Obamacare opponents return to the Supreme Court on March 4 with a potentially lethal argument: that the law does not permit Obamacare subsidies to be paid in the 34 states that did not establish state healthcare exchanges. If they win, millions of Americans could lose subsidies that enable them to buy health insurance.
That outcome would shake the healthcare system established by the Affordable Care Act. Bad news for the Obama administration—but also potentially risky news for Republicans. Joshua Green hypothesized earlier this week at Bloomberg BusinessWeek that "voters with skyrocketing premiums may not blame Obama, as Republicans assume. They’ll expect the party hell-bent on destroying the law to have a solution—and react badly if none is forthcoming.” At least some Republicans share this fear. At the Washington Examiner, Byron York detailed Senate Republicans’ increasingly frantic political calculations:
Republicans are going to find a way to continue paying subsidies to the estimated 7.5 million Americans who receive taxpayer-funded help to pay their insurance premiums through the federal Obamacare exchange.
The prospect of seeing those people lose their subsidies—even though some have received them for a short period of time, and even though Obamacare has imposed burdensome costs on many other Americans—is just too much for Republican lawmakers to risk.
"We're worried about ads saying cancer patients are being thrown out of treatment, and Obama will be saying all Congress has to do is fix a typo," said one senior GOP aide involved in the work.
Precisely because the outcome of a successful challenge to the ACA will unleash such operatic chaos, it seems more likely that the Court will flinch. The Supreme Court has upheld every social program enacted by Congress since Social Security in 1937—and it would take five very bold justices to disembowel the Affordable Care Act less than three years after they upheld the constitutionality of its most controversial feature, the individual mandate.*
Even this less operatic outcome would, however, create drama enough. If the King v. Burwell challenge fails, Obamacare remains in place until at least the spring of 2017. That’s two more years for the law to institutionalize itself, confer benefits, and create constituencies. Those constituencies will have a question for the politicians running for office in 2016: What happens to us if you repeal the law? The last time Americans voted for president, Obamacare remained a theoretical proposition. Neither the program’s new taxes nor its new subsidies were being paid. By 2016, Americans will feel keenly whether the program has benefited them or hurt them. If the courts don’t settle the matter for the politicians in 2015, Obamacare will top the list of ballot questions in 2016.
At that point, Republicans will face two broad groups of choices (groups because each choice comes in many themes or variations).
The first choice? Try once again to rally the losers from Obamacare into an election-winning coalition.
Obamacare is a highly redistributive social program. Most of the benefits flow to the poorest 20 percent of the population, while costs are widely shared. In this, Obamacare looks much more like America’s unpopular anti-poverty programs than securely popular universal entitlements like Social Security and Medicare. The net losers from Obamacare include wealthier people who must pay higher taxes; older Americans who fear that the costs of Obamacare will jeopardize Medicare; securely employed workers whose insurance is made less generous and more expensive by cross-subsidies; and upper-income state taxpayers who will pay the cost of expanded Medicaid rolls without ever using Medicaid themselves. Together, this coalition represents enough voters to win off-year elections like 2010 and 2014. True, it fell short in 2012. But with some refinement and tinkering—and facing a less compelling Democratic presidential candidate—perhaps it could succeed in 2016.
The second choice is accepting Obamacare as a fact. Republicans would seek to amend those of its features they find most obnoxious by controlling its costs, spreading its benefits, and reforming its financing. Instead of outright repeal, Republicans would allow states more leeway to run their exchanges as they see fit, and free private insurers to impose tougher cost discipline on hospitals and other healthcare providers. This approach would also rely less on costly Medicaid to extend coverage to low-income Americans—and more on cheap clinics for everyday medicine and state-subsidized high-risk pools for critical care. To further trim costs, it might open the medical profession to more competition from nurse practitioners, dental hygienists, and others now restricted by state law from offering equal services at lower prices.
It would also require a new approach to financing the program, junking Obamacare’s ultra-redistributive taxes on work and saving and replacing them with taxes that fall more broadly on the population as a whole. If everybody benefits from a program, everybody should pay. I’d nominate as substitutes a new excise tax on sweeteners; higher taxes on alcohol; very high taxes on marijuana in those states that legalize it; and taxes on carbon emissions as well. (Obesity, drug and alcohol over-use, and car accidents are major drivers of health costs. I’d also personally wish to raise the excise tax on gun and ammunition purchases as well, because of the terrible costs to society of accidents and injuries, but here we’re entering dreamland.)
It might seem almost unimaginable that the GOP could ever adopt this second approach. The party has entrenched itself so deeply and for so long on the “no compromise” battle line. But the party has also shown itself deeply reluctant to deprive voters of benefits they have already begun to receive under Obamacare. It has been unable to develop—much less agree upon—a coherent alternative that would preserve those benefits. As 2016 approaches, it probably would prefer not to make the presidential election a referendum on treatments for cancer patients. The first choice may be the message that wins cheers from party faithful. But what if party professionals become convinced that it’s a choice that will cost them four more years out of the White House? Unwillingly, grudgingly, grumblingly, the second choice will come to seem the only choice there is—as it has been, in reality, all along.