Monday, March 2, 2015

Republicans: "We Have a Plan For Fixing Health Care" If the Supreme Court Eliminates Subsidies in as Many as 37 States––It Won't Be So Simple

Key Senate Republican committee chairman Orrin Hatch (UT), John Barrasso (WY), and Lamar Alexander (TN) have an op-ed in the Washington Post today saying they have a plan if millions of Americans lose their Obamacare subsidies this summer.

First, I have no idea how the Court will rule, likely in late June. While it is hard for me to see Chief Justice John Roberts voting to strike a major blow to the new health law now when he had that same chance three years ago and didn't, no one can predict what is going to happen this time.

But if the Court does throw the subsidies out in late June, it will mean that the Obamacare insurance subsidies would no longer be available to millions in as many as 37 federally-run states come August 1.

Realizing just what chaos this would cause, these three senators wrote:
First and most important: We would provide financial assistance to help Americans keep the coverage they picked for a transitional period. It would be unfair to allow families to lose their coverage, particularly in the middle of the year.
They provided no more detail except to say that they have had discussions with House and Senate colleagues and that there is "a great deal of fconsensus on how to proceed."

I don't doubt their intentions, but it would be nowhere so easy.
A few questions:

Will the full Congress pass, and the President sign, such a subsidy safety net before the Court rules, or at least by August 1 when the subsidies would end? If they end for even for one month, we are going to have chaos in the health insurance markets with uncertainty over whether people are covered or not.

And, don't presume passage of such a simple fallback will be simple. Just look at the current chaos in the Republican-led Congress over funding the Department of Homeland Security with the new Republican majority not able to agree amongst itself on how to continue paying the people that are now protecting our borders.

While I have no doubt these three Senators would be willing to vote for a clean subsidy extension––just as they recently voted for a clean Department of Homeland Security extension––what will their Tea Party colleagues in the House be willing to vote for who seem adamant that Obamacare can't crash and burn quickly enough?

What conditions will Republicans attach to any extension?
Undoubtedly, many Republicans will want to attach conditions to any subsidy extension that the President will find problematic.

In fact, Hatch, Barrasso, and Alexander are saying in their op-ed that they "will give the states flexibility to create better more competitive health insurance markets offering more options and choices." Such conditions will undoubtedly be veto bait for President Obama.

How long would the extension be?
The Republicans are not going to grant an indefinite extension. That would be tantamount to just fixing Obamacare which is something Republicans are clearly not going to do.

So, they will want to put a deadline on any extension in order to maintain pressure on Democrats to eventually recast the new health law their way.

A separate Republican suggestion by Nebraska Senator Ben Sasse is to create a reprieve if the Court rules against the subsidies by giving consumers a Cobra-like 18-month subsidy extension. An 18-month extension would take us to the end of 2016 meaning this Congress and this President would have to agree to substantial changes to Obamacare before Barack Obama leaves office. And that would be a heavy lift to say the least.

My sense is that in order to avoid a stalemate with this President, and something tantamount to a "fiscal cliff" over health care, the subsidies would need to be extended until at least the end of 2018. Doing so presumes the new Congress and President can reach an agreement in the first half of 2017 and then the market, the states, and the feds would have only about 18 months to put the new deal in place. Remember, the Obama administration had 3 1/2 years to implement Obamacare and we know what happened.

An extension to the end of 2018 would also put Obamacare front and center on the 2016 election-year agenda with the winners hopefully having a mandate to fix the health law.

Conservative Republicans will have a tough time letting Obamacare stay in business that long worried that the law will just become even more entrenched if it is not quickly rooted out.

So, the simple assurance that Republicans have a plan to avoid any major disruption to Obamacare from an adverse Supreme Court ruling may not be so simple.
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