Pending Supreme Court Decision On Obamacare Requires Solutions

By John McManus, president and founder, The McManus Group

Last month the Supreme Court heard oral arguments for King v. Burwell on whether subsidies to health insurance policies offered through the federal exchange (covering individuals in 34 states) are legal, since the statute explicitly reads that subsidies may only flow through exchanges “established by a State.” The court is expected to render its verdict in June, and it is anyone’s guess how it will rule.

What is the Obama administration’s backup plan if the 87 percent of the 7.7 million people enrolled in the federal exchange lose their premium subsidies? Answer: the administration has said there is no plan.

In congressional hearing after hearing, the administration has refused to say whether it has any contingency plan at all. The following exchange between Senator John Cornyn (R-TX) and Health and Human Services Secretary Sylvia Burwell was typical:

Cornyn: “So let me ask you again: If the Administration loses in the King vs. Burwell case, do you believe you already have the authority to make an administrative fix? Or will you come to Congress and ask for additional legislation?”

Burwell: “Senator, I am focused right now on implementation.”

Cornyn: “Mr. Chairman, these hearings are absolutely no use to us if the witnesses refuse to answer straightforward questions, which this witness has repeatedly done.”

At a House hearing, Energy and Commerce Subcommittee Chairman Joe Pitts (R-PA) asserted HHS officials had drafted a 100-page document on potential actions the agency could take if the Court strikes down the subsidies. Burwell responded she was aware of no such 100-page document. Perhaps the document was 99 pages?

The Administration must believe that admitting it has a contingency plan to assist those who would lose subsidies under a straightforward reading of the law would reduce pressure on the court to preserve the ACA. The Administration is arguing — beyond any credulity — that it has no contingency plan to a negative ruling in King v. Burwell and that such a verdict by the court would result in a healthcare apocalypse that is beyond repair. Therefore, the ACA must be upheld because it is doing so much good that the law Congress actually passed should be disregarded by the court in lieu of the law they wish Congress had enacted.

In that same vein, dozens of powerful health lobbies have submitted amicus briefs arguing that the court should focus on the result of its decision, not the legislative language of the statute. Was it hyperbole when the hospital lobby’s brief stated, “This is no abstract case about principles of statutory construction; petitioners’ position, if accepted, means more people get sick, go bankrupt or die”? That same brief claimed it would be unfair for hospitals to accept substantial Medicare cuts but lose their new subsidized customers.

Justice Antonin Scalia dismissed this rationale in oral arguments, suggesting that “If there are disastrous consequences, Congress will react.”

Indeed the Republican chairmen of the committees of jurisdiction have outlined a plan to provide an “offramp” to Obamacare should King v. Burwell declare the subsidies illegal. The plan would retain subsidies, perhaps for a limited period of time, and permit increased flexibility for individuals to enroll in health plans that better fit their needs, instead of the current plans which must comply with munificent benefit mandates that drive up costs. But reinstating subsidies obviously requires a Republican Congress to spend money in this area, which could be construed as tacit endorsement of a program they’ve been fixated on repealing. Enacting that plan will be a difficult task but a political necessity, as no family should pay for a political party’s overreach.

Yet the plan is certainly superior to the Obama administration’s mantra that it has no backup plan of any kind!

Of course, an alternative to congressional action would be a state response to the issue — allow states to establish their own exchanges, as originally conceived in the legislation. This option was suggested by Justice Samuel Alito during the oral arguments.

However, that raises a similar constitutional question that blindsided many in the health policy community when the Supreme Court last ruled on Obamacare in 2012: undue coercion of states by the federal government. In its decisive 7-2 decision, the court held that conditioning federal subsidies for currently covered Medicaid beneficiaries to only those states that expanded Medicaid to cover other indigent populations was “overly coercive to the states,” even though the federal government was picking up between 90 and 100 percent of the tab. This decision emboldened nearly half the states — mostly controlled by Republicans in the South and Mountain West — to refuse to undertake Medicaid expansions. Many poor people in those states still have no coverage because the statute explicitly prohibits insurance exchanges from subsidizing anyone with income below the poverty level.

It is notable that Justice Anthony Kennedy wondered in oral arguments about the “dynamics of federalism.” Kennedy stated, “If your argument is accepted, the states were told to establish exchanges in order to receive money (for their citizens) or send the insurance into a death spiral; isn’t that coercion?”

If Kennedy joins the liberal coalition protecting Obamacare on the state coercion basis, it will not matter if the Chief Justice holds that the subsidies in the federal exchange are illegal. The law would remain intact.

Upholding the clear language of the law and declaring illegal the subsidies through the federal exchange would make for a tumultuous and active 114th Congress in healthcare. Congressional inaction will not be an acceptable outcome for either party. Divided government may actually work to their benefit as each party must take ownership over a solution that solves the problem. Could that solution be a Democratic priority of subsidies for low- and middleincome individuals combined with Republican priority of greater flexibility and more affordable options?

Maybe. But the time to enact such legislation is short, and the dynamics are not good as we roll into the fall and the next presidential election approaches. A half dozen senators wake up in the morning and see a potential president looking in the mirror, and they may prefer scoring political points with their bases to making the tough compromises necessary to enacting bipartisan legislation.

Wouldn’t it have just been easier if the legislative language in Obamacare articulated what its proponents say it really means? That would certainly reduce the level of mendacity that no Plan B is under consideration by the minions charged with protecting the president’s signature domestic achievement.