Rude Awakening: How the Dream of Derailing Obamacare Can Turn into a Nightmare for Republicans

Credit: New York Times with data based on ACA enrollment figures.

Credit: New York Times with data based on ACA enrollment figures.

Today, the Supreme Court heard arguments in a case challenging subsidies for Americans who buy health insurance through federally run exchanges in their states. Under the Affordable Care Act, Americans buying health insurance from their state exchanges are eligible for subsidies if they meet certain income criteria (the subsidy is given on a sliding scale based on income to individuals and families making up to 400% of the federal poverty level).

Conservatives salivating to dismantle President Obama's crowning achievement are making the absurd argument that these subsidies are only made available to exchanges established by individual states, and that if a state chose not to establish an exchange, allowing for the federal government to step in to establish such an exchange, the residents of those states are not eligible for the law's subsidies. This is because, they argue, the language of the law reads the subsidies (called "premium assistance" in the law) are to go to taxpayers enrolled in exchanges "established by the state".

Except that the language of the law also allows the Secretary of HHS to set up "such exchange[s]" in states that choose not to establish their own. Such exchange, as in for all purposes of the law, the federally established exchanges are bound by the same regulations and enjoy the same privileges as an exchange established by a state. For those wishing to explore the language of the law in greater detail, extensive explanations are available here and here.

Suffice it to say that right wing argument is wholly without merit and would be seen as such if our Supreme Court weren't packed with right wing activists in black robes. I still believe there is very little chance that the Supreme Court actually agrees with the wingbats and takes away subsidies from millions of Americans. I doubt Chief Justice John Roberts is about to unravel his entire legacy, and as the New York Times reports, Justice Kennedy, beyond just the context of the law, expressed concerns as to whether it would even be Constitutional for Congress to force states to establish exchanges or have their citizens forfeit the subsidy.

Justice Kennedy repeatedly asked whether Congress had the constitutional authority to make states choose between setting up their own insurance exchanges and letting their citizens lose tax subsidies to help them buy insurance.

“There is a serious constitutional problem here if we adopt your position,” he told Mr. [Michael A.] Carvin [lawyer arguing for subsidies to be taken away from federally run exchanges].

This is an interesting - and rather conservative (small 'c') question. Justice Kennedy is implying that it's the conservatives in the case that are arguing to vastly expand the powers of the federal government over states. Socialist!

But that is the least of the mistakes the right wing and Republicans are making by challenging the subsidies in the law. Although I am still firmly in the camp of those who believe the Supreme Court will ultimately leave the law alone, in the event the conservative judicial activists were to win and remove the subsidies from the federally run exchanges, the GOP's victory lap will be pyrrhic and short lived.

In that event, Republicans will see their dream to undermine Obamacare into a nightmare. Why? Because GOP attacks on Obamacare are only popular so long as it has no real effect on the law's implementation. Any actual adverse effect will have the result of reminding people what they had and who took it away from them. And in an enormous scale: 7.5 million Americans in 34 states would lose their subsidies - and therefore in all likelihood their health insurance - should the law's opponents prevail. Now here's the worse news for the Republicans: because of the racial distribution disparity in GOP vs. Democratic states, 61% of those who lose coverage this way will be white. 61% of those losing coverage will also be living in the South.

Credit: New York Times.

Credit: New York Times.

These 7.5 million people will also have the privilege of looking a state or two over and seeing states that did set up their exchanges and are doing just fine while their state literally just took the same coverage away from them and their children.

A victory by Obamacare opponents will force 34 states - led by Republican legislatures and/or governors - to decide whether to actually set up their own exchanges. Should Republican politicians in those states choose to set up their own exchanges in order to keep the subsidies flowing for their citizens, they will be viewed by their right wing base as capitulating to the black monarch and forever stained with the cooties of Obamacare. If they choose not to, these 7.5 million Americans aren't going to sit quietly. Politically, Republicans in these states will be damned if they do (by their own base) and damned if they don't (by everyone else).

The Republicans in these states have been performing political grandstanding by refusing to form their own exchanges. But not having to actually deal with the consequences of people left high and dry has allowed them to have their cake and eat it too. If they have to choose between subsidies for a wide swath of their middle class citizens (who benefit the most from the subsidies) and grandstanding against Obama, that will be a difficult choice indeed.

But they rejected the Medicaid expansion with nearly no consequences, you say. Not all of them - a certain finger-wagging governor of Arizona comes to mind. In addition, they got to reject the Medicaid expansion before it went into effect. They never had to deal with the consequences of people having health care and then having it taken away in the blink of an eye. That is exactly what they will have to deal with here. Among the unique paradoxes of American politics is that the American people are weary of new social programs but no one wants to give theirs up once they have tasted it (see "Keep your government hands off my Medicare" dumbness, for example).

Similarly, a decision to upend the law will create enormous upheaval and pressure on the Republican Congress. They too will be left without the ability to simply critic Obamacare without suffering the consequences of actually taking it away from a huge swath of middle class voters. Democrats will propose legislation to fix the decision, allowing for the federal exchanges to be able to give out the subsidies again, and Republicans will be forced either to surrender the great court victory at the legislative level or suffer 7.5 million+ Americans' wrath - Americans who they won't be able to demonize as umemployed lazy bums (these Americans earn money, just not enough).

Which finally brings us on the political front to presidential politics. Every Democrat running will run on a platform to fix the ruling via Congress, while Republicans will either fight amongs themselves, or more likely refuse to do anything in fear of the wrath of their Right wing. Which means another landslide victory to the White House for yet another Democrat - and this time perhaps along with enough of a majority in Congress to fix the ruling.

Political fallout will be the most stinging to Republicans should they "win" the ruling - which is yet another reason that makes me think that the Court's conservatives will make sure they don't - but it won't be the only. The other fallout will be insurance companies getting stuck in the middle of it taking their wrath out on the Republicans.

Remember that there is no actual objection here to the federal government running exchanges in states that refuse to do so themselves. The only objection is to people who buy through those exchanges receiving any kind of help. Meaning that in the event of an adverse ruling, the federally run exchanges will still exist, and insurance companies will still be subject to all regulations, including the ban on discrimination based on pre-existing conditions (or, you know, being a woman). What will have changed is that they will not have the subsidies. The subsidies, you recall, are actually handed to the insurance companies after an individual chooses a plan.

These individuals who will lose coverage won't be subject to the individual mandate since it exempts those who cannot afford for between 2 and 8% of their income to pay the premium - which if they are receiving premium assistance, they obviously aren't. Thus, insurance companies will be left with all of the burdens of the law in those states but none of its sweeteners. Who do you think they will be gunning for when that happens?

The administration has said that there is no backup plan should the Court decide to throw things into chaos - and they truly don't have an option. Democrats aren't yet en masse proposing legislation to make the case a moot one. That may well be due to the fact that Democrats know, as well as Republicans, that a victory at the Supreme Court will quickly turn into a nightmare for Republicans in power - in the states and in Congress. They know that if and when the battle turns away from a caricature of Obamacare to the reality of what to do with 7.5 million Americans who suddenly had their health care taken away, there won't be enough gin in Washington, DC to drown John Boehner's sorrow.

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