Earlier this month, North Carolina Governor Pat McCrory signed Senate Bill 4 (S4).

S4 is an “Act (1) to Clarify the State’s Intent not to operate a state-run or “partnership” health benefit exchange, (2) to provide that future medicaid eligibility determinations will be made by the state rather than the federally facilitated exchange, and (3) to reject the affordable care act’s optional medicaid expansion.”

It passed the Senate by a vote of 32-17 and the House by a vote of 75-42.

As Michael Cannon, director of health policy studies at the Cato Institute, has reported in detail in a new paper on the subject, States rejecting the creation of exchanges and the expansion of medicaid are two linchpins that can bring Obamacare to its demise.

The Patient Protection and Affordable Care Act (PPACA) itself empowers states to block the employer mandate, to exempt many of their low- and middle-income taxpayers from the individual mandate, and to reduce federal deficit spending, simply by not establishing a health insurance “exchange.” Supporters of the law do not care for this feature, yet they adopted it because they had no choice. The bill would not have become law without it.  (see 50 Vetoes: How States Can Stop the Obama Health Care Law)


While a flurry of republican governors initially said that they would not implement the exchanges, an increasing number have changed their minds and are moving ahead with implementation.  That’s why the legislative approach taken in North Carolina is crucial.  S4 protects the people of North Carolina from having to rely on the whims of a single politician – who could obviously be a different person in a few short years.


The new law, which takes effect immediately, first addresses exchanges.  It states, in part:

No department, agency, or institution of this State shall enter into any contracts or commit any resources for the provision of any services related to the federally facilitated Health Benefit Exchange under a “Partnership” Exchange model, except as authorized by the General Assembly. No department, agency, or institution of this State shall take any actions not authorized by the General Assembly toward the formation of a State-run Health Benefit Exchange.

In other words, there will be NO state run or even a partnership exchange in North Carolina unless the General Assembly reconvenes and passes another bill that authorizes it.  This creates a situation in North Carolina that’s almost – in practice – as good as if that particular language wasn’t in the bill (“except as authorized by the General Assembly”).  Why?  Because without it, the same situation would be the case – the Assembly could pass a new law, repealing S4, and then go forward to pass another authorizing the exchange.  The only step removed under the law just passed is the need to repeal the newly-passed law first.

And while the federal government can still come in and run the exchange itself, it certainly doesn’t have the manpower or the resources to do this everywhere.  When a critical mass of states refuse to create these exchanges, the entire system will be highly vulnerable to failure.

The new law in North Carolina also bans the expansion of Medicaid:

The State will not expand the State’s Medicaid eligibility under the Medicaid expansion provided in the Affordable Care Act, P.L. 111-148, as amended, for which the enforcement was ruled unconstitutional by the U.S. Supreme Court in National Federation of Independent Business, et al. v. Sebelius, Secretary of Health and Human Services, et al., 132 S. Ct. 2566 (2012). No department, agency, or institution of this State shall attempt to expand the Medicaid eligibility standards provided in S.L. 2011-145, as amended, or elsewhere in State law, unless directed to do so by the General Assembly

It does, however, include a provision which creates a mechanism whereby the NC FAST program would be ABLE to “develop” and “provide” Medicaid eligibility determination requirements for a Federally-run exchange – should the Feds ever be able to get them set up.  This does open the door for a very low-level of cooperation, but it’s not enough to keep the Obamacare house of cards afloat if a critical mass of states do the same.  The fact of the matter is this – state operation of the exchanges and the medicaid expansion are both critical to the success of implementing Obamacare.

Michael Cannon summed it up like this: It is no exaggeration to say that by refusing to implement Exchanges and the Medicaid expansion, states can force Congress to reopen the PPACA

As of now, both the State Exchange and the Medicaid expansion are dead in North Carolina.


If you would like to see model legislation to introduce in your state to nullify state health care exchanges, please see The Tenth Amendment Center’s Model Legislation: Model Legislation: Nullify Obamacare in 4 Steps

Track the status of federal health care nullification legislation in states around the country HERE

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