John Hood says legislators and the Governor have secret reasons to reject Obamacare

It is safe to assume that John Hood, president of the John Locke Foundation, has easy access to Gov. Pat McCrory and legislative leaders in Raleigh. That means he has more insight than the rest of us into what motivates Republican lawmakers. That is why I found his column today interesting.

Hood explains to the rest of us why Republicans rejected a health benefits exchange and the Medicaid expansion. Just to be technically correct, the legislature did not reject a state exchange this session. It’s too late to set up a state exchange for 2014. Instead, they decided to surrender state functions we are already performing to the federal government. Now back to the point of this post. Hood says the reason Gov. McCrory and the legislature do not want a state exchange is because they buy into a slightly wacky legal theory pushed by the Cato Institute that says in a federal exchange people can’t get subsidies and the employer and individual penalties don’t apply.

Let’s set aside the legal reasoning here. Most lawyers reject this idea, but with our current Supreme Court I don’t take anything for granted.

What is more intriguing about the column is that virtually no Republican has ever mentioned this reason for rejecting the exchange. I watched every minute of debate in the House and Senate on the “No Exchange/No Medicaid” bill. I’ve listened to every public pronouncement on the issue from House and Senate leaders. I’ve read everything I could find that legislators wrote or said in newspapers regarding the exchange and Medicaid expansion. I have spoken to many Republican lawmakers about the bill. The only time the Cato reasoning was mentioned was once, and then only obliquely, by Sen. Brown during debate on the Senate floor.

During debate and in press conferences and in letters to the editor and in a memo released by Gov. McCrory the reasons for rejecting an exchange and Medicaid include: too many stifling regulations from Washington, we don’t have the infrastructure in place, Medicaid will crowd out private insurance, Medicaid in North Carolina is broken, Washington is engaging in a bait and switch, and something about gas prices and quantitative easing.

The motivations given by Hood are not among the public explanations given by legislators. So, we should ask: is Hood right about the motivations of McCrory and the legislature? If so, why are they hiding their real reasons for rejecting Obamacare? Don’t we deserve a public debate on these issues?

If Republicans are rushing the “Obamacare rejection” through the legislature because they know the move is unpopular now, wait and see what happens if the Supreme Court says people can’t get subsidies on a federal exchange. If you are the 55-year-old head of a household making $80,000, that would mean your insurance premiums in 2014 would shoot up from about $7,600 per year to $20,000 per year. All of this because of a decision by your state legislator and governor.

I don’t doubt Hood is right. But if he is then the General Assembly and the Governor need to be more honest about their intent.


  1. John Hood

    February 15, 2013 at 9:38 am

    Adam, if you are familiar with Sen. Berger’s statements, the online petition, and the media coverage about it, then you ought to be more familiar with the argument that state and federal exchanges have different tax implications. That was one of his points: that rejecting the state exchange would protect against “government-forced insurance” and “billions in new taxes on businesses and the people of North Carolina.” We can disagree about whether Cato’s legal claim is valid, and I state in the piece that if the claim is unsuccessful in court, NC may well revisit the issue. The argument may prove to be incorrect. But let’s not pretend it’s a new or secret one.

  2. Doug

    February 15, 2013 at 9:59 am

    John, if they had not presented the article that way it would not have served the purpose of fear mongering this blog excels at.

  3. Rip

    February 15, 2013 at 10:00 am

    It’s hard to hide the truth, but anyway it’s all about taxes, but rarely about the welfare of the people….

  4. Adam Linker

    February 15, 2013 at 10:05 am

    John, Sen. Berger’s office has declined to explain to the press the reasoning behind the claims in his petition so how could the rest of us know that’s what he meant? Indeed, after all of the debate and all of the press conferences the Cato theory has never been explicitly mentioned or explained. It is, therefore, quite reasonable to say it is new and/or secret. This line of reasoning would open a public debate about Republican leaders attempting to deny subsidies to 600,000 people in the health exchange. If that is what they want to do we should talk about it. Instead, it has never been mentioned.

  5. Adam Linker

    February 15, 2013 at 10:37 am

    Also, on the floor Sen. Apodaca said we don’t need to expand Medicaid because people in NC will get subsidies in the federal exchange down to 100 percent FPL. That directly contradicts the idea that he is motivated by avoiding penalties and subsidies by opting for a federal exchange.

  6. John Hood

    February 15, 2013 at 11:16 am

    Adam, really. Did you read my column? I talked about the same issue. (In fact, the column is mostly about the Medicaid piece, not the exchange piece.) The inconsistency lies in how the law was originally written. A series of if-then statements in response to the original mistake is not inconsistency. It is a policy for coping with a mess imposed by Washington. If it turns out that federal exchanges don’t allow for taxes and tax credits, the entire law will obviously have to be rewritten, anyway, and thank goodness. If not, then the federal exchange will allow for subsidized private coverage down to 100% of poverty, which many of us prefer to Medicaid coverage for that population. The problem then becomes how to address the problem of poor people ineligible for current Medicaid. Perhaps the Obama administration will get its act together and do what the governors originally suggested. Or perhaps a future president and Congress will pass something more reasonable. Here’s hoping.

  7. Adam Linker

    February 15, 2013 at 12:35 pm

    Indeed, I read your column. I’m not saying you were inconsistent at all. I’m saying the context of Sen. Apodaca’s comment was inconsistent with the idea that people will be denied subsidies in a federal exchange. I suspect, because you write about many issues, you did not closely follow all of the committee and floor debates on this particular bill.

    We could go back and forth all day. My only point is that if Republicans are basing their vote on the Cato theory then they should say so. They have not. Sen. Berger was given a chance to explain when reporters called about his petition. Legislators had many opportunities to talk about this idea of blocking subsidies in the federal exchange. It has just never come up.

    By the way, I think if the Cato idea prevailed it would speed the adoption of state exchanges. But that’s just speculation on my part.

  8. Adam Searing

    February 15, 2013 at 2:41 pm

    I loved all the GOP comments during the debate about how much they really, really care about the poor, but now just isn’t the right time even for a 100% federally-funded Medicaid expansion. Haven’t seen anything from the GOP in NC for last 15 years I’ve been doing this that was a plan to make sure poor people in NC get decent health coverage. Guess I missed that one too somehow.

  9. david esmay

    February 15, 2013 at 8:34 pm

    Doug, fear mongering and astroturfing are the domain of the Right.

  10. Dick

    February 18, 2013 at 6:50 pm


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