4 Scenarios for Republicans to Consider If Obamacare Subsidies End

If the Supreme Court rules Obamacare’s federal exchange subsidies are illegal, it’d be up to Republicans to save it.
Photograph By: Bloomberg/Getty Images

Today in bad news for the left: the Supreme Court announced Friday that it will hear arguments on the legality of Obamacare subsidies in states using the federal exchange. In other words, in June 2015 the court could rule that the subsidies used by millions of Americans to purchase health insurance are illegal. 

Vox has a great explainer on the specifics of this King v. Burwell, but here’s the short version: The case’s plaintiffs argue that the Affordable Care Act, as written, only authorizes federal subsidies for state-run exchanges, and the states that decided to use the federal exchange are not eligible. The administration argues that Congress’s intent was for all states to qualify for subsidies, something the actual drafters of the bill have repeated.

Obviously, this is worrying news for anyone who depends on these subsidies to pay for insurance, as well as people who will enroll in plans starting next week. But this also sets up a political question for the new Republican Congress, (mostly Republican) state governments, and President Obama.

The Supreme Court could rule in favor of the administration, just as the Fourth Circuit did when it ruled on the case in July. If not, a bipartisan Congress could easily pass a bill to resolve the issue on the legalities of the subsidies, or state governors and legislatures could decide to build state-run exchanges, whose subsidies are not up for debate. Another idea, GOP leaders would argue, is for Obama to just sign the bill to repeal Obamacare heading to his desk. Here are four scenarios.

1. The administration loses, and states act

No matter what happens, subsidies for plans purchased through state-run exchanges are legal. That means that states can decide to accept funds from the government and open up their own exchanges. 

Given that the GOP holds more governor seats and state legislatures (especially in states that didn’t build their own exchanges) this would end up being a test—do you accept funding from the government to build an exchange or let people lose the subsidies that make their plans affordable? Ohio’s Republican Governor John Kasich inadvertently answered this question a few weeks ago:

2. The administration loses, and Congress does nothing 

The new Republican Congress would be forced to answer a similar question. Congress could pass a bill to clear up the language of the Affordable Care Act, thereby preserving the subsidies, or it could…not. Given that the two leaders of the GOP Congress—Senate Minority Leader Mitch McConnell and Speaker of the House John Boehner—said in a Wall Street Journal op-ed this week that they are “renewing our commitment to repeal ObamaCare,” it seems a ruling against the administration would help them. It’s not hard to imagine Congress clamoring for repeal in the face of a decision against the administration while Obama asks for a bill.

3. The administration loses, and Congressional Republicans act

But maybe a new era of bipartisan compromise really is upon us. In this scenario, Congressional Republicans would use their power to save the health care law, help millions of Americans keep their subsidies, and force the Democrats to agree to something big in return. The question is whether Republicans want anything more than they want to repeal and replace the health care law.

4. The court rules in favor of the administration

It's hard to say what the court will decide—what we can reasonably assume is that at least four judges think the Fourth Circuit was wrong. As Nicholas Bagley at The Incidental Economist argued:

The justices who agree with King wouldn’t vote to grant. They would instead want to signal to their colleagues that, in their view, the IRS rule ought to be upheld. The justices who disagree with King would want to signal the opposite. […] the Court’s decision to grant King substantially increases the odds that the government will lose this case. 

The “don’t worry, Obamacare is safe” argument is that the Supreme Court already had a chance to decimate the law in 2012, but didn’t. Either way, a favorable ruling from the Supreme court is the ideal scenario for the administration. 

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