U.S. Supreme Court allows Obamacare subsidies nationwide

Credit: Ted Eytan

Credit: Ted Eytan

RALEIGH – Legislative efforts to reform Medicaid became even more urgent today in the wake of this morning’s announcement from the U.S. Supreme Court that said government subsidies for healthcare were constitutional, essentially upholding the Affordable Care Act.  The ruling in King v. Barwell was delivered by Chief Justice John Roberts, who said the court decided that the tax subsidies would be allowed in all 50 states, not just the 14 who set up their own exchanges. North Carolina elected not to form exchanges.

Justices_sm“Abolishing the subsidies could well push a state’s individual insurance market into a death spiral,” said Roberts. “It is implausible that Congress meant the Act to operate in this manner.”

The decision meant that the justices sided on the intent of the law, not the exact language of the statute. Opponents of the law were out in force after the announcement.

BurrOfficialPortraitsmall“Regardless of today’s decision by the Supreme Court, the fact remains that Obamacare is not working for the American people,” said Senator Richard Burr (R-NC). “While the court may have ruled on the issue of subsidies in the federal exchanges, this fundamentally flawed law continues to speak for itself in the form of broken promises, government mandates, and double-digit premium increases. Obamacare must be repealed and replaced with health care reforms that expand access to quality and affordable health care by empowering individuals in their health care decisions—not Washington bureaucrats.”

Senator Thom Tillis (R-NC) shared his colleague’s sentiments:

Meanwhile in the General Assembly, both chambers felt an even greater level of urgency to find common ground in Medicaid reform. The program is often called a financial Pac-Man, now accounting for 17% of the state budget, pushing other services down the priority list. Today almost 2 million North Carolinians are on Medicaid.

“This shows that if you write legislation where no one knows what’s in it until it’s passed, it causes a lot of indecision and problems, especially for state governments who have to abide by those rules,” said Gov. Pat McCrory this morning. “Now that we have that ruling, we have to proceed with Medicaid reform, which is a priority of mine.”

Over the past two weeks, the House and the Senate have presented separate plans for reform. The House passed theirs as stand-alone legislation, the Senate incorporated theirs into the budget. Leadership in both chambers are expected to start meeting next week to hammer out differences.

They agree that the system needs to be capitated, rewarding patients and providers for access to quality care by paying a flat, per-patient rate. Who manages the system is the fork in the road.  The House says a provider-led entity within DHHS should be in charge while the Senate believes an appointed board, outside of DHHS, should oversee private regional Managed Care Organizations to coordinate the program.  Both models have positive and negative track records in other states.

lambeth“I’m optimistic that we can develop a reform plan over the next few months; we have some more time now with the budget negotiations,” said state Rep. Donny Lambeth (R-Winston-Salem), a career hospital administrator and lead on the House’s reform efforts. “We agree on the ‘why’ and we agree on a lot of other points. We just have to figure out the ‘how’ and what works for our state. Because of this, the whole healthcare system is going to change and our Medicaid system has a chance to lead the nation if we can do it the right way.”

Once the final plan is passed and signed, Lambeth warns that the state’s reform plan will still have a federal gauntlet to survive. Because the federal government pays two-thirds of Medicaid costs, states must apply for waivers for any changes to the program. Careful design and an army of legal manpower will have to convince the Feds that the reform programs are cost-saving and improve access and quality of care. From there, legislators are warned that the federal government often takes up to two years or more to approve the waivers.

That lengthy approval process can also be a political minefield, making the outcome of the 2016 elections a factor in Medicaid reform’s ultimate success.