Who's Afraid of a Healthcare Ruling?

The early field of 2016 GOP contenders is crowded with governors and senators from competitive states—including John Kasich and Rob Portman from Ohio, Jeb Bush and Marco Rubio from Florida, Chris Christie from New Jersey, Mike Pence from Indiana, and Scott Walker from Wisconsin. All are experienced and appeal to crucial parts of the party’s voter and donor bases. They also have something else in common: good reasons to worry about a politically explosive Supreme Court decision to restrict health-insurance subsidies that could come down in June 2015.

The plaintiffs in King v. Burwell claim that a single phrase in the 900-page Affordable Care Act of 2010 precludes the flow of subsidies to reduce premiums for private health-insurance plans purchased in states that have not created their own insurance exchanges. Millions of middle-income people who happen to live in such states rely instead on “federally facilitated marketplaces” set up for each state by the U.S. Department of Health and Human Services.

At issue is a technicality of statutory interpretation with big human and economic consequences. Experts disagree about how much damage a pro-King verdict could do to national health reform overall. But no one doubts that in many states large numbers of Americans with modest incomes could abruptly lose the federal subsidies that 85 percent of them use to reduce the cost of monthly-insurance premiums. Equally worrisome, insurance markets in the affected states would likely collapse, because many healthy customers would drop coverage, leaving companies with disproportionately sick customers desperate enough to pay suddenly higher premiums.

But here is the politically ironic upshot: A couple dozen U.S. states run or represented by Republicans are the ones seriously threatened. Of course, a pro-King ruling would reinvigorate calls to repeal or gut ObamaCare nationwide. But Congressional Republicans would not be able to do that, because President Obama would veto a law that prevents insurance companies from turning away sick customers. And federal subsidies would keep flowing to two to three dozen states that run—or decide to approve—their exchanges. Between half and two-thirds of Americans could end up in such states. Currently, all but one of the states that would not face subsidy cut-offs are run by Democrats or divided governments.

Health reform would be set back by even a partial cessation of consumer subsidies, but this outcome, cutting off subsidies to some states but not others, would be especially destructive to an already internally divided GOP. During the first four years of health reform, repeal, obstruction, and destruction have been never-ending war cries from right-wing activists and Republicans elected from safe, very conservative districts. However, other Republicans who have to deal with the human and fiscal realities of health care have quietly favored pragmatic accommodation, taking advantage of the flow of federal funding.

Nowhere has GOP pragmatism taken firmer hold than in swing-state Ohio, home to GOP presidential hopeful Governor John Kasich and to GOP Senator Rob Portman, who is up for reelection and consideration as his party’s vice-presidential nominee in 2016. Cheered on by the Ohio Chamber of Commerce, Kasich maneuvered around the GOP legislature to accept ObamaCare funding to expand Medicaid to include hundreds of thousands more Ohioans with incomes just above the poverty line. Meanwhile, more than 230,000 middle-income Ohioans have bought plans on the state’s federally facilitated marketplace, most of them using subsidies that reduce premiums to an average of around $100 per month. As the Dayton Daily News explains, “companies are rushing to join the health-insurance marketplace in Ohio, giving consumers more choices at rates much lower than the doomsday predictions” originally made by reform opponents. Insurance companies love the profit opportunities, with 16 offering more than 290 plans in 2015, up from 12 offering about 200 plans in 2014.

Think of the mess for Kasich and Portman if the Supreme Court destroys Ohio’s insurance marketplace. As GOP presidential debates and primaries get under way, conservatives in their party would redouble calls to get rid of ObamaCare. But back home in Ohio, insurance executives, business leaders, and hundreds of thousands of customers would demand that the U.S. Congress or their state find a way to keep subsidies flowing. Kasich and Portman will be counter-punched between Tea Partiers and business interests. Nor would the continuation of Ohio’s Medicaid expansion help, because a lot of Ohio voters would wonder why the near-poor still get coverage while exchange subsidies for middle-income people disappear.

Ohio GOP hopefuls won’t be the only ones in trouble. New Jersey Republican Governor Chris Christie would have to explain why more than 350,000 near-poor people in his state get to keep enjoying the ObamaCare Medicaid benefits he accepted, while some 200,000 middle-income people lose their subsidies and six insurance companies no longer reap profits on the state’s federally facilitated exchange. Similar questions would hit GOP Governor Mike Pence, because he has just arranged for Indiana to expand Medicaid under ObamaCare.

Even Wisconsin’s Governor Scott Walker would hit a speed-bump. To be sure, he has refused to expand Medicaid and regularly denounces ObamaCare. But more than 200,000 Wisconsin citizens are signed up to purchase health plans on the federally facilitated exchange. Walker has also put through much-touted changes to his state’s existing Medicaid program that require many poor people to purchase private plans on the federally facilitated exchange. If that marketplace collapses, so does Walker’s reform.

Florida, too, has refused to expand Medicaid under ObamaCare, but Bush and Rubio would still face anger from the 14 insurance companies offering exchange plans and from the more than 1.5 million middle-income Floridians who have purchased private plans, usually with subsidies. Enrollments and insurer participation on Florida’s federally facilitated exchange have boomed from 2014 into 2015—and the same is true in ultra-conservative Texas, home to former Governor Rick Perry, a fierce opponent of health reform. But what will Perry say if a Supreme Court decision nixes subsidies benefitting more than one million consumers and 16 insurance companies using his state’s federally managed marketplace?

In short, if the Supreme Court rules for the King plaintiffs, insurance companies and customers facing sudden losses will surely push for steps to restore the status quo. Republicans everywhere will feel the heat, but none more so than prominent figures from competitive states like Ohio, Florida, and Wisconsin—the very GOPers who could fare best as presidential or vice-presidential nominees in 2016. For them, a bombshell Supreme Court ruling would bring an end to having it both ways. Suddenly, they would be forced to make high-stakes choices between politically pleasing anti-ObamaCare rhetoric and the vital pay-offs from health reform already enjoyed by so many of their home-state constituents.