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Scott Walker won't fix Obamacare, but he will take credit for it

Scott Walker is threatening to cut off Obamacare subsidies in his state, while boasting how he's used the same subsidies to reduce the uninsured.

If you want a taste of how confusing the political fallout of King v. Burwell will be if the Supreme Court knocks out some of the subsidies available under the Affordable Care Act, Wisconsin Gov. Scott Walker has you covered. In the run-up the court's imminent decision, the likely 2016 contender is threatening to cut off Obamacare benefits in his state while boasting how he's used the same benefits to reduce the uninsured. 

In an op-ed for CNN, Walker announced on Wednesday that he will not move Wisconsin to its own state exchange if subsidies available under the federal exchange are struck down, instead calling on Congress to solve the problem. Absent a fix from Congress, that means hiking premiums on roughly 166,000 Wisconsin residents and setting the state's individual insurance market on fire for subsidy recipients and non-recipients alike. The court could rule on the case as early as Thursday. 

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"The decision will be a turning point," Walker wrote. "States didn't create this problem, Washington did. Governors across the country have been clear: If the Supreme Court strikes down the Obama executive overreach, we will not bail out Obama at the expense of the American people. We will not set up state exchanges under the rules of Obamacare."

Walker's position will score him some points with hard-line opponents of the law, who fear governors will bail out the health care law by rapidly adopting their own solutions to an anti-subsidy ruling before Republicans in Congress can try again to repeal it. But in the same op-ed, Walker did something odd: He bragged about how he used the Obamacare subsidies now on trial to offer more health coverage to low-income Wisconsin residents. 

"Wisconsin is the only state that didn't accept the Medicaid expansion funds and that has no gap in coverage, according to the Kaiser Family Foundation," Walker wrote. "For the first time in state history, everyone living in poverty has access to coverage."

How did Walker achieve this expanded coverage where other governors who turned down the Medicaid expansion failed? Short answer: Obamacare. Slightly longer answer: Obamacare subsidies and Wisconsin's unusually generous existing health law. 

The Affordable Care Act provides federal funding to expand Medicaid to cover low-income residents in all 50 states at up to 138% of the poverty line, but thanks to a 2012 Supreme Court ruling, governors are allowed to refuse the expansion and stick with their current Medicaid programs. Because the law didn't anticipate this change, there's a gap in coverage in many states for residents making less than the minimum income to qualify for Obamacare subsidies -- 100% of the federal poverty line -- but more than the maximum income to qualify for Medicaid in their state, which is often significantly lower. As a result, 4 million Americans are too rich for Medicaid and too poor to receive Obamacare subsidies to help pay their premiums. 

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Unlike other states, however, Wisconsin's Medicaid eligibility levels were even higher than the Affordable Care Act's when it passed: 200% of the federal poverty line. The catch was that the state couldn't afford to cover everyone who qualified, so for years a large number were left on a wait list. That is, until Obamacare came along. 

Wisconsin's unique Medicaid system gave Walker a unique opportunity. By moving the state's higher-income Medicaid applicants who qualified for Obamacare subsidies onto the federal exchange, he could reduce the wait list for poorer resident. This meant that thousands of newly insured residents would receive significant help from the federal government through the Affordable Care Act, but by avoiding the voluntary Medicaid expansion, Walker could keep his state's fingerprints off their checks. 

Walker obliquely hinted at this dilemma in the op-ed, noting that he was "forced to accept the confines of Obamacare" in crafting his approach. That undersells the role the subsidies -- which never would have existed without Obamacare --  played in his plan. Simply put, there's no way Walker's compromise solution works without those subsidies and the second a court strikes them down, his plan will cease functioning as a result.

As for a solution, Walker called on Congress and President Obama to "prevent millions from losing health insurance by acting to repeal and replace his failed experiment," but no such replacement exists at the moment. Much to the chagrin of conservative health wonks, Republicans have yet to find a consensus alternative to the law, let alone an alternative that would continue the subsidies Walker used to carry out his plan. Repealing the law would kick 19 million people off insurance in the first year, according to the Congressional Budget Office. 

Walker can sell himself as a crusader in the war to repeal Obamacare benefits. He can sell himself as a populist reformer who uses the same benefits to combat poverty. It takes some serious twisting to do both at the same time.