An imminent decision from the U.S. Supreme Court on subsidies under the Affordable Care Act could unleash “incredible chaos” in North Carolina’s health care market, N.C. Insurance Commissioner Wayne Goodwin predicted Wednesday.
Goodwin said the shock waves of invalidating health insurance subsidies would go far beyond the 458,738 North Carolinians who count on financial aid under the health care law. The fallout could ultimately drive some insurance companies to stop selling policies in the state, Goodwin said, leaving legions of residents stranded without coverage.
Goodwin, a Democrat, spoke about the implications of the Supreme Court case, King v. Burwell, from his Raleigh office Wednesday. A court decision is expected this month, and could come as early as Thursday, on the lawsuit filed by four Virginians challenging ACA subsidies in North Carolina and 33 other states that don’t run their own insurance exchange and instead rely on the federal exchange.
“It would create massive instability and incredible chaos,” Goodwin said. “It will take several years to know the impact of this.”
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North Carolina officials could remedy the uncertainty by creating a state-run exchange, but few are expecting that to happen. Republicans who control state government have expressed deep antipathy toward the ACA, characterizing it as a big government program that stymies free enterprise and inflates costs.
Republicans in Congress are considering several alternatives to the ACA, but they are not likely to be as comprehensive as the law pushed through in 2010 by the Obama Administration without a single Republican vote.
The ACA has been immensely popular here. As of earlier this month, 492,014 North Carolinians had coverage under the law, propelling the state to the fourth-highest enrollment in the nation. The federal government offset the insurance cost for 92.3 percent of those enrollees with subsidies averaging $316 a month.
North Carolina has emerged as one of the most subsidy-dependent states in the country, behind only Florida and Texas. The subsidy is available to people whose household income falls between 100 percent and 400 percent of the federal poverty level.
The law requires most Americans to obtain health insurance, but most aren’t directly affected because they have insurance through an employer or a federal health care plan like Medicare or Medicaid. However, Goodwin said, eliminating subsidies wouldn’t end the individual mandate for citizens to obtain health insurance, putting many people in a bind.
Goodwin is generally in favor of the ACA but said it could be improved. He said the law gives insurance commissioners no authority to regulate navigators who advise the public on health insurance, even though regulators have oversight over insurance brokers and agents.
Goodwin also said he has authority to hold hearings and impose caps on homeowners insurance and auto insurance, but lacks those powers under the ACA for health coverage.
A Supreme Court ruling in favor of King could invalidate the subsidies in several different ways. The prohibition could be effective immediately, or the court could set a deadline for Congress to address the issue. Goodwin said giving Congress time is preferable, but would give insurers just several weeks to adjust.
He said the worst outcome would be a ruling that said the subsidies were never legal, forcing millions of Americans to repay the money, but Goodwin said the court is not likely to go to that extreme.
Either way, the ruling is expected be divided and close as the justices split into ideological factions.
The N.C. Department of Insurance is currently reviewing proposed rate increases by four health insurers and expects to set 2015 rates by August 25. The cancellation of subsidies would render the pending rate proposals virtually useless, because the calculations would be based on inaccurate data. Insurers would scramble to file rate revisions without fully understanding whom they’ll be insuring next year and what those costs and risks will be.
Goodwin said all but the the sickest and most desperate would likely cancel coverage without financial aid, driving up rates for everyone else with health insurance.
“Everyone benefits if more people have insurance,” Goodwin said. “There are hundreds of thousands of North Carolinians who now have coverage who didn’t before and that ultimately helps everybody.”