How a ruling against Obamacare could leave both political parties in a bind

If the Supreme Court rules against the current implementation of subsidies, lawmakers on both sides of the aisle would be hard-pressed to forge a path  that would avoid leaving millions of Americans uncovered.

Jonathan Ernst/Reuters
Demonstrators in favor of Obamacare gather at the Supreme Court building in Washington Wednesday. The US Supreme Court will consider on Wednesday a second major legal attack on President Obama's healthcare law, with conservative challengers taking aim at a pivotal part of the statute that authorizes tax subsidies to help people afford insurance.

A Supreme Court case on Obamacare threatens to disrupt health insurance for millions of Americans – and in the process it might upend Washington politics as well.

A ruling in favor of the plaintiffs would create a volatile situation for both political parties. They’d need to collaborate on any federal fix, but they’d also be angling for position in the next battle – over whether health-care policy would move toward saving Obamacare or replacing it.

And in the process, both parties would be trying to avoid being blamed for any mess that ensues.

What’s at stake in court isn’t the whole of Obamacare, but it is an important piece. In the King v. Burwell case, opponents of Obamacare allege that the law’s federal subsidies to help people buy insurance extend only to states that actively set up their own health-plan marketplaces under the law. (They say a phrase in the law, about marketplaces “established by the state,” makes this clear.)

By some estimates, 7.5 million Americans in 34 states are at risk of losing their subsidies, because most states opted to rely on a federally created marketplace rather than establishing their own. For many individuals, not having subsidies would make the insurance unaffordable.

Premiums could surge, meanwhile, for individuals who continue with health plans in those same states, because insurers would be struggling to make up for the loss of those subsidized payers.

Republicans, who now hold a majority in both branches of Congress, say they have a plan that can allow Americans to retain health coverage, even if the court rules against the Affordable Care Act (ACA) as implemented by the Obama administration.

But much remains unclear. Will Republicans have the legislation ready in time for a possible June court ruling? Will they have the votes to pass it in both House and Senate? Will their plan really find a viable fix for people who lose subsidies? And if the Republican-backed legislation differs with President Obama’s vision for the ACA, will the president sign it?

“People do not deserve further disruption from this law,” Sen. Orrin Hatch and two other Republican leaders wrote over the weekend in an opinion column in The Washington Post, asserting that their legislation can keep such a disruption from happening.

Mr. Obama would face his own political challenge from the case, which went before the Supreme Court for oral arguments Wednesday.

In a ruling that could come in June, he’d potentially be put in the position of having to make a public case for the 2010 law all over again, this time without a Democratic Congress at his side.

As president, he might be able to use the bully pulpit to grab the high ground and blame Republicans for insurance-market chaos.

But Republicans could put Obama on the spot by arguing that the law is unpopular and that the way forward is to chart a new course while offering a temporary fix for those thrown off the subsidies.

Senator Hatch of Utah, joined by fellow Republicans Sen. Lamar Alexander of Tennessee and Rep. John Barrasso of Wyoming, voiced that goal in their joint column this past weekend.

“A ruling [against the 34-state subsidies] would also give Congress an opportunity,” they wrote, “to stop Obamacare’s damage and create a pathway to reforms that move our health-care system in the direction of freedom, choice and lower costs.”

Another handful of Republican leaders, including Rep. Paul Ryan of Wisconsin, wrote Monday in The Wall Street Journal along similar lines.

“No family should pay for this administration’s overreach,” they argued in the Journal. Their proposal wouldn’t extend ACA subsidies to the 34 states, but it would “offer those in the affected states a tax credit to buy insurance.”

They proposed that states be offered an “off-ramp out of ObamaCare,” so states could opt out of ACA coverage rules and expand the insurance choices available to consumers.

Democrats argue that the ACA coverage rules are vital, to ensure that people don’t end up with low-quality coverage.

For now, it’s not clear which way the court will rule. Both parties are positioning for the possible battle ahead, but also to influence the ruling itself.

Legal scholars say Supreme Court justices will consider whether their decision will have unsettling effects on the ground. If chaos in insurance markets looks likely, they might be reluctant to rule against the Obama administration and its defendant, Health and Human Services Secretary Sylvia Mathews Burwell.

Some political analysts say that explains why the administration has downplayed its ability to put contingency plans in place to help affected states.

Republicans, by contrast, could make a ruling against the Obama administration more likely if they can persuade justices that contingency plans are ready.

“Republicans have a plan to create a bridge away from Obamacare,” Hatch and his colleagues asserted, mentioning the idea of “transitional” assistance for affected individuals. They cited “a great deal of consensus” among Republicans, but made no mention of how to navigate the potential for a Democratic filibuster in the Senate.

If Washington didn’t come up with a timely fix, meanwhile, it could be hard for states to act. Setting up an Obamacare exchange wasn’t a quick process for the states that have done it. And many of the state governments are at least partly under the control of Republicans who aren’t fans of the ACA. 

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