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How the Obamacare Subsidies Battle Could Play Out

Jonathan Bernstein is a Bloomberg View columnist. He taught political science at the University of Texas at San Antonio and DePauw University and wrote A Plain Blog About Politics.
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We don't know whether the Supreme Court's decision in the King case will be to take away subsidies for people who signed up for insurance through healthcare.gov, the Obamacare exchanges. But if that is what happens, the legislative politics of a fix are increasingly clear.

The case is about whether Congress did or didn't authorize the Affordable Care Act to contain the same set of subsidies for people in states using federally run exchanges as it does for those in states that run their own exchanges. If the court rules against the Obama administration, millions of people in more than half of the states will lose subsidies and may drop their insurance. Even worse, if healthy people flee (as is likely) and those with immediate medical needs remain, the markets in those states could collapse as insurance companies raise premiums to make up for the lost customers.

QuickTake Health Insurance Exchanges

So if Republicans win, they create an ugly mess. Moreover, it’s a mess that could be completely fixed with a one-page bill that would make clear that subsidies are available in all states.  But most Republicans don’t want to pass a one-page fix; the whole point of the suit was to create the mess.

What happens?

Republicans have already signaled (as the Plum Line’s Greg Sargent detailed) that their basic strategy will be to pass something combining the one-page fix (probably with a time limit set after the 2016 election) with some partial repeal of Obamacare, and then dare the president to veto it.

The first question is if they can even get that far. Few if any Democrats would vote for a bill that combines, say, the restoration of subsidies with the repeal of the individual mandate. Some Republicans, on the other hand, would prefer chaos, even if they take the blame, to anything that could be interpreted as support for (or, worse, “saving”) Obamacare. And then, as Karl Rove points out, even those who want to follow the hostage-taking strategy can't agree on the demands to make.

Suppose, however, that they manage to pass a measure, and Barack Obama vetoes it.

The question then becomes whether Republicans would prefer to back off and pass a “clean” subsidies extension -- one allowing subsidies to continue in all states and doing nothing else -- or to hold on and try to blame Obama for the chaos.

The outcome comes down to a simple question: Will Republicans consider a subsidies fix a “must-pass” bill? If so, they’ll back off and allow a simple fix through the 2016 election to pass, probably with mostly Democratic votes. That is, plenty of Republicans might be happy to have subsidies restored as long as they don’t have to vote for it.

Then again, Republicans may prefer to hold off and see what happens. They probably would lose the public opinion battle – after all, the president (who always has the bigger microphone) can wave around a one-page bill that would save the insurance of millions of people, while Republicans would have to argue that it’s the president’s fault because he wouldn’t sign their more complicated bill. They might not care, though.

We've seen similar cases in the last Congress: Republicans eventually decided to allow Superstorm Sandy relief and the Violence Against Women Act to pass, while they never permitted votes on a comprehensive immigration plan or on a bill prohibiting employer discrimination based on sexual orientation or identity. In each case, most Republicans wanted to oppose the measure in the event of a vote, though there were enough votes to pass it anyway. The question was whether enough Republicans wanted the legislation to pass while publicly voting "no." And they probably didn't know what they would do until the situation played out.

My guess is that if this does happen (the court may, and should, rule the administration has read the health-care law properly), Republicans would be under heavy pressure to allow a simple fix to pass, and would probably give in. But it's hardly certain.

  1. Specifically, it would eliminate the words "established by the state" at one point in the law. The King plaintiffs say those words in one clause mean that only state-run exchanges are eligible for subsidies; the administration maintains that read in the full context of the bill, they do no such thing. The Court will decide which is correct, but if those words are eliminated it wouldn't matter.

  2. A Republican majority (but not a filibuster-proof majority) in the Senate complicates matter further -- coordination becomes even more complicated -- but the basic situation is still the same.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Jonathan Bernstein at jbernstein62@bloomberg.net

To contact the editor on this story:
Max Berley at mberley@bloomberg.net