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Supreme Court’s King v. Burwell decision could give GOP opening to rewrite Obamacare

A ruling against the government would mean millions lose health insurance subsidies and give Republicans, led by Rep. John Kline, the best leverage they’ve had in years to make changes to the Affordable Care Act.

A finding against the government in King v. Burwell will force Congress to act.
REUTERS/Carlos Barria

WASHINGTON — Sometime in the next week, the U.S. Supreme Court is expected to hand down its ruling on the most substantive legal challenge to Obamacare in years. In King v. Burwell, the court will decide whether language in the Affordable Care Act prohibits the federal government from providing insurance subsidies to consumers in states that use the federally-run exchange instead of state-created exchanges.

Thirteen states — including Minnesota — have set up their own exchanges, while consumers in 34 states — which are mostly Republican-run and concentrated in the South and Midwest — rely on the federal marketplace.

It all hinges on one sentence in the ACA, which reads that tax credits for low-income health care consumers will be available through exchanges “established by the State.” The plaintiffs — four Virginia residents — argue that the language doesn’t provide for extension of subsidies to the federally-run exchanges, making them illegal. The government contends that the law clearly provides for that, and that Congress wouldn’t have written the law in any other way.

The stakes are huge: one the one hand, the court could rule that the government is correct, keeping the Affordable Care Act intact and depriving opponents of one of their best legal hopes for challenging the health care law.

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But if the court decides that the federal government can’t provide subsidies to individuals who obtained a plan through, millions of people would lose these supports — and possibly their ability to afford health insurance. It’s unclear exactly how many people would be affected — most estimates range from roughly 6 million to as many as 9 million.

For Minnesota, at least in the short term, a ruling striking down the federal subsidies would have little effect: because Minnesota built its own exchange, consumers’ subsidies aren’t at risk.

But with the threat of millions of Americans nationwide losing health insurance subsidies they had counted upon, a ruling against the government will force the Republican-controlled Congress to act. And given the GOP’s long history of opposition to the health law — a Republican controlled House has voted at least three times to completely repeal the law since its passage — the changes made to the health law will extend well beyond the narrow question of who receives subsidies.

Kline sees opportunity to rewrite health law

Second District Rep. John Kline, as chair of the House Committee on Education and the Workforce, is one of the select few legislators charged with crafting the GOP’s response in the event of a ruling against the government,  along with Ways and Means Committee Chairman Paul Ryan, R-Wisconsin, and Energy and Commerce Committee Chair Fred Upton, R-Michigan.

Since the Supreme Court’s ruling on King v. Burwell is still pending, the group has hasn’t released any specific plans. But most observers believe the GOP would temporarily extend subsidies for some period of time in order to ensure that millions of Americans’ insurance premiums don’t skyrocket overnight.

In the longer term, the simplest fix to address the complaint in King would be to add a sentence that’d clear up the subsidy confusion — clarifying that subsidies could flow to consumers in exchanges “established by the State” as well as those established by the federal government.

But Republicans, who have campaigned against Obamacare since it passed in 2010, don’t want to let this opportunity slip away without getting more fundamental changes to the health law.

In a Wall Street Journal op-ed written earlier this year, Kline, Ryan, and Upton repudiated Obamacare and broadly outlined what the GOP might send to the president’s desk in return for extending subsidies. They seem to accept King’s arguments: “the Internal Revenue Service handed out subsidies to people on both the federal and state exchanges,” they write. “This blatant disregard for the law has put millions on the hook, because if you received a subsidy and lose it because of the administration’s illegal actions, you’ll face big insurance bills you can’t afford.”

To correct what they call an illegal move, the GOP chairmen say their plan-in-progress would include the removal of Obamacare’s defining element: the individual and employer mandates to have health insurance. “Our proposal will also allow participating states to opt out of ObamaCare’s burdensome individual and employer mandates, allowing Americans to purchase the coverage they want,” they write. They also say that they’d plan to extend a flexible tax credit to consumers who lose subsidies in affected states.

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Political chicken

Despite the wonkiness of all of this, there’s an element of political gamesmanship here. The GOP knows that it must send Obama something he can sign — to ask him to get behind everything in that op-ed would be difficult. According to Fred Morrison, a law professor at the University of Minnesota, anything short of a simple one-sentence subsidies fix could hand the president some political ammunition. “Obama’s going to get on TV and say, for 8 million people who had their insurance taken away, it was the Republicans that did it,” he says.

Obama, though, will be under pressure to sign whatever comes to his desk, and Republicans are hammering their talking point that the White House has carelessly failed to develop a King plan B.

Observers on both sides agree, however, that the onus will be on Congress to fix the aftermath of the court’s decision. If the GOP is unable to agree on a single plan — which could be likely, given that other ideas will compete with the Ryan-Kline-Upton plan — it won’t look good.  And there’s also the Senate to consider, and Republicans in that chamber seem to be coalescing around a plan to extend subsidies through 2016 while striking the individual and employer insurance mandates, according to US News and World Report.

Replacing Obamacare

Still, Ryan and other GOP leaders have been clear that — any short-term deal notwithstanding — King would hugely advance the cause of an Obamacare replacement. In March, Ryan said the GOP would have an “immediate response” to a ruling in favor of King, adding that once they “deal with it…I fully intend on articulating what we ought to replace the whole thing with.”

The big question, then, is how quickly the GOP would move toward that system. Morrison says the GOP could extend subsidies until after the 2016 elections, buying them time to run on a more comprehensive ACA fix while avoiding potentially damaging political fallout.

The endgame for most strategies, though, hinges on the presidential elections. If a Republican moves into the White House in 2017, Congressional Republicans believe they will have a very favorable climate to move toward a full Obamacare repeal.

That isn’t to say they won’t face substantial opposition from Congressional Democrats. 5th District Rep. Keith Ellison dismissed the Republican alternatives in an interview with the Huffington Post. The GOP plan, he said, is to “go back to 1999…to the days when huge portions of our country were in a health care nightmare.”

Waiting on the court

Of course, most of these considerations go out the window if the court rules against King. In a statement, Ellison said he’s “optimistic the Supreme Court will do what’s right… and rule against the Republican-backed attempt to take health care away from millions of Americans.”

Conservatives and liberals are divided on how the court might rule — each side is bullish on their chances. Morrison agrees with Ellison, predicting that Chief Justice John Roberts will lead a charge on the court for a pro-government ruling.

The Supreme Court will hand down the decision on Thursday, Friday, or next Monday. Congress, however, begins its July 4th recess on Monday — meaning that a late ruling could delay a King response from Capitol Hill.