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Feb 23

North Carolina Health Insurance Mandate May Be Eliminated

The North Carolina legislature and senate have approved a bill House Bill 2, called “Protect Health Care Freedom.” This bill is designed to weaken the well known “Patient Protection and Affordable Care Act” (PPACA) which was passed into law by the federal government in March of 2010. NC House Bill 2 would eliminate the penalty for those without health insurance in North Carolina. Many other states are currently pursuing similar legislation.

The purpose of the individual health insurance mandate penalty is to encourage more healthy individuals into the coverage pool. The effect of an influx of healthy new policy holders would be an overall reduction in the average monthly premiums for policy holders. Given the mandated policy benefits prescribed by the PPACA, according to Blue Cross Blue Shield policy premiums were already projected by health insurance companies to increase in 2014, when many of the provisions become effective. This increase would have been somewhat alleviated by federal insurance subsidies received when purchasing insurance through a state exchange for applicants whose annual income is less than 400% of the federal poverty level.

Allowing the optional purchase of health insurance will leave many uninsured out of the market, which will exacerbate the 2014 increase. One of the most powerful strategies contained in the PPACA, for restraining policy premium increases depends on including this population. Another important factor in the passing of House Bill 2 is the rate spread provision of the PPACA. The premium rate spread requires a minimum difference between the most expensive and least expensive policies issued by insurance companies. Statistically, older policy holders have higher health insurance premiums, and this provision will help decrease their rates. However, the effect on the opposite end of the spectrum is an increase in premiums for the young and healthy. The result will actually be a further decrease in incentive for young policy holders to have health insurance, driving even more away from the market.

Nationwide, the struggle will continue in many states. However, in North Carolina, policy makers have been halted as Governor Perdue vetoed NC House Bill 2 and explained with the following 3 reasons:
1.That the house bill is contradictory to the US Constitution because it is, “out of obeyance with federal laws.”
2.That 27 other states were already pursuing this measure, and doesn’t need North Carolinian resources.
3.That there are unintended consequences in the bill that would harm the children’s health insurance as part of the NC Medicaid program, undermines the requirement that motorists have coverage, and penalizes insured college students.

According to Blue Cross Blue Shield NC congress is currently considering if it has the votes required to override the Governor’s veto.

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