More than 400,000 in NC Keep Obamacare Subsidies

The U.S. Supreme Court has upheld the tax breaks for those who purchased health insurance through the federally-run exchange. The ruling allows more than 400,000 North Carolina residents to keep subsidies that help pay for their health insurance premiums.

The question at hand in King v. Burwell was whether a small line of text in the Affordable Care Act (ACA) prohibited the federal government from providing subsidies for health insurance to people in states without their own exchanges. North Carolina is among 34 such states. Duke University professor Don Taylor says more than half-a-million North Carolina residents purchased insurance through the ACA, and most of them are receiving the federal subsidies that were in question.

“Ninety-one percent of the North Carolinians have gotten a subsidy, and the average amount of that subsidy is about $315 a month,” Taylor said.

The Supreme Court ruled 6-3 to allow the federal subsidies to flow to all states, whether their exchange is state-run or not. Chief Justice Roberts, who ruled with the majority, said the line in question had to be read within the greater context of the ACA, which was to “improve health insurance markets.”

North Carolina Congressman David Price says he is relieved by the Court’s ruling on what he calls a “drafting error” in the ACA.

“It’s a very fortunate decision; it’s a common sense decision,” Price said. “And from what I’ve seen, Chief Justice Roberts’ reasoning in ruling this way reflects that. This is a matter of discerning Congress’ intent, despite this drafting error, and making sure that the nation doesn’t suffer the consequences of an overly literal focus on this one omission in the law.”

The ruling means more than 400,000 North Carolinians will keep their subsidies. It also puts an end to a serious threat to the future of Obamacare. Taylor says ending the federal subsidies would have forced many people to drop coverage and destabilized the entire health insurance exchange.

“If the healthy people flow out because the premiums go up, and you only have sick people left, then that’s called ‘death-spiral,’ and that insurance market is unsustainable,” Taylor said.

Now that the ACA is no longer threatened, Price says it’s important to shift focus to expanding Medicaid in the state. The U.S. Supreme Court’s 2012 ruling on the ACA allowed states to opt out of Medicaid expansion.

“It’s unfortunate that the Supreme Court left that loophole,” Price said. “It’s even more unfortunate, I think, that North Carolina and other states are taking advantage of the loophole to detriment of – in the case of our state – almost half-a-million people.”

Governor Pat McCrory has given no indication that he will call for Medicaid expansion. In a statement his office released Thursday, the Governor said quote “we must build a North Carolina-based reform plan that focuses on healthier patients at a cost taxpayers can afford.”

Student Loans Increase, Await Congress Decision

NORTH CAROLINA – On July 1, by Congress not making a decision to renew subsidies on federal student loans, they once again increased them from 3.4 percent to 6.8.

According to a report from NPR, the efforts to keep the rates from doubling on Subsidized Stafford loans—which account for roughly a quarter of all direct federal borrowing—fell apart amid partisan disagreement in the Senate before the July 4th holiday.

The change only affects new loans, not loans existing prior to the decision. Whether or not this change will be effective this coming school year is unclear; Congress could reconvene and take action on restoring the previous rates before it breaks again for the month of August.

Assistant Director for Financial Aid at UNC, Kristin Anthony, weighs in on how the change might affect UNC students.  While she is unhappy about the increase, she says the average student loan debt at UNC is already extremely low compared to the national average.

“The nationwide average of loan debt from a graduating senior ranges somewhere between $24- and $25,000, but here at Carolina, ours has always been roughly around $15,000,” says Anthony.

Anthony says she’s hopeful that Congress will soon work on legislation that would bring the interest rates down to the previous level, particularly before the coming school year in August.

The good news is that even though there are loans being made currently that are at the 6.8 percent interest rate, if in the near future Congress takes action to restore previous rates, the lower rates will be implemented on all loans made since July 1.

“We do have documentation that has come from the federal government that has indicated that whatever they do decide in the near future, that they will backdate it to July 1, 2013,” says Anthony.

As far as possibly affecting enrollment at UNC, Anthony says she’s confident the change won’t make a difference.

“I think that students may just take a greater interest in keeping their loans lower—instead of borrowing the maximum amounts they’re allowed to borrow, they may start to look at, ‘what do I actually need versus what do I want to take?’”

“I think Carolina still stays very attractive to students, especially with our cumulative debt for graduating seniors, versus others schools that they may compare that number to,” she says.