The Supreme Court’s decision in King v. Burwell, which was argued Wednesday, could have profound political and economic effects. As I write in the current issue of Bloomberg Businessweek, a court decision eliminating federal subsidies for 34 states under the Affordable Care Acts could lead to 9.6 million people losing their insurance and premiums skyrocketing for many more.
This could have a major impact on the presidential race, since the immediate imperative in the wake of such a ruling will be figuring out how to contain the fallout. Writing in the Wall Street Journal, Nebraska Senator Ben Sasse warns his GOP colleagues of the political nightmare they’ll face if they don’t have a plan to help people who lose their insurance: “Chemotherapy turned off for perhaps 12,000 people, dialysis going dark for 10,000. The horror stories will be real.”
Of the Republican presidential contenders, no one has more at stake than Wisconsin Governor Scott Walker. Led by Walker, Wisconsin declined the ACA’s Medicaid expansion and opted against creating a state-based exchange to provide access to health insurance, relying instead on the federal exchange. This means that should the court side with the King challenger, residents of Wisconsin and 33 other states will lose the subsidies that make their insurance affordable. If Congress doesn’t devise a fix—and let’s be real: it’s Congress—responsibility would fall to the states.
Walker isn’t the only presidential prospect facing this dilemma. Chris Christie would, too, since New Jersey also relies on federal exchanges. But Walker will be in a tougher spot because his own health-care plan also removed 83,000 people from BadgerCare (Wisconsin’s Medicaid program) and directed them to seek coverage the federal exchange. In Wisconsin, these people are called “transitioners,” since they’re transitioning into the private market. If you’re a Republican presidential hopeful trying to appeal to conservatives, pushing people out of a government program and into the private market is sure to be a hit.
However, while Walker himself wouldn’t emphasize this, his plan is built upon Obamacare. As he explained to Milwaukee Public Radio in 2013, the law’s subsidies are what allow him to move the transitioners off of Medicaid without leaving them no access to insurance: “You’re going to hear some detractors claim that moving people to the private market or to the exchanges isn’t affordable. I think most people would find it hard to imagine that with the tax subsidies, that $19 a month is somehow not affordable. I think it is.”
But if the court strikes down the subsidies and Congress doesn’t bail him out, Walker will find himself in an especially difficult position. He’ll have to come up with a way to help the roughly 185,000 Wisconsinites who will lose their subsidies. And in addition, he’ll be personally culpable for the 83,000 low-income transitioners who would not have been affected by a court decision had he left them on Medicaid, but would now lose their subsidies and probably their health insurance. “The success of his policy of transitioning adults off of BadgerCare is built on the existence of the ACA and the availability of those subsidies,” says Donna Friedsam, Researcher and Health Policy Programs Director at the University of Wisconsin Population Health Institute.
Two points worth noting: Friedsam also points out that Walker expanded Medicaid eligibility to a different group of childless adults who fall below the federal poverty line and weren’t previously covered (although he pointedly did not do it though the ACA). And he couldn’t possibly have foreseen—because no one did—that relying on a federal exchange, rather than a state exchange, might one day cost Wisconsinites billions in federal health-care subsidies and jeopardize their coverage.
If it does, Walker says he’ll count on Washington for a fix. But if none is forthcoming, the responsibility will be his. He has apparently ruled out creating a state exchange, but has not proposed any alternative. On Tuesday, a spokesperson said his staff was discussing the matter. Of course, the need for one may never arise. But if it does, Walker could quickly wind up as the Republican face of the crisis. Insurance is more expensive in Wisconsin than most other states, which may be why 90 percent of residents enrolled in coverage rely on federal subsidies, much higher than the national average. The pain of a court decision would be acutely felt—first by Wisconsinites, and then by Walker.