The GOP endgame on the Supreme Court’s upcoming Affordable Care Act decision has long been planned. The details vary, but the underlying plan is clear: If the law’s insurance subsidies are struck down in states using the federal exchange, Republicans will propose alternatives that gut the law, forcing President Obama to accept some sort of concessions in order to help the 6 million Americans whose insurance just became unaffordable.
All that assumes, however, that Obama will cave—or at least compromise. But what if the president decides he won’t give an inch?
Instead of striking a deal, Obama could take his case directly to the public, blaming Republicans for a lawsuit they supported taking health-insurance subsidies from millions, and insisting that they pass a bill to restore them with no strings attached.
The administration’s best-case scenario would obviously be a win in King v. Burwell, in which the plaintiffs are suing to block the IRS from handing out health insurance subsidies in the 34 states on the federal exchange, arguing that the law allows such subsidies to be granted only through state-run exchanges.
But while losing the case would wound the law, it wouldn’t destroy it. Instead, most of the consequences would be felt in Republican-controlled states, where governors and legislatures declined to set up state exchanges. In 16 states and the District of Columbia, the law would continue almost entirely unaffected.
When weighed against a total (or effective) repeal of the president’s signature legislative achievement—one he believes is an absolute necessity to fix a broken health-care system—that option doesn’t appear so bad for Obama, especially if he can convince the public that the subsidy mess is Republicans’ fault, and that they could fix it with ease.
As the country waits for word from its top nine justices, that’s the line of argument the president has adopted.
“Congress could fix this whole thing with a one-sentence provision,” Obama said at a press conference this month. That would presumably mean authorizing the subsidies in any exchange—state or federal.
The president would have to risk the humanitarian toll that even the temporary loss of subsidies would bring if Congress balks. But that—and corresponding public pressure for Republicans to act—might be the only leverage he has. The White House declined to comment on the record for this story.
“Frankly, there’s little incentive to go into that debate and relitigate everything that was debated over the series of years about the health-care law, when the fix could be very simple and avoid a lot of problems,” Ben LaBolt, a former Obama aide, told National Journal, saying that the 6 million affected Americans are going to want a quick fix.
“I’d be surprised if the White House strayed greatly from that solution,” he said.
To Obama’s advantage, the 16 states (at a minimum) that won’t be affected at all by a ruling against the administration are home to more than 111 million people. States such as Delaware and Pennsylvania already have said that they want to transition to a state-based exchange to protect their subsidies, meaning as many as 500,000 of their residents receiving aid won’t lose it. More states could follow, especially if the administration makes it as easy as possible for states to “establish” their own marketplace.
Or look at it another way: The Obama administration commonly cites 16 million as the number of people covered by the ACA. Even if 6 million lose their subsidies and therefore their coverage (at least a few would almost certainly find a way to pay without the subsidies), about 10 million Americans will still be insured through the law. The Medicaid expansion, the other big piece of its coverage expansion that more than half the states have adopted, would largely continue as is.
“The Medicaid expansion is still a huge deal, covering millions of people,” said Larry Levitt, vice president at the Kaiser Family Foundation, “and it could operate just fine in most places, even if the individual insurance market erupts into chaos.”
Beyond that, huge swaths of the law remain in place, regardless of how King is resolved. Young adults still could stay on their parents’ health plan until age 26, which the administration says has covered millions of people. Insurers still will have to meet the law’s requirements for how much of the premiums they receive are spent on actual care, a provision that the administration says has saved Americans billions of dollars in lower prices and rebates.
And nationally, the law’s ban on discrimination against people with preexisting conditions—as well as new requirements for the services that insurers must cover—would persist, though with a major complication: Without the subsidies, the financial penalty for failing to buy health insurance would not be enforced, causing a de-facto end to the individual mandate in those states. And as noted in the Supreme Court’s last major go-round with Obamacare, requiring insurers to cover people with preexisting conditions while not requiring healthy people to buy insurance could send the affected states’ individual insurance markets into a death spiral.
But despite the parts of the law that would remain intact, Republicans clearly see an opportunity, and they have signaled that they’ll want big concessions—repeal of the employer and individual mandates, a state opt-out option, among others—to even temporarily extended the subsidies post-SCOTUS. (The individual-mandate repeal in particular likely is a deal-breaker for the administration because the law can’t function without it.)
And if the Supreme Court rules against the law, Republican officials also will be under extreme pressure from conservative groups that have long called for a complete repeal of the law—and would be furious if their party surrendered its best leverage yet to do so.
So if they’re going to convince conservatives to back down, Obama and congressional Democrats need their narrative to stick, and they need to convince the GOP that they actually won’t give away big chunks of the law to get the subsidies restored. So over and over, they have emphasized the availability of an easy fix—either a one-sentence bill or the establishment of a state exchange by red states—and almost dared Republicans to do what nobody thinks they will.
“These conservative states that didn’t set up exchanges, my guess is their elected officials are going to have some real challenges trying to figure out how to meet the needs of their constituents,” Democratic Sen. Ron Wyden of Oregon said in an interview. “I think the first thing that will happen would be individuals in those states that didn’t have exchanges would go to a town hall meeting or a community forum and say, ‘How come we don’t?’”
The White House is pursuing a similar theme: “The fact is, in the unlikely event that there is an adverse ruling, the president has also been pretty clear that if Congress is actually serious about solving this problem, they could solve the problem in one day with a one-page bill,” White House press secretary Josh Earnest told reporters this week.
“But it’s pretty clear from those who have been quoted talking about this publicly—at least on the Republican side of the aisle—that their interest is not in trying to protect the critically important gains that have been enjoyed by millions of Americans across the country, but rather to dismantle them,” he continued. “And that is the publicly stated goal of any number of members of Congress.”
For all their rivals’ trying, Republicans have a ready-to-go narrative of their own, one that blames Obama and his fellow Democrats for passing a flawed law to begin with.
“This is entirely of the president’s making,” GOP Sen. Cory Gardner of Colorado said in an interview. (His state set up an exchange and wouldn’t be affected). “I think the American people are dissatisfied with Obamacare, and Congress has an obligation to act. We’ve said it from Day One that this is a bill that’s overly burdensome to the American people. We’ve watched as costs continue to increase. Now we’ll know whether or not the Court agrees that the president’s law is unlawful.”