How Will Republican States Handle the Latest Obamacare-Killing Lawsuit?

Thirty-six states could pre-empt a decision that would kick people off health care. They probably won't do it.

Progressives hardly needed another dose of panic this week. They got it anyway, when the Supreme Court confirmed that it would review King v. Burwell, a lawsuit that challenges the legality of Affordable Care Act subsidies in states that did not set up their own health care exchanges. My colleague Greg Stohr has explained the background, and plenty of commentators have worked through the logic of the case. But nobody disputes that the decision to take this up puts the law at risk. Every one of the libertarian-minded attorneys who argued against the subsidies figured that the conservative Roberts court was more likely to strike down the subsidies than the D.C. circuit, recently filled out with Obama appointees, and apparently ready to side with the government in the companion Halbig case.

What worries liberals, as much as a loss, is that the record number of Republican state legislators elected this week would use a King decision to destroy Obamacare. That's really been the point of this case and Halbig. In 2010 and 2011, Michael Cannon—now one of the legal minds behind this suit—dropped into swing states and red states and begged for legislators not to build exchanges. If they did so, they would be enshrining Obamacare; if they did not, they would increase the chance of the law collapsing. Cannon did this long before there was a chance of actually ripping subsidies away from the states that punted on exchanges, as did Americans for Prosperity. They have something else in common now, a confidence that the end of subsidies would not push states to set up exchanges.

"It would be imprudent to do that now," said Americans for Prosperity president Tim Phillips in an interview, "It would be imprudent to take an action based on what the Supreme Court may or may not do. We strongly oppose states setting up these exchanges, and the main reason is that Obamacare so dictates the terms of exchange at any level. If you set one up, you’re stuck following the thousands of mandates that Obamacare puts forward."

Phillips was proud that AFP worked in the states -- when few media outlets were paying attention to stop the exchanges. "I’m glad we did it," he said. "It was an important thing to do. We did not do it for partisan reasons."

But any decent map of America, and of the 2014 results, shows that the 36 states that declined to set up their own exchanges are run by people inclined to kill Obamacare. Of those 36, only seven will have Democratic governors in 2015. (Alaska is likely to have an independent governor, unless late ballots reverse the results of its election.) Only one state, Delaware, has a Democratic governor and legislature.

If libertarians won King, and 7.6 million people suddenly found themselves with unaffordable, subsidy-free health plans, the remaining 35 state legislatures would face a choice. Could they vote to build exchanges or, as Nicholas Bagley suggests, create a new office that contracts with the federal exchange?

They could. Alternatively, they could take this chance to obliterate Obamacare and blame the problems not on the court, but on the Democrats of 2009 and 2010 who left contradictory language in their law. In the summer, when Halbig briefly triumphed, several Republican campaigns said the same thing -- that the decision was proof of a badly-written law that needed to be destroyed. Today, outgoing House Oversight chairman Darrell Issa crowed that "the sloppy and rushed nature of the process that created the health law is rightly catching up to it." A cynic might find a contradiction between the idea that the law was "sloppily written" and that the Supreme Court must find that Congress intended to embed it with a self-destruct button.

Before it's here, it's on the Bloomberg Terminal.