket.

Price reporting alone hasn’t changed consumer behavior in states such as New Hampshire that pioneered public disclosure, according to a . Instead, patients made cost-based decisions only when they reaped the benefits or paid the extra price.

However, that September article reported that hospitals in New Hampshire and California voluntarily lowered prices for fear of losing business once those prices were made public.

The Novant and Carolinas Healthcare executives said they believe it’s helpful for consumers to understand costs, though that’s not likely to be the only factor in medical decisions.

“Personally, I’m not looking for the cheapest surgeon,” Seehausen said. “But I am looking for a good value.”

John Murawski of the Raleigh News & ObserverÌý²¹²Ô»å Julie Appleby of Kaiser Health News contributed.

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When Robin Blakeney of Concord stopped taking some of her medications to save money, she ended up hospitalized for two weeks.

Blakeney, who has congestive heart failure, diabetes and high blood pressure, is the kind of fragile patient who accounts for an outsized share of America’s soaring health care tab. The federal government has invested $15 million in a North Carolina experiment that gives community pharmacists a new role in patient care.

The pharmacy project is part of a 10-year, $10 billion federal exploration to overhaul the nation’s health care system. The Affordable Care Act created the to launch experiments in every state. Successes can serve as models for national reform.

The office’s goal is lofty: making medicine less of an ordeal, improving patients’ health, and controlling the spiraling costs that burden taxpayers, employers and consumers.

The project created by the nonprofit gives pharmacists access to medical information about high-need patients and reimburses them for the extra work.

When Blakeney got out of the hospital this fall, Moose Pharmacy sent someone to her house to review her prescriptions and her follow-up care. Her drugs now come in a packet that she opens twice a day: eight pills each morning, four in the afternoon. The pharmacy delivers refills to her house, and pharmacist Carlie Traylor calls to check on Blakeney.

Owner Joe Moose says his staff has made about 1,000 visits: “We have yet to have a patient who’s actually taking what the physician thought they were on.”

Some are confused about their regimen, while others are just forgetful. Some suffer side effects and drop drugs without consulting their doctors. Some, such as Blakeney, skimp when they run out of money.

As a result, controllable conditions can turn into crises, sending patients to the emergency room and leading to hospital admissions. Not only do costs skyrocket, but patients’ lives and well-being are put at risk.

“These are expensive failures,” Moose says.

Moose and his staff use tactics such as packing multiple medications together, making check-in calls and reminding patients of the need for tests, such as blood pressure checks and blood glucose monitoring for diabetics. If they see something going wrong, they can alert the doctor.

Blakeney says she loves the new approach. She said Moose Pharmacy lets her charge her medications and makes sure there are no gaps between refills.

Expanding The Model

The Community Care program is working with about 120 pharmacies around the state, many in rural areas where distance adds to the challenge of seeing a doctor.

Community Care already works with 1,800 medical practices and asked those offices to identify pharmacies that would be good partners. Trygstad says he was pleasantly surprised by how readily the doctors embraced the idea of letting pharmacists help manage care for the most challenging patients – people with such conditions as heart disease, diabetes, behavioral health issues, asthma and chronic pain.

The traditional model involves very little contact between the doctors who write prescriptions and the pharmacies that fill them. The pharmacies are paid for the drugs they sell, regardless of whether they provide great personal service or none at all.

Under the new model, pharmacies get $70 to $95 for the initial work-up, which can take 30 to 90 minutes, and a monthly fee of $2 to $5 for each of the chronically ill patients taking part. There’s also a “pay-for-performance” reward based on such measures as patient health, quality of life, and reduction in hospital admissions and emergency room visits.

The grant program provides technology to ensure that pharmacies can track information about their patients, such as hospital admissions and discharges and care plans from all their doctors.

The at UNC Chapel Hill is working with Community Care to monitor the program and tweak it to work better during the three-year grant. The federal government will also hire an outside evaluator.

The center is doing the same for grant recipients across the nation to determine whether successful results could be expanded. But those contractors are prohibited from disclosing data to anyone other than the center. The health law requires the federal government to disclose evaluation reports on its tests “in a timely fashion,” but so far the innovation center itself is largely silent.

One reason is that it’s early, officials say; there’s no reason to publish results in the first or second years of a three-year study. Another reason is the political risk of revealing the investments that don’t produce results. Some failures are inevitable, federal officials say, but even those will produce useful information on what doesn’t work.

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But he worried that his unpredictable income could leave him in the lurch. The subsidies are designed to provide more help to those with smaller paychecks. But in North Carolina, the floor drops out when a wage-earner falls below the poverty level, a distinct possibility for Helms.

His fear: Getting health insurance – and long-delayed care – could leave him worse off if he loses his coverage and has to repay Uncle Sam.

Experts say that won’t happen, but his trepidation is understandable.

People who rely on tips, commissions or jobs with variable hours can have a tough time predicting annual income, which is the basis for ACA subsidies. In a recent , almost one-third of Americans said their income fluctuates from month to month.

In general, lower income means a higher subsidy.

But for those who hover around the poverty line, a slump can put them into the “no help” category in the Carolinas and 21 other states that haven’t expanded Medicaid coverage.

When Congress passed the ACA, the plan was for all states to use federal money to extend Medicaid to the poorest able-bodied adults, with subsidized private insurance covering low- and moderate-income people. But North Carolina and South Carolina joined other Republican-led states in saying “no thanks,” leaving at least in the coverage gap.

Report every penny

The “too poor for subsidies” dilemma highlights a message that can be a tough sell: Reporting all possible income to the IRS can be an advantage to low-income taxpayers.

People struggling to make a living often work jobs doing hair, yard work, auto repairs or child care. They may be paid in cash and fail to report that income, but that’s a mistake, said Scott Curtis, area developer for Liberty Tax Service in Charlotte.

Not only can that extra income keep someone eligible for health insurance subsidies, Curtis said, but at some income levels it can boost the Earned Income Credit, a tax credit for the working poor.

Keith Adams of Common Heart, a nonprofit group that’s certified to help Union County residents with ACA enrollment, says his group tells people the same thing: “Find every scrap of income and pay taxes on it.”

Will N.C. close the gap?

A handful of states that rejected the Medicaid expansion have created their own ways to offer coverage. Arkansas, Iowa and Pennsylvania, for instance, got approval to use the federal expansion money to create their own subsidies for people in the gap to buy private policies.

It’s unclear whether North Carolina will follow suit. State leaders say some type of Medicaid reform will be on the agenda when the General Assembly convenes Jan. 14. Gov. Pat McCrory and departing House Speaker Thom Tillis have indicated interest in finding ways to extend coverage, while Senate President Pro Tem Phil Berger says he hasn’t changed his stance on rejecting the federal money.

If North Carolina does nothing, it will forego almost $40 billion in federal money for Medicaid expansion over the next decade, while saving just over $3 billion in state costs for expansion, according to a recent study by the Robert Wood Johnson Foundation. Meanwhile, state taxpayers will in federal tax hikes designed to pay for the expansion without reaping any benefit.

Any decisions the legislators make in next year’s session would take effect in coming years, too late to alleviate Helms’ fears.

Taking a chance

Last week, Helms spent about an hour with Hardee filling out the application for subsidized insurance.

His challenge is a familiar one to people who work with the exchange. “The majority of people have trouble estimating their income,” Hardee said. “Most of the people we see aren’t on a salary.”

Based on his last three years of earnings, they estimated his 2015 income at $12,000. That qualifies him for $671 a month in federal aid. He chose a Coventry silver plan that will cost him just over $95 a month (a nonsmoker could have gotten it cheaper). Because he also gets help with out-of-pocket costs, he’ll have no deductible and pay only $10 for primary care visits and $20 for visits to specialists.

Hardee also helped Helms find an in-network doctor near his home.

She showed him how to update his income during the year. If it becomes clear he’ll fall below the poverty level he could lose his subsidy. But he wouldn’t be penalized or asked to repay what he’s already gotten, Hardee said.

As long as Helms makes his first payment by the end of this month, his coverage kicks in Jan. 1.

He’s in pretty good health, he says. But at his age, various aches and pains have been worrying him, along with all the screenings he’s skipped.

Soon he’ll be able to put his mind at ease – or get treatment if problems turn up.

“It just means the world to me,” Helms said. “It’s everything I can do to keep tears from running down my face.”

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