Surrender? GOP Prepared To Extend Obamacare Subsidies If King v. Burwell Guts Them

Matt Vespa
|
Posted: Jun 05, 2015 12:45 PM
Surrender? GOP Prepared To Extend Obamacare Subsidies If King v. Burwell Guts Them

Republicans are ready to extend an olive branch to the Obama administration if the Supreme Court decides to rule against them in the highly anticipated King v. Burwell case. The outcome of this decision could gut Obamacare subsidies for millions of Americans who signed up on the federal health care exchange. They’re prepared to temporarily extend those subsidies (via the Hill):

House conservatives are hinting at support for a temporary extension of Obama-Care subsidies if the Supreme Court cripples the law, even as they set up a working group to develop their own plan.

The high court is set to rule later this month in the case of King v. Burwell, which could invalidate subsidies for millions of people in at least 34 states using the federally run marketplace. Republicans say they need to be ready to address people losing their coverage, but have yet to coalesce around a plan.

Now another proposal is in the works. Members of the conservative House Freedom Caucus told The Hill they are setting up a group of four or five lawmakers, led by Rep. John Fleming (R-La.). The lawmakers will develop a plan meant to influence the main House working group led by Rep. Paul Ryan (R-Wis.) and two other panel chairmen, which Fleming complained is meeting in “secret.”

While working on their own ideas, Freedom Caucus members are also open to something like Sen. Ron Johnson’s (R-Wis.) idea to temporarily extend subsidies.

Johnson’s plan would extend ObamaCare subsidies through August 2017, when he hopes there will be a Republican president, while also repealing the law’s individual and employer mandates.

His bill has 31 Republican co-sponsors in the Senate, including Majority Leader Mitch McConnell (R-Ky.). It has not received the same welcome in the House, though; Ryan’s working group is still publicly undecided on the question, and House Budget Committee Chairman Tom Price (R-Ga.) came out in opposition to the idea last month.

Other members said they were originally skeptical when told of the idea to extend ObamaCare subsidies but warmed to it once they learned Johnson’s plan would also repeal the individual and employer mandates, which they say gives people more freedom.

Rep. Justin Amash (R-Mich.) called it a “bad idea to continue the subsides, especially for the length of time that Senator Johnson is suggesting.”

Republicans acknowledge they will face pressure to do something if the court rules for the challengers. Figures from the Obama administration released Tuesday show 6.4 million people would lose subsidies that help them afford insurance.

The states that did not set up their own exchanges, and are therefore in danger of losing subsidies, are concentrated in the Midwest and South — areas many of the conservative members represent.

Of course, all of the plans could be moot if the court rules for the administration and upholds the subsidies. The court could also delay the expiration of the subsidies to give time for a backup plan to kick in. The main House and Senate working groups say they will not release their full plans until after they see the details of the ruling.

There was another lawsuit filed that was similar to KingHalbig v. Burwell–which argued virtually the same position (via SCOTUSblog):

Whether the Internal Revenue Service may permissibly promulgate regulations to extend tax-credit subsidies to coverage purchased through exchanges established by the federal government under Section 1321 of the Patient Protection and Affordable Care Act.

Jonathan Turley, law professor as George Washington University, wrote last summer about the legal framework of the case:

The Halbig case challenges the massive federal subsidies in the form of tax credits made available to people with financial need who enroll in the program. In crafting the act, Congress created incentives for states to set up health insurance exchanges and disincentives for them to opt out. The law, for example, made the subsidies available only to those enrolled in insurance plans through exchanges "established by the state."

But despite that carrot — and to the great surprise of the administration — some 34 states opted not to establish their own exchanges, leaving it to the federal government to do so. This left the White House with a dilemma: If only those enrollees in states that created exchanges were eligible for subsidies, a huge pool of people would be unable to afford coverage, and the entire program would be in danger of collapse.

Indeed, the Halbig plaintiffs — individuals and small businesses in six states that didn't establish state exchanges — objected that, without the tax credits, they could have claimed exemption from the individual mandate penalty because they would be deemed unable to pay for the coverage. If the courts agree with them, the costs would go up in all 34 states that didn't establish state exchanges, and the resulting exemptions could lead to a mass exodus from Obamacare.

The administration attempted to solve the problem by simply declaring that even residents of states without their own exchanges were eligible for subsidies, even though the law seemed to specifically say they were not. The administration argues that although the statute's language does limit subsidies to residents of places with exchanges "established by the state," that wording actually referred to any exchange, including those established by the federal government.

Turley noted that in January of 2014, a federal judge upheld the language, though the DC Circuit Court of Appeals saw it differently later that July. Philip Klein at the Washington Examinearound the same time about the Halbig case:

If the court rules against the Obama administration and the ruling stands, it would mean that individuals in states that defaulted to a federal exchange would no longer be eligible for subsidies. And in total, exchanges in 36 states were created at least in part through the federal government.

So, states opposed to Obamacare could simply refuse to set up a state exchange or to expand Medicaid. In those states, employers wouldn't be penalized for failing to offer qualifying insurance (which is triggered by workers seeking federal subsidies), meaning that anti-Obamacare states could become more attractive to businesses trying to get around the employer mandate.

Now, the DC Circuit Court sided with the plaintiff–Jacqueline Halbig– in her case, citing that the IRA does not have the authority to expand subsidies to the exchanges, but the Fourth Circuit court ruled in favor of the Obama administration in King, though they said the regulatory language was “ambiguous” and “subject to interpretation” in that case.

The problem for Republicans is entirely political and message-based; how to deal with the fallout when millions have lost their health care subsides? The left is already gearing up for an offensive, which will certainly involve endless personal stories about how Republicans took their health care away. These stories are powerful, they work, and conservatives often botch the defense. The thing the media probably won’t talk about is that if progressives actually wrote the law properly, these cases would have never seen the light of day. Moreover, it’s the Democratic Party that should shoulder the burden of the blame from the potential legions of citizens beleaguered with health care woes because it’s their own awful law.

CORRECTION: Sorry, folks. DC Circuit Court ruled on Halbig and the Fourth Circuit Court ruled on King. Apologies for the error.