What's NC's backup plan if health insurance subsidies knocked out?
Posted April 25, 2015
Updated April 26, 2015
Raleigh, N.C. — After he returned from a trip to Washington, D.C., this year, Gov. Pat McCrory described his disappointment that President Barack Obama had no backup plan in place if the U.S. Supreme Court strikes down a key feature of the Affordable Care Act.
The case, known as King v. Burwell, could cost hundred of thousands of North Carolina residents the tax subsidies they used to buy health insurance on the HealthCare.gov marketplace if justices decide a key feature of the law should be overturned.
"I asked him, 'Is there a way we can work together?'" McCrory recalled of a meeting at the White House organized by the National Governors' Association. "He basically said three things. One is, he doesn't think it's going to be overturned. I don't know where he gets that from. That's like me trying to predict our North Carolina Supreme Court. And second, he believes 'Obamacare' is working. And third, if it is overturned, just get on a state exchange."
More than 560,000 people have health insurance purchased through the federal law, which is sometimes called Obamacare. Those purchases are made through an online exchange that evaluates how much an individual will have to pay for his or her policy. North Carolina is one of 27 states where the federal government runs that exchange. In the other 23 states, the state government either runs the exchange by itself or in partnership with the federal government.
The heart of the King v. Burwell case contends that residents in states with solely federally run exchanges should not be eligible for those subsidies due to the language in the law. Most court watchers expect that decision to come down in June.
It is possible that the Supreme Court could find in favor of the Obama administration, and there will be no problem going forward. But should the case go the other way, more than 515,000 lower-income North Carolina residents would be faced with coming up with additional monthly premium payments or dropping their policies.
"It would be a big mess," said Adam Searing, a senior research fellow at the Georgetown University McCourt School of Public Policy.
If the decision does go against the ACA, people would probably have only 30 days to make that decision. Many would drop the policies, Searing said, because they could not afford to pay their premiums without a supplement that amounts to an average subsidy of $315 per month.
Indeed, Obama has sounded confident that the law would be upheld.
"There is, in our view, not a plausible legal basis for striking it down," he told the Reuters news service in an interview earlier this year.
So, if the Obama administration doesn't have a Plan B, what is North Carolina's?
"We're looking at everything," McCrory said.
As for the possibility of doing a state exchange, which would be a massive information technology project, the chances aren't good, at least not for a 30-day window.
"We're doing an examination of how much time it would take to do a state exchange, how much it would cost and whether or not we even have the resources to do that," McCrory said. "It doesn't look real positive for that being an alternative, at least in the short term."
Counting on federal government
In fact, McCrory couldn't decide to spin up a state exchange even if he wanted to. Early in 2013, the General Assembly passed a law prohibiting the governor and the Department of Health and Human Services from creating a state exchange, and it appears unlikely they would back off that decision anytime soon.
"If you look at just how long it took the feds to develop an exchange that functioned, that's not a July 1, here's the solution," said state Sen. Ralph Hise, R-Mitchell.
It would likely take more than a year to develop such a system, Hise said, and the state has run into problems developing such complex information technology products.
Other state lawmakers shared similar views, saying that the federal government would have to fix what amounted to a federal problem caused by what attorneys for the Obama administration argues is, at worst, a bill-drafting error.
"Anything related to this would be a hard sell for Republicans who have voted multiple times to abolish the whole Affordable Care Act," Searing said.
At the very least, he said, any bill making a quick and simple fix would likely be larded down with other policy designed to significantly change the health care law.
That could be difficult to push through. Despite some recent bipartisan deals, the ACA remains a hot-button topic for conservatives. It's unlikely that Obama would sign a measure that he saw as gutting the law, even if it got past a U.S. Senate with enough Democrats to block revisions to the law they saw as unfavorable.
Still, members of the state's congressional delegation are optimistic they could respond quickly if the Supreme Court were to strike down subsidies here.
Meghan Burris, a spokeswoman for Republican Sen. Thom Tillis said that the senator believed a congressional fix would be needed if the court ruled against the ACA.
"The senator believes we need a short-term, federal solution after the Supreme Court ruling and then a long-term solution post-Obamacare to implement market-based reforms that will actually help control costs and promote quality health care and competition," she said.
In the U.S. House, where Republicans have held more than 50 votes to repeal the Affordable Care Act in the past four years, including one in February, a spokeswoman for 2nd District Congresswoman Renee Ellmers said she favored a plan developed by a House working group. That plan would repeal many features of the law, such as the tax penalty-enforced requirement that everyone have health insurance, while providing subsidies for low-income residents who want to buy.
"I'll work with my colleagues to ensure that we reach a sound, responsible decision in order to provide the people of North Carolina with accessible care," Ellmers said in a statement.