By Phil Gramm
On March 4 the Supreme Court will hear oral arguments in King v. Burwell, with a decision expected in late June. If the court strikes down the payment of government subsidies to those who bought health insurance on the federal exchange, Republicans will at last have a real opportunity to amend ObamaCare. Doing so, however, will be politically perilous.
The language of the Affordable Care Act states that subsidies should only be paid through state exchanges. The bill’s authors perhaps believed that pressure from citizens and the health-care providers who would benefit would entice states to set up exchanges. But, faced with mounting technical problems in setting up the exchanges, the Obama administration decided—legally or illegally—to allow subsidies to be paid through a federally run exchange. Therefore, political pressure that might have convinced states to set up exchanges never developed.
The political pressures to set up state exchanges if federal subsidies are now struck down will be enormous. The Kaiser Family Foundation used Congressional Budget Office data to estimate that 13 million people will receive subsidies in 2016 through the federal exchange. If the Supreme Court strikes down these subsidies, 13 million people would lose an average of $4,700 a year, and health-care providers would certainly fight to protect some $60 billion a year in subsidies.
The president’s most likely response to an adverse court decision would be to refuse to work with Congress to fix ObamaCare. Instead he will likely mount an effort to force the 37 states now using the federal exchange to set up state exchanges to qualify for the subsidies. His administration could make it easy for states to continue to use the federal exchange while nominally taking ownership through a shell state entity. Ten states already have some form of partnership with the federal exchange.