Obamacare Heads Back to the High Court | Eastern North Carolina Now

    Publisher's note: The author of this post is Katherine Restrepo, who is Health and Human Services Policy Analyst for the Carolina Journal, John Hood Publisher.

    RALEIGH     To kick off the New Year, the Cato Institute hosted its ninth annual health policy conference, where I and other attendees were briefed heavily on the status and potential implications of King v. Burwell - better known as one of the Obamacare "subsidy lawsuits."

    Basically, the federal health law expressly states that health insurance subsidies can be distributed only through state-based exchanges and not in states with federal marketplaces. Because subsidies are limited to state exchanges, the plaintiffs residing in federal exchange states are seeking to be freed from Obamacare's employer and individual mandates. One could say that the IRS has overstepped its bounds by illegally shoveling taxpayer money into the 36 states that have established federal exchanges since 2014.

    Oral arguments are to be heard before the Supreme Court on March 4, and a final ruling will be issued this June. In the meantime, the media will portray King v. Burwell as a challenge to Obamacare. But this is misleading, since plaintiffs are really just asking that the law operate as written.

    If the court ultimately strikes down subsidy distribution in federally established exchanges, over 10,000 employers, 2.5 million employees, and 400,000 individuals in North Carolina will be exempt from Obamacare's employer and individual tax penalties.

    On the other hand, outrage will ensue. No subsidies would mean that millions of North Carolinians would be exposed to the full cost of Obamacare health insurance premiums.

    Policy commentators weighing in on the situation suggest that this can be avoided easily by having states switch from federal to state-based exchanges. Yet for North Carolina to make this transition, more than legislation is needed.

    Moreover, the seed money needed to establish a state exchange is no longer available. North Carolina was once set on establishing its own exchange under former Gov. Beverly Perdue, but more than $70 million in startup grants were returned to the feds once Republicans took control of the legislature.

    Despite Republicans' opposition to the federal health law, Robert Pear's recent article in the New York Times indicates that some GOP legislators may be distancing themselves from further endorsing King, and not all attorneys general in federal exchange states have filed amicus briefs agreeing that the law clearly limits discounted health plans to state exchanges:

• Six Republican state attorneys general - in Alabama, Georgia, Nebraska, Oklahoma, South Carolina and West Virginia - filed a brief agreeing that subsidies were illegal if distributed through the federal marketplace. "Those were the states that expressed an interest in joining," said Aaron Cooper, a spokesman for Attorney General Scott Pruitt of Oklahoma, who led the effort.
• But 31 states have Republican governors, and most did not file briefs. State-level Republicans were far more involved in the landmark 2012 case challenging the constitutionality of the Affordable Care Act, when more than two dozen Republican attorneys general were plaintiffs.

    Will anti-Obamacare North Carolina legislators hold fast to their constitutional principles? Federal exchange states like Ohio and Missouri went as far as introducing legislation titled the Health Care Freedom Act 2.0, which would suspend insurers' licenses if they accepted subsidies from the federal government.

    The Congressional majority is now equipped with more opportunities to propose a fix to this unworkable law. Medical care certainly can be more affordable with fewer of the taxes and regulatory requirements Obamacare currently imposes. And there are ways that insurance companies can compete for individuals with pre-existing conditions by offering portable, secure, guaranteed renewable policies.

    A popular proposal co-sponsored by U.S. Sen. Richard Burr, R-N.C., advises the repeal of all 20 of Obamacare's taxes and fees that affect employers, insurance companies, medical device companies, and individuals. Instead, it proposes the liberalization of exchanges so insurers can be more flexible with the products they offer.

    Burr's plan also calls for a universal, refundable tax credit to be distributed to individuals as an incentive to purchase suitable health plans - the idea being that money put into the hands of a consumer is spent more wisely.

    However, libertarian critics argue that a universal tax credit equates to redistribution of taxpayer money in another form. Rather, they would support a tax deduction combined with large health savings accounts. Louisiana Gov. Bobby Jindal's JindalCare plan supports this strategy, and Cato scholar Michael Cannon is in the process of fine-tuning his proposal as to what Congress can do.

    Stay tuned for more details on this.