In June, the Supreme Court will issue another ruling on the Affordable Care Act, this time on the question of whether the ACA allows the federal government to subsidize insurance policies procured through the federal exchanges or only from state-created exchanges. Conservatives and Republicans are, publicly at least, universally in favor of a ruling denying subsidies on the federal exchange. But Republican legislators know that will put them in a real dilemma. Sahil Kapur explains why:
Many Republicans would view it as a dream come true if the Supreme Court were to slash a centerpiece of Obamacare by the end of June. But that dream could fade into a nightmare as the spotlight turns to the Republican Congress to fix the mayhem that could ensue.
“It’s an opportunity that we’ve failed at for two decades. We’ve not been particularly close to being on the same page on this subject for two decades,” said a congressional Republican health policy aide who was granted anonymity to speak candidly. “So this idea — we’re ready to go? Actually no, we’re not.”
Republican leaders recognize the dilemma. In King v. Burwell, they roundly claim the court ought to invalidate insurance subsidies in some three-dozen states, and that Congress must be ready with a response once they do. But conversations with more than a dozen GOP lawmakers and aides indicate that the party is nowhere close to a solution. Outside health policy experts consulted by the Republicans are also at odds on how the party should respond.
The party that has failed to unify behind an alternative to Obamacare for many years now has five months to reach an agreement. It’s an unenviable predicament, especially for the congressional Republicans leading the effort to devise a response — all of whom hail from states that could lose their subsidies.
So the key questions are this: What is good policy and what is good politics. In reality, they don’t have a good answer to either one. They see three options:
In an illustration of the depth of the struggle, Sen. Lindsey Graham (R-SC) told TPM he would support the old Wyden-Bennett health care plan from 2009 if the court guts the ACA. But there’s one problem: that bill has an individual mandate similar to Obamacare, making it a political death-sentence for GOP leaders.
Avik Roy, a conservative health care adviser, laid out the party’s options at the strategy meeting in Hershey: do nothing, work with Democrats to fix the law, or seize what he calls “their best opportunity to reform the health care system” and propose a serious conservative alternative.
Republicans don’t view the first two options as viable.
But the third isn’t viable either, not as policy or politics. They don’t have the votes to overcome a veto and they know it, which means they can’t depart too far from the ACA if they choose to try to throw out the ACA and pass a conservative alternative. And the “free market” reforms they might want to make would be terrible politics:
Roy’s preferred approach is to use a King ruling as basis to weaken Obamacare regulations and mandates. He proposes legislation to keep the federal subsidies for all states with one caveat: they can choose between setting up an Obamacare-style state exchange and a more deregulated exchange, potentially free of rules like forcing insurers to accept customers with pre-existing conditions or provide a minimum package of essential benefits.
Conservative policy wonks Jim Capretta and Yuval Levin disagree. They want the GOP to offer a more sweeping alternative that lets states opt out of Obamacare entirely, and lets insured Americans receive a federal “age-based credit” to buy health insurance allowed in their state. Obamacare mandates would no longer apply — people could buy comprehensive coverage or bare-bones catastrophic plans that the Affordable Care Act is phasing out.
“It would show voters that a better system is possible—and at a far lower cost—without ObamaCare’s punishing taxes, burdensome mandates and inept micromanagement,” Capretta and Levin wrote in the Wall Street Journal.
But even if that were true (and it isn’t), it would be wildly unpopular. The ACA has three requirements that are almost universally supported: Prevents insurance companies from rejecting someone due to preexisting conditions, prevents them from voiding someone’s insurance if their care becomes too expensive, and prevents them from setting lifetime caps on coverage. Any “free market” reform that voided those rules would, coupled with the fact that it would void millions of health insurance policies, be politically devastating for Republicans. The other options:
If offering a plan seems difficult, the GOP’s other options are even more fraught.
The “let it burn” option means doing nothing as millions of Americans in three dozen states lose their subsidies. Many of them would no longer be able to afford insurance or seek waivers. Insurers would be forced to raise prices as they lose younger, healthier customers — causing them to lose more customers. This is plausible in the near-term if Republicans fail to propose a viable alternative. But the “death spiral” would eventually compel a fix.
The second option means teaming up with Democrats to enact a legislative fix to make clear that the subsidies are available to Americans in all states. House Minority Whip Steny Hoyer (D-MD) last week told TPM that there should be a fix if the court rules against the government. But however strong the pressure, countervailing sentiments in the GOP base against Obamacare are likely too powerful to make it palatable.
Republicans also aren’t ready to call on their states to set up exchanges, likely because conservatives could attack that as supporting Obamacare. Asked about the prospect Sens. Jerry Moran (R-KS), Jeff Sessions (R-AL) and Alexander demurred. Each would face a situation where many of their constituents lose insurance subsidies and perhaps their coverage…
“Our guys feel like: King wins, game over, we win. No. In fact: King wins, they [the Obama administration and Democrats] hold a lot of high cards,” the congressional Republican health policy aide said. “And we hold what?”
Yep. This is the difference between political rhetoric and political reality.