Democratic Gov. Roy Cooper began facing Friday what might be his most challenging veto decision of the 2019 session — even counting the state budget stalemate.

Cooper has until Aug. 26 to decide on Republican-sponsored and bipartisan-supported Senate Bill 86, which allows small businesses to use associations to obtain health-care plans.

Cooper’s office said he is reviewing the bill. He can sign it, issue a veto or let it become law in 10 days without his signature.

Bill supporters estimate that about 110,000 North Carolinians, or about 1% of the population, could benefit from signing up for an association health plan (AHP).

SB86 piggybacks on previous AHP legislation, such as permitting a grouping of employers in the same trade, industry or line of business in an AHP. Employers with up to 50 workers could qualify, and there must be at least 500 employees combined to qualify for an AHP.

The bill received significant bipartisan support, passing 32-9 in the Senate on Tuesday and 82-32 in the House on Aug. 7.

Still, there are expectations from both parties that Cooper will opt to veto the bill, whether because he disagrees with the coverage limitations placed in SB86 or due to his priority of extending Medicaid coverage to between 450,000 and 650,000 North Carolinians.

“I do expect the governor to veto this bill,” said Rep. Donny Lambeth, R-Forsyth, and a leading legislative health-care expert. “It is part of the health-care debate, and he has suggested it is part of the Medicaid issue.”

Sen. Joyce Krawiec, R-Forsyth, a co-sponsor of SB86, said Cooper “should not prevent these workers from receiving coverage because he wants to cover another group in Medicaid expansion. One has nothing to do with the other.”

“Even with expansion, this population will still have no coverage,” Krawiec said. “He is already holding the state hostage with his refusal to sign the budget. He should not hold small business ‘prisoner’ to his wishes.

“He knows signing SB86 is the right thing to do. He should do it,”

Vetoes

The governor has vetoed four bills this session, most prominently the Republican state budget compromise in House Bill 966.

Cooper has received written commitment from 51 of the 55 House Democrats that they will sustain his veto of the state budget. Sunday is Day 52 of the stalemate.

It has cost — at an estimated $42,000 a day — more than $1 million in taxpayer money to keep the General Assembly open for the 24 House floor sessions since Cooper issued his veto June 28. The House has not conducted a veto override vote since first placing it on the floor agenda July 8.

What’s different about SB86 compared with the four vetoed bills is the amount of Democratic support for SB86.

Republicans hold a 29-21 advantage in the Senate and a 65-55 advantage in the House. It takes one Democratic senator and seven Democratic House members to support a veto override to reach the required three-fifths majority if all members are present.

There were nine Democratic senators, including Forsyth County’s Paul Lowe, who voted for SB86, and 19 Democratic House members, including Forsyth’s Derwin Montgomery, approved the bill.

Rep. Pricey Harrison, D-Guilford, said Cooper may veto the bill because of its “bare-bones coverage” that doesn’t include Affordable Care Act’s essential health benefits.

Critics of AHPs say they giving small employers access to the flexibility of larger employers could lead to those plans opting out of providing 10 essential health-care benefits required in the federal marketplace under the ACA.

Those benefits are: ambulatory or outpatient services; emergency services; hospitalization; maternity and newborn care; behavioral health services; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services, and chronic disease management; and pediatric services, including oral and vision care.

Rep. Lee Zachary, R-Yadkin, whose district includes western Forsyth, said the lack of the essential benefits protections could prompt a Cooper veto. Bill co-sponsor Rep. Dan Bishop, R-Mecklenburg, said adding those protections was a non-starter for getting SB86 through the legislature.

“The bill did not solve all the problems employers have in providing insurance for their employees, but it would resolve some of the cost issues associated with employer provided plans,” Zachary said.

Requirements

The AHP has to be offered by a nonprofit with at least 500 members and having been in business for at least two years for reasons beyond providing insurance, such as a chamber of commerce or a trade group.

As an example, Krawiec cited the possibility of the Winston-Salem, Greensboro and High Point chambers of commerce joining forces to form an AHP.

Calvin McRae, director of government relations for the Winston-Salem chamber, recognized the legal hurdles facing AHPs in federal court.

SB86 would loosen the requirements for AHPs in North Carolina in response to federal Labor Department changes made in June 2018 by the Trump administration.

However, on March 28, a federal District Court judge struck down the final U.S. Labor ruling. U.S. Labor officials filed an appeal April 26.

On April 29, U.S. Labor said it would not enforce violations stemming from good faith reliance on the AHP rule’s validity, as long as businesses in an AHP meet their responsibilities to pay health benefit claims as promised.

“The federal appeals process could take years to adjudicate,” McRae said.

“However, these plans could be a great option for many folks who are stuck in the margins of health care. The Winston Salem Chamber is working with other chambers across the state to map out courses of action for either decision.”

Krawiec said “many small business owners would like to offer insurance coverage for their employees and simply can’t afford it.”

“This is an opportunity to cover thousands who work for small business and have no coverage. They make too much for subsidies but not enough for expensive premiums,” he said. “Realtors alone estimate 6,000 members will be able to obtain coverage.”

The votes

Harrison said that “I think there might be more support for a veto than the vote count represents.”

“Unless required to cover essential health benefits, there’s no guarantee that AHPs will offer good coverage just because large employers do,” Harrison said. “AHPs under SB86 can price out the old, sick and others in need of care by charging higher premiums to businesses based on gender, occupation, age, and geography.

“AHPs will not close the coverage gap, and they will increase premiums for ACA-compliant private coverage. Why not lower them with Medicaid expansion?”

Lowe said he voted for SB86 because “small businesses need access to health care, and this bill offers some advantages, which is better than nothing.”

Lowe cited a group of barbers that talked to him about forming an association “since Medicaid expansion wouldn’t cover them and their employees, and they don’t want to pay thousands of dollars for monthly health insurance premiums.”

However, Lowe said if it comes to a veto override, “I will support the governor. His office has told me to vote my conscience on this bill.”

Overriding a veto

Of the four vetoed bills, only one, Senate Bill 359 — titled “Born-alive abortion survivors protection Act” — has had an override attempt.

The bill cleared the Senate by a 30-20 vote April 15 with two Democrats supporting. It passed the House by a 65-49 vote with support of four Democrats.

After Cooper vetoed the bill April 18, the Senate overrode the veto by a 30-20 vote April 30.

House GOP leadership placed the veto override vote on the calendar on nine consecutive sessions before the override vote was taken June 5.

Even though the House voted 67-53 in favor of overriding the veto, it failed to achieve the three-fifths majority by three votes.

Sen. Don Davis, D-Pitt, was the lone Democratic vote in support of the SB359 veto override. He is among several eastern N.C. Democratic legislators being pressured to override the budget veto, included being enticed with funding for special projects in the budget.

Democratic Reps. Charles Graham of Robeson County and Garland Pierce of Hoke County voted in favor of the SB359 veto override, and they, too, are facing pressure on the budget veto override.

The other two vetoed bills — Senate Bill 320 (titled “Regional water systems and state grants”) and Senate Bill 392 (titled “Various state charter changes”) — have yet to be placed on each chambers’ agenda for a session override vote.

Cooper vetoed SB320 on Aug. 2 and SB392 on July 29. SB320 passed the House 63-54 and the Senate 23-22. SB392 passed the House 87-26 and the Senate 27-15.

Mitch Kokai, senior policy analyst with the Libertarian-leaning John Locke Foundation, said it is possible Cooper could “reject a standalone AHP bill if lawmakers do nothing to address his Medicaid proposal.”

Senate leader Phil Berger, R-Rockingham, addressed that possibility in a statement Tuesday in which he said Cooper “can choose to either sign the bill or veto it, blocking a way for thousands of small business owners and their employees throughout the state to access affordable health insurance.”

For and against

Two nonprofit advocacy groups, the N.C. Association of Health Underwriters and N.C. Realtors, have launched public-relations campaigns urging Cooper to sign SB86.

The health underwriters association represents more than 3,000 insurance agents, brokers and consultants.

“The adoption of enabling legislation for Association Health Plans will provide self-employed individuals, small business owners, and gig-economy workers and their families an affordable health insurance option,” the association said in a statement Wednesday. “Please know that SB86 is an appropriate, beneficial expansion of health insurance options for North Carolinians, as you have stated is an important goal of your administration.”

The Realtors association said that “as we have traveled across the state, we have consistently heard the challenges facing our members in retaining affordable health-care coverage.”

The association said it conducted a poll of its more than 45,000 members in June regarding AHPs.

“The data showed that 38% of members feel their (health insurance) coverage is getting worse, 68% have already had to make reductions in their coverage to keep premiums and deductibles affordable,” the group’s statement said. “No one in North Carolina should have to make the choice between their health and other necessities. We implore Governor Cooper to sign this bill.”

Meanwhile, the N.C. chapter of the March of Dimes said in a statement Friday that it opposes AHPs and SB86 enough to urge Cooper to veto it because of the absence of covering essential benefits.

“The March of Dimes believes that SB86 would hinder access to comprehensive health insurance and would weaken the insurance market for all North Carolinians. Chief among our concerns is that AHPs can exclude benefits like maternity care and may also set annual and lifetime spending caps for any of the essential health benefits not covered,” the group said.

“This type of skimpy coverage could be devastating for a family that has a premature baby or a child born with a birth defect.

“Our greatest fear is that these limits could prevent a mother or a baby from getting the treatment they need to live long and happy lives.

Looking ahead

Zagros Madjd-Sadjadi, an economics professor at Winston-Salem State University, said he understands why the governor would want the language in SB86 to be part of his Medicaid expansion-led health-care push.

“It is quite likely that the optics would look really bad for Democrats if they switched their support to sustain a veto (of SB86), and it will be hard for Cooper to veto it as well,” Madjd-Sadjadi said.

“The problem is that it is hard to say that you are for Medicaid expansion, but against AHPs, when AHPs will expand health coverage without a potential large cost hanging over you if the federal government reduces Medicaid expansion subsidies.

“I would place the likelihood that the AHP bill will become law at around 85% — quite probable but not a certainty given the fractious nature of politics nowadays in our state.”

Kokai said if the governor vetoes SB86, “it would be very easy for a Democrat to point to the governor’s veto message and say something along the lines of ‘Gov. Cooper brings up valid concerns I hadn’t considered.’ ”

“Cooper almost certainly would put pressure on Democratic legislators to stick with him,” he said. “It’s unclear whether Republican legislative leaders would be able to offer sufficient enticements to keep their Democratic colleagues from falling into line with their party leaders.”

John Dinan, a political science professor at Wake Forest University and a national expert on state legislatures, said the politics and debate surrounding the budget bill and a possible override of a veto of the budget “are very different from any other bills.”

“I wouldn’t see much connection between the fate of the budget bill and developments concerning a veto or veto override of any other bills,” he said.

Dinan, citing that a federal judge has blocked implementation of AHPs in other states, said “it may well be that the stakes are seen as somewhat low in terms of voting for or vetoing this bill, given that it is unclear when or even whether it could be implemented, as litigation works its way through federal courts.”

Get today’s top stories right in your inbox. Sign up for our daily morning newsletter.

rcraver@wsjournal.com 336-727-7376 @rcraverWSJ

Load comments