Update: The Supreme Court ruled Thursday morning that people who receive health insurance through the federal government’s exchange are still eligible for tax subsidies to help pay for the insurance. The court sided with the Obama administration in a 6-3 ruling, with Chief Justice John Roberts writing the opinion. New story coming soon.
The Supreme Court could rule as soon as Thursday in King v. Burwell, the landmark case that could gut the Affordable Care Act by cutting off subsidies and making health care unaffordable for millions of Americans in states that have not set up their own insurance exchanges. The human impact of the ruling is the main story, but a win in court by the challengers would drop a political bomb on the 2016 presidential field and Congress like nothing we’ve seen so far this election cycle. How candidates respond could define the parties in 2016 and beyond.
RELATED: SCOTUS upholds Obamacare subsidies
An estimated 6.4 million people in 34 states who bought insurance on the federal exchange because their states refused to set up their own exchange could be cut off from subsidies. Not only will those people face higher immediate costs, but the problems will get worse from there as healthier customers drop their insurance first in response to subsidy cutoff, leading to major premium increases across the board as risk pools become sicker and more expensive.
Some of the most affected states are presidential battlegrounds and home to one or more presidential contenders. More than 1.3 million Florida residents receive insurance subsidies, for example, along with 161,000 in Ohio, and another 166,000 in Wisconsin. Republican Govs. Scott Walker of Wisconsin and John Kasich of Ohio, both exploring presidential runs, would immediately face pressure to create state exchanges that would preserve the subsidies while Congress figured out its response. In an op-ed for CNN on Wednesday, Walker indicated he would allow the subsidies to end and await a solution in Washington even as he took credit for a coverage expansion enabled by the same subsidies.
Republican Sens. Marco Rubio of Florida, Ted Cruz of Texas and Lindsey Graham of South Carolina would face intense scrutiny at home from their constituents as they manage the response on Capitol Hill. Kentucky Sen. Rand Paul might have a little more political leeway as his state operates its own exchange, but the amount of national attention to the health care crisis would dwarf anything that has come so far in the campaign.
Republican critics of the law are both excited about the possibility of derailing Obamacare and terrified of the responsibility that a meltdown of the individual insurance market in dozens of states would entail. A number of prominent Republicans, especially those facing re-election in swing states, have expressed concern that they’ll be accused of denying health care to sick Americans if Congress doesn’t find a way to at least temporarily keep subsidies flowing.
“It is easy to imagine the advertising campaign that will promote [Obama’s] simple solutions and viciously attack any opposition,” Sen. Ron Johnson (R-Wis.), one of the most endangered incumbents next year, wrote in a Wall Street Journal op-ed proposing extending subsidies through 2016 in exchange for ending law’s individual and employer mandates. “Heart-wrenching examples of Americans who have benefited from Obamacare—and there are millions who have, through taxpayer subsidies—will flood every TV channel.”
Democrats from President Obama to Hillary Clinton are expected to argue – accurately – that the entire issue could be resolved with an easy-to-understand, one-page bill clarifying that federal exchanges and state exchanges alike are eligible for Obamacare subsidies. The only thing standing in the way of an immediate and permanent return to normalcy would be a ruthless campaign by Republicans designed to undermine Obama’s signature law by holding Americans’ health care hostage.
Republicans, by contrast, would have to explain why the Affordable Care Act must be repealed, replaced or overhauled entirely in light of the decision. As of now there’s no consensus in the party, despite years of failed attempts to reach one, on a permanent alternative to the law. Unless one develops fast, the argument will likely be between a Democratic chorus singing in unison and an atonal cacophony on the other side. This dynamic has even some longtime critics of the law, like columnists Peter Suderman and Ramesh Ponnuru, in the dumps about the GOP’s likely response.
The best scenario for Republicans is that Americans throw their hands up and chock the problem up as another flaw in Obamacare, rather than the product of a deliberate conservative legal campaign to sabotage the law, or Republicans’ refusal to accept a simple fix. But there’s an important trend that could make that turn less likely – the law has been growing more popular as its broad goal of insuring more Americans proves successful and hiccups like the botched rollout of its website fade from memory.
A CBS News/New York Times poll this week found for the first time that more Americans liked the law than disliked it, signaling their approval by a 47-44 margin. This isn’t the same environment as the 2013 shutdown fight over Obamacare, where both the law and Obama were at their low point in the polls, and Democrats still managed to win over the public. Not only that, respondents by a whopping 70-22 margin said the Supreme Court should allow the federal government to continue handing out subsidies unimpeded.Awareness of the court case is low compared to where it would be after the court’s decision, but it’s clear from the CBS poll and other surveys that Americans instinctively dislike King v. Burwell’s implications. A Kaiser poll this month found 60% of respondents would want Congress to act to restore subsidies if the suit succeeds, versus just 26% who said they should do noting.
House and Senate GOP leaders read the same polls and agree with Johnson that they need to deflect immediate blame regarding subsidies by passing a temporary measure to preserve the subsidies. Obama would almost certainly veto any bill that made significant changes to the law, however, and it’s unclear whether Republicans would cave (at least until after the election) or dig in for an extended standoff as insurance markets collapse around the country.
Even before they get to that point, Republicans would have a more immediate problem – many influential conservatives are likely to oppose any temporary extension of subsidies or any tweaks to the law that fall short of total erasure. Jim DeMint, the former South Carolina Republican senator and current president of the Heritage Foundation, came out hard on the issue Tuesday with an op-ed in The Washington Examiner titled “Let the subsidies die.” Ken Cuccinelli, president of the Senate Conservatives Fund, is threatening primary challenges against Republicans who extend the subsidies rather than “fight for full repeal.”
You can expect these divisions to spread to the Republican presidential field, where candidates will be torn between hard-line opponents of the law and voters – in some cases their own constituents – begging for immediate relief.
So far they’ve mostly kept their responses close to the vest – only Louisiana Gov. Bobby Jindal and Cruz have offered full-scale health care laws, each of which would cover significantly fewer Americans than the Affordable Care Act. Former Florida Gov. Jeb Bush has only said Republicans need to be ready with a replacement. Rubio, who signed onto an amicus brief with Cruz in support of the King lawsuit, has pledged on his website to “provide an off-ramp for our people to escape this law without losing their insurance” if the court cuts off subsidies.
Cruz, however, is already distancing himself from attempts to keep the subsidies running. If he gains traction, he could keep the field pinned to the right and spook Republicans in Washington and in individual states out of stopgap solutions.
“In a perfect world, we would take that opportunity to repeal Obamacare,” Cruz told Politico this month. “At a minimum, we should allow states to opt out.”
Up to this point, Republicans have had the luxury of attributing all woes in health care – old or new, real or imagined – to Obamacare’s sweeping overhaul of the system. But if the Supreme Court mortally damages the law, 2016 contenders, and especially Republicans in Congress, will have to grapple with the real trade-offs involved in crafting a replacement or grafting a fix onto the existing law in an environment where large swaths of Americans suddenly face huge hikes in their insurance premiums.
One problem right off the bat is the cost: As the Congressional Budget Office found this week, undoing the Affordable Care Act would add $353 billion to the deficit over the next decade. Republicans are loath to craft an alternative that raises similar amounts of revenue, which in turn limits their ability to offer direct financial aid to Americans seeking to purchase coverage – and repeal would cut 19 million Americans off from insurance in the very first year alone.
The margin for error is low. If Republicans in Washington and on the presidential trail can’t agree on a consensus fix or force Democrats to surrender major concessions early on, then the party’s dysfunction in the face of crisis will quickly become the main political story. At the end of the day, the greatest victory for the GOP might be if the court rules the subsidies legal after all.