The U.S. Supreme Court could rule whether health insurance subsidies are invalid in North Carolina’s federal health insurance exchange as early as 10 am tomorrow morning. Because these subsidies are tied to the individual and employer mandates, it is estimated that over 10,000 large employers, 2.5 million employees, and over 400,000 individuals in the Tar Heel State could indeed be exempt from these penalties.
If liberated from these onerous regulations, halting the flow of subsidies means that millions of citizens would be exposed to the full cost of Affordable Care Act health insurance rates equivalent to on average increases of 317 percent.
Policy commentators weighing in on the situation suggest that chaos can be avoided by requiring states to switch from federal to state exchanges, where subsidies can legally be distributed to health insurance exchange carriers.
Yet, the operational status of over half of the nation’s state exchanges further indicates that it would be a wise decision for North Carolina to not opt for a state exchange. Taxpayer money has been squandered in states such as Hawaii, Oregon, Nevada, and Massachusetts due to technological issues and incompetent management. Problems have driven some of these states to adopt the federal exchange platform. Others are attempting to cover their operational costs by levying high user fees on consumers.
It would also be difficult for North Carolina to make this transition, since the seed money needed to establish a state exchange is no longer available from the federal government. North Carolina was once set on establishing its own exchange under Democratic Governor Beverly Perdue, but in 2013 a newly elected Republican majority passed Senate Bill 4 into law that ceased to use more than $70 million in start-up grants.