Republicans Are At A Loss On What To Do If SCOTUS Nixes Obamacare Subsidies

House Speaker John Boehner, left, and Senate Majority Leader Mitch McConnell meet with the press at the GOP retreat at the Hershey Lodge in Hershey, Pa., Thursday, Jan. 15, 2015. (AP Photo/, Mark Pynes )
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Many Republicans would view it as a dream come true if the Supreme Court were to slash a centerpiece of Obamacare by the end of June. But that dream could fade into a nightmare as the spotlight turns to the Republican Congress to fix the mayhem that could ensue.

“It’s an opportunity that we’ve failed at for two decades. We’ve not been particularly close to being on the same page on this subject for two decades,” said a congressional Republican health policy aide who was granted anonymity to speak candidly. “So this idea — we’re ready to go? Actually no, we’re not.”

Republican leaders recognize the dilemma. In King v. Burwell, they roundly claim the court ought to invalidate insurance subsidies in some three-dozen states, and that Congress must be ready with a response once they do. But conversations with more than a dozen GOP lawmakers and aides indicate that the party is nowhere close to a solution. Outside health policy experts consulted by the Republicans are also at odds on how the party should respond.

The party that has failed to unify behind an alternative to Obamacare for many years now has five months to reach an agreement. It’s an unenviable predicament, especially for the congressional Republicans leading the effort to devise a response — all of whom hail from states that could lose their subsidies.

“There are a lot of ideas,” Senate Finance Committee Chair Orrin Hatch (R-UT) told TPM on Tuesday. “If the case goes the way I think it should go … then we’ve gotta come up with a way of resolving the problems we’re in. We’re quietly looking at all that and trying to do that.”

For now, the GOP’s goal is to “make the world safe for [Chief Justice John] Roberts to overturn” the Obamacare subsidies, said one prominent outside conservative close to Republican lawmakers and the case, who requested anonymity to speak candidly. “What I worry about is — the goal is to not let our guys look like they’re going crazy and letting the world spin into chaos.” In other words, Republicans must show they’re willing and able to deal with the issue.

House Republicans held a strategy meeting on Jan. 15 at a retreat in Hershey, Pennsylvania, about contingency plans for the King v. Burwell ruling, led by House Ways & Means Chair Paul Ryan (R-WI) and House Energy & Commerce Chair Fred Upton (R-MI).

Senate Republicans have set up a working group to hash out a plan, led by Hatch, Health Committee Chair Lamar Alexander (R-TN) and Policy Committee Chair John Barrasso (R-WY), a doctor. TPM spoke to the three senators about what the party’s plan should be, but none of them offered any details.

From left, Sen. Orrin Hatch, R-Utah, Sen. Lamar Alexander, R-Tenn., Sen. John Barrasso, R-Wyo. , Sen. John Cornyn, R-Texas, Senate Minority Leader Mitch McConnell of Ky., and Sen. John Thune, R-S.D. (AP Photo/J. Scott Applewhite)

Alexander said, “If the court rules that the law is what the law actually is, states still have the option to create a state exchange and keep their subsidies.”

In an illustration of the depth of the struggle, Sen. Lindsey Graham (R-SC) told TPM he would support the old Wyden-Bennett health care plan from 2009 if the court guts the ACA. But there’s one problem: that bill has an individual mandate similar to Obamacare, making it a political death-sentence for GOP leaders.

Avik Roy, a conservative health care adviser, laid out the party’s options at the strategy meeting in Hershey: do nothing, work with Democrats to fix the law, or seize what he calls “their best opportunity to reform the health care system” and propose a serious conservative alternative.

Republicans don’t view the first two options as viable.

Republican aides to the committees of jurisdiction in the House and Senate didn’t have any news to report about the way forward.

Privately there is concern among GOP health policy aides that — contrary to Senate Majority Leader Mitch McConnell’s (R-KY) contention that the Supreme Court could create an “opportunity” for a “major do-over” on health care reform if it rules against the government in King — the party won’t be ready with a viable solution in time.

One big challenge, the Republican aide said, is that a GOP plan would be unlikely to cover as many people, making it an easy piñata for Democrats to pound. “That’s the brutal truth. We have a problem with that for very specific reasons. We don’t have good responses,” the aide said. “Show me the constituent in a town hall meeting who you can tell it’s OK for them to lose their health insurance.”

Rep. Paul Ryan, R-Wis., emerges from a closed-door meeting of House Republicans, on Capitol Hill in Washington. (AP Photo/J. Scott Applewhite)

Thomas Miller, a health policy expert at the American Enterprise Institute, said Republicans are unlikely to have a “fully formed” plan before the ruling. He said it would be a slow burn — they may have to “let off some steam” with repeal votes before they vote on serious solutions.

“Certainly there are cross-pressures and impulses within just the Republican ranks on this,” he said. “There are issues that are not going to be fleshed out — a consensus is not going to be reached in advance of the King decision.”

But Miller said it’s important to build support for a set of proposals ahead of the ruling and have legislation on the shelf that “gets the job done in a period of several weeks in late June to early July.” He proposed three broad ideas to fill the hole the Supreme Court might create: a tax-credit mechanism (which could be income-sensitive, age-adjusted, or a flat dollar amount), block grants to states, and reforms to the exchanges. None will be easy to secure support for.

“You also may need to find space in the budget resolution to deal with contingencies,” he said, which will be a challenge because the budget is due in April, before a decision is expected. “You’re trying to pass a wide enough corridor so you can use it. That involves a lot of creativity.”

Setting aside the big question of whether some of their proposals are workable as a matter of politics or policy, the inability of outside conservative experts to agree on a response further highlights the Republicans’ dilemma.

Roy’s preferred approach is to use a King ruling as basis to weaken Obamacare regulations and mandates. He proposes legislation to keep the federal subsidies for all states with one caveat: they can choose between setting up an Obamacare-style state exchange and a more deregulated exchange, potentially free of rules like forcing insurers to accept customers with pre-existing conditions or provide a minimum package of essential benefits.

Conservative policy wonks Jim Capretta and Yuval Levin disagree. They want the GOP to offer a more sweeping alternative that lets states opt out of Obamacare entirely, and lets insured Americans receive a federal “age-based credit” to buy health insurance allowed in their state. Obamacare mandates would no longer apply — people could buy comprehensive coverage or bare-bones catastrophic plans that the Affordable Care Act is phasing out.

“It would show voters that a better system is possible—and at a far lower
cost—without ObamaCare’s punishing taxes, burdensome mandates and inept
micromanagement,” Capretta and Levin wrote in the Wall Street Journal.

From left are, Sen. Charles Schumer, D-N.Y., House Minority Whip Steny Hoyer of Md., House Minority Leader Nancy Pelosi, D-Calif, Senate Minority Leader Harry Reid of Nev., and Senate Minority Whip Richard Durbin of Ill. (AP Photo/Harry Hamburg)

If offering a plan seems difficult, the GOP’s other options are even more fraught.

The “let it burn” option means doing nothing as millions of Americans in three dozen states lose their subsidies. Many of them would no longer be able to afford insurance or seek waivers. Insurers would be forced to raise prices as they lose younger, healthier customers — causing them to lose more customers. This is plausible in the near-term if Republicans fail to propose a viable alternative. But the “death spiral” would eventually compel a fix.

The second option means teaming up with Democrats to enact a legislative fix to make clear that the subsidies are available to Americans in all states. House Minority Whip Steny Hoyer (D-MD) last week told TPM that there should be a fix if the court rules against the government. But however strong the pressure, countervailing sentiments in the GOP base against Obamacare are likely too powerful to make it palatable.

Republicans also aren’t ready to call on their states to set up exchanges, likely because conservatives could attack that as supporting Obamacare. Asked about the prospect Sens. Jerry Moran (R-KS), Jeff Sessions (R-AL) and Alexander demurred. Each would face a situation where many of their constituents lose insurance subsidies and perhaps their coverage.

“Our members are discussing this issue along with all the other failures of Obamacare,” said Don Stewart, a spokesman for McConnell. “But I don’t have any announcements just yet.”

As the court gets closer to hearing arguments in the case, there is a gap between the excitement among GOP political operatives and the nervousness of at least some GOP policy aides.

“Our guys feel like: King wins, game over, we win. No. In fact: King wins, they [the Obama administration and Democrats] hold a lot of high cards,” the congressional Republican health policy aide said. “And we hold what?”

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