Obama’s Hardball Option to Save Obamacare

Republicans are hoping that a Supreme Court loss would force the president to make major concessions on his health care law, but that’s not a guarantee.

U.S. President Barack Obama speaks to members of the media during his last news conference of the year in the Brady Press Briefing Room at the White House December 19, 2014 in Washington, DC. President Obama faced questions on various topics including the changing of Cuba policy, the computer hack of Sony by North Korea, his executive action on immigration and his plan on working with a Republican majority Congress. (Photo by Chip Somodevilla/Getty Images)
National Journal
June 24, 2015, 4 p.m.

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.”

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