WASHINGTON — Millions of Americans could find their health-insurance plans endangered if the Supreme Court rules this summer that President Barack Obama’s administration has broken the law in subsidizing them. The administration created this problem by pushing through a poorly written statute and lawlessly implementing it. But congressional Republicans nonetheless should step up and solve the problem — and they should do it in a way that hastens the end of Obamacare.
The Affordable Care Act lets subsidies flow to insurance plans purchased on exchanges established by state governments. Since most states haven’t set up exchanges, following the law would have required limiting the subsidies geographically. The administration decided to offer them more widely, to include plans purchased on federal exchanges in states that declined to establish their own. If the Supreme Court decides to reinstate the law’s limits, millions of people whose plans are subsidized will suddenly face much higher premiums. And if they drop their coverage, it could cause premiums to rise for those who are left on the exchange.
Republicans could respond by saying it’s Obama’s fault and not their problem. But that would be a pretty callous reaction, and it probably wouldn’t be politically sustainable. A new poll from the Kaiser Family Foundation shows that if the court restricts the subsidies, 64 percent of people think Congress should “pass a law so that people in all states can be eligible for financial help from the government to buy health insurance.” Democrats would present a united front calling for quick fixes: The recalcitrant states could set up exchanges or deem the federal exchange for their residents to be “state-established”; Congress could pass a short bill blessing the subsidies everywhere.
Acceding to such demands, however, would present its own disadvantages. Republicans would have to expand the reach of Obamacare right after the court had shrunk it, entrenching a model of health-care policy they consider bad for the country and enraging many of their supporters. Because of the way Obamacare is written, the ruling would end the employer mandate and limit the reach of the individual mandate in the affected states. Going along with the Democrats would mean voting for these especially unpopular features of Obamacare. If the only alternatives are doing nothing or effectively reversing the court’s decision, Republicans will split over which to choose and fight each other about it.
But there are other alternatives. Republicans could, for example, offer to authorize the subsidies everywhere, but only through the end of this presidency and in return for some changes to the law. Or they could offer an insurance alternative that enables the people affected to get affordable coverage. James Capretta and Yuval Levin of The Weekly Standard have outlined legislation that meets that goal.
Levin and Capretta have concluded, however, that the best response by Congress to a decision striking down the subsidies would be less ambitious. They think Congress should advance legislation to allow states to opt out of Obamacare and into something better. Those states would then be exempt from the law’s regulations and mandates. People already on the federal exchanges in those states would keep getting their subsidies for some limited time. Going forward, though, people in those states with no access to employer coverage would get tax credits they could use to buy any state- approved coverage — whether or not it meets Obamacare’s requirements or is bought on any government-run exchange.
This legislation would create a safe exit ramp from Obamacare. It would protect people from losing their coverage when Obamacare’s illegal subsidies end. It would respond to the public demand expressed in that Kaiser poll. Opponents of the law would no longer have to choose between leaving people without insurance and expanding a bad health-care policy. And if supporters of Obamacare balk at the proposal they will have to explain that Obamacare is terrific but can’t withstand the existence of a rival model in other states.
The plan is not politically foolproof. Some people would see their subsidies decline. Popular Obamacare regulations about how insurance companies should treat people with pre-existing conditions would have to be altered (though not abolished) for markets to work in the opt-out states. But it’s the best option for Republicans. They ought to work on it starting yesterday.
Ramesh Ponnuru is a senior editor for National Review and columnist for Bloomberg View.