By Brenda Porter-Rockwell
This summer, North Carolinians were left scratching their heads in wonder after two federal appeals courts handed down conflicting rulings around financial subsidies for the health insurance marketplace of the Affordable Care Act, also known as Obamacare.
Just two weeks earlier, in July, United Health Care, the state’s second-largest insurance provider, announced plans to operate on the health insurance marketplace here, joining Blue Cross and Blue Shield of North Carolina and Coventry Health.
These announcements will have an impact on the 396,212 North Carolinians who are eligible to enroll in a marketplace plan with financial assistance.
Same argument, different rulings
In a 2-1 decision, a Washington, D.C. appeals court ruled that the language in the ACA does not legally allow the federal health care exchange to issue health subsidies to individuals. According to the court, states such as North Carolina that did not create their own state-based health exchanges cannot offer federal subsidies. Only states with their own exchanges can offer the subsidies, two of the three judges ruled.
“We reach this conclusion, frankly, with reluctance,” wrote Judge Thomas Griffith of the U.S. Court of Appeals for the D.C. Circuit. “At least until states that wish to can set up Exchanges, our ruling will likely have significant consequences both for the millions of individuals receiving tax credits through federal Exchanges and for health insurance markets more broadly. But, high as those stakes are, the principle of legislative supremacy that guides us is higher still.”
But just a few hours later, a three-judge panel of the 4th Circuit Court of Appeals in Virginia unanimously agreed that while the language in the ACA may be vague, the intent behind that language to support the greater good is clear: The federal exchange could issue subsidies.
The ruling of the D.C. Circuit Court surprised experts.
“It’s unusual to have a split decision, like you saw in D.C.,” said Jane Perkins, legal director of the National Health Law Program in Carrboro. “It’s not impossible; it’s just unusual. Most decisions are full-panel decisions.”
In partnership with AARP Foundation Litigation, NHeLP submitted a friend of the court brief to the Virginia courts supporting the legality of the subsidies. North Carolina is part of the 4th Circuit.
The rulings, Perkins said, are clearly tied to politics.
“You have to look at who appointed the judges,” she said. “On the D.C. panel, there are two Republican appointees and one Democratic appointee. Virginia’s 4th Circuit Court, which includes North Carolina, issued a full-majority decision. They were appointed by Democratic presidents.”
‘Reading the tea leaves’
If the D.C. Circuit Court decision is upheld on appeal, it could have far-reaching implications for North Carolina’s underserved populations.
“It’s too early to tell exactly what the implications are. There is a lot of courtroom battle yet to come,” Perkins said.
Michael Carvin, an attorney representing the plaintiffs, has filed a petition asking the U.S. Supreme Court to reverse Virginia’s 4th Circuit decision. The federal government made an en banc request for the full D.C. Circuit Court – not just the three-judge panel – to review the decision.
There are more Democratic appointees on the full court.
“So if we were reading the tea leaves, we would expect the full en banc decision to reverse the 2-1 panel and uphold the availability of health subsidies to limited-income working people, regardless of whether they live in a state with a state exchange or a state where the federal government is operating the exchange for the state,” Perkins explained.
She said she’s sure the federal government would like the D.C. Circuit Court to act quickly. Carvin can argue to the Supreme Court that there is a split among the circuit courts, with one court upholding the subsidies and another not.
However, there is no guarantee the Supreme Court will hear the case. One of the considerations that helps the Supreme Court decide whether to take a case is a split among the circuit courts. If the D.C. Circuit decides to grant an en banc review, then it will likely vacate the earlier 2-1 decision, Perkins noted. If that happens, there will be no circuit court split. The Supreme Court only rarely agrees to take a case when there is no circuit split.
Business as usual, for now
As the litigation continues, the health care subsidies remain in place and the special open-enrollment period remains open. The new-enrollment period opens again in November.
“There’s no need to panic right now; it’s business as usual.’ said Madison Hardee, a staff attorney with the Charlotte-based Legal Services of Southern Piedmont. “The marketplace has not closed.”
The addition of a third insurance carrier offers the potential that North Carolina’s underserved populations will have more options in terms of choice and, perhaps, price.
“We’re excited to hear that United is joining the marketplace. It’s always a huge advantage to have more services offered across North Carolina,” said Hardee.
According to data gathered by the Kaiser Family Foundation, 357,584 consumers have selected a plan on the North Carolina exchange as of April 2014.
Allen Feezor, a senior fellow at the Washington, D.C.-based Institute for Health Policy Solutions and former deputy secretary of the state Department of Health and Human Services, said it remains to be seen whether United’s arrival will translate into more options for the state’s rural and other underserved populations.
United has not yet identified which counties it will serve or, like Coventry, what its rates will be for 2015. BCBSNC has said it will raise its rates to compensate for the large number of high-risk enrollees who signed up for insurance on the exchange in 2014.
Feezor speculated United’s prices could be lower than the other two carriers, reflecting their status on the exchange as a newcomer and their need to quickly grow their exchange provider network.
He sees United as likely operating in New Hanover County and in the Asheville area, where the company has large-group commercial accounts. Otherwise, United will be working feverishly to “leverage existing relationships with insurance brokers and benefits consultants, for example,” he said.
“That suggests the competition and pricing on the exchange will be an interesting dynamic to watch,” Feezor added.
For the next few months, citizens and policy experts alike will continue to watch for word about Medicaid expansion, insurance rates and whether subsidies will remain an option on federally run exchanges.
While some states with Republican governors, like Oklahoma, that did not expand Medicaid entertain the notion of expanding the health program in some way for low-income individuals, North Carolina’s Republican leadership remains firmly against program expansion, another wrinkle that affects the health futures of North Carolina’s underserved populations.
“As lawyers, we typically do not like tea leaf reading,” Perkins said. “You can’t know the future. But NHeLP’s well-educated guess, based on 40 years of appellate court advocacy, is that the D.C. Circuit Court will vacate the 2-1 decision and there will be two federal circuit court decisions upholding the availability of subsidies for all Americans.”
“However, we’ve been surprised before,” she added.