Cooper: Health reform challenge could jeopardize funding

The General Assembly on Tuesday sent House Bill 2 to Gov. Beverly Perdue, who has said that she wouldn't veto the legislation although she disagrees with it.

The bill will become law on March 6 unless Perdue vetoes it, and spokeswoman Chrissy Pearson said the governor is reconsidering that stance in light of Cooper's warning.

"The governor felt like she knew what she was going to do with this bill. She felt like she would let it go into law. She would neither sign it or veto it," Pearson said. "She has a new challenge on her hands. She is willing to ask these questions. She's willing to change her mind if that's what it takes to protect North Carolina."

The bill would exempt North Carolina residents from the requirement under the Patient Protection and Affordable Care Act that they buy health insurance by 2014 or pay a penalty. It also would require Cooper to join in a lawsuit filed by 26 others states to challenge the law.

Cooper on Thursday sent a letter to Perdue and leading Republican lawmakers, stating that a legal analysis of the bill by state Solicitor General Christopher Browning found that the legislation could lead to financial repercussions for  Medicaid and Children's Health Insurance Program, which receive federal funding.

The federal law requires states to minimize Medicaid fraud and collect $500 fees from hospitals, nursing homes and other providers to offset the cost of enrollment and verification requirements, Browning noted. The language in House Bill 2 appears to prevent the state from collecting the required Medicaid fee, which could lead the federal government to withhold some funding, he said.

"North Carolina cannot accept the benefits of the federal Medicaid program and then avoid its requirements by simply enacting a state statute declaring those federal requirements to be a violation of state law," Browning wrote in a memo to Cooper.

The bill's language also could bring an end to the sales tax collected on over-the-counter medications, the uninsured motorist coverage requirement in auto policies and the deductibles and co-payments charged to families in the Children's Health Insurance Program, he said.

Browning also said House Bill 2 would be unenforceable if enacted into law because federal law trumps all state laws.

"A state law cannot repeal a federal law," he wrote in the memo.

A spokeswoman for Cooper said the attorney general said the legal concerns arose only in recent days and that lawmakers never asked for his input during their debates on the bill. He said last year that he didn't want North Carolina to join the multi-state lawsuit because he believed the health reform law was constitutional.

Senate President Pro Tempore Phil Berger said that Cooper needs to stand up for North Carolina residents.

"The attorney general should be defending the constitutional rights of North Carolinians, not the political interests of Barack Obama and national Democrats,” Berger, R-Rockingham, said in a statement. “We disagree with his opinion and don’t think states should bow down when the federal government passes unconstitutional laws.”