The potential impact of a Supreme Court decision gutting Obamacare subsidies in three dozen states is often discussed in terms of the millions who could lose health coverage, potentially destabilizing insurance markets across the country. But it turns out that the impact could be considerably more dramatic than that, radiating out to produce untold economic damage, too.

That’s the conclusion of a must-read from Joshua Green of Bloomberg Businessweek. Green talks to health care policy and industry experts and concludes a ruling against the law could “hurl the political system, and no small part of the economy, into chaos.” Of particular interest is the view offered by Stuart Butler, a longtime fixture in conservative health care wonk circles:

The result would not just leave millions uncovered but also risk destroying the individual health-care markets in states that don’t act….On the business front, the effects would be no less significant.
“If the U.S. health-care system were its own economy,” says Butler, “it would be the sixth-largest in the world — larger than Britain’s.” Entire segments of the health system redesigned their business models to take advantage of the ACA’s incentives. Hospitals, for instance, were given a trade-off: They stopped receiving government payments to offset the cost of treating the uninsured, cuts that amount to $269 billion over a decade. In return, they were promised millions of new patients insured through federal subsidies.
“All the major hospital systems and big insurers like Kaiser and Geisinger spent a ton of money adapting to the ACA,” says Butler. If subsidies vanish, “suddenly the market is misaligned. If you’ve hired all these new doctors and health-care workers to cover all these new people walking in the door, and they don’t come, what do you do? You lay them off.”

Meanwhile, a Republican Senator, Ben Sasse of Nebraska, is sounding similar warnings in the Wall Street Journal. Sasse tells fellow Republicans they’d better have an alternative to deal with those who might lose insurance, to avert a political nightmare for Republicans: “Chemotherapy turned off for perhaps 12,000 people, dialysis going dark for 10,000. The horror stories will be real.”

That’s a useful concession, though, unsurprisingly, Sasse blames Obama administration officials for that scenario (why don’t they have a contingency plan to deal with the damage this GOP-backed lawsuit could produce?). But the real news here is that Sasse thinks the result will be an untenable situation for GOP governors:

When Team Obama then turns its guns on the holdout states and their 37 governors, the political pressure to adopt ObamaCare will be crippling. I fear that most governors will fold. We’ve already seen some Republican governors finesse their principles to expand Medicaid and secure extra money. The new pressure will be even more acute.

I’m not particularly optimistic that GOP governors will fold. But the point is, even Republicans agree that an anti-ACA ruling could create real political and governing complications for GOP state lawmakers. That, combined with potential economic disruptions, could have potential legal relevance.

Remember, more than 20 states have argued that a Court decision gutting subsidies would unfairly impose a surprise retroactive punishment on them, despite the fact that they were given no clear warning of the dire consequences of failing to set up an exchange. That, the states say, raises serious Constitutional concerns, meaning the Court should instead opt for the interpretation of the ACA that doesn’t raise such concerns — the government’s. It’s not impossible this argument could appeal to Anthony Kennedy or John Roberts, and the potential for serious disruptions within states might buttress that argument.

I still think it’s quite possible that the Court will side with the challengers. But I would not rule out the possibility that the prospect of economic chaos — or, indeed, political chaos — could weigh on the Justices.

Still, whether or not all of this does end up having legal significance, the potential for such disruptions carries important implications for the political and policy story that could unfold after an anti-ACA ruling. Bottom line: This story doesn’t end with such a ruling, and no one can really predict where it will go next.


*  SCOTUS GUTTING ACA COULD UPEND HEALTH CARE POLITICS: Politico has a good piece gaming out just how volatile and unpredictable the politics of health care could get if the Supreme Court guts subsidies for millions. Dem strategist Paul Begala predicts Democrats will go on the attack on the issue and make it resonate in the 2016 elections:

If subsidies are canceled going into the 2016 election cycle, Democrats would blame the Republicans, who are still trying to kill the Affordable Care Act five years after its passage. Of the two dozen GOP senators up for reelection in 2016, all but two come from states where people could lose subsidies and not be able to pay for insurance. “The ACA is a fact of life now, not an abstraction,” Begala said. “It’s easier to kill an abstraction … than to tell millions of Americans that the health insurance they’re relying on has suddenly disappeared.”

And many of the states that are home to the largest numbers of people who are eligible for subsidies, and thus stand to lose the most in tax credit money, are key 2016 swing states: Florida, North Carolina, Pennsylvania, Virginia, Wisconsin.

* ARE HOUSE REPUBLICANS SIGNALING CAVE IN DEPORTATION FIGHT? The Senate is set to move forward with a bill funding the Department of Homeland Security, stripped of measures rolling back Obama’s deportation relief for millions, which will be moved in a separate bill. If that passes, as expected, the pressure will mount on the House GOP leadership, and Roll Call’s Matt Fuller talks to some House Republicans who are subtly signaling that they may end up supporting that clean funding when it comes down to it.

If House Republicans do cave, it wouldn’t be all that surprising, given that this same script has repeatedly played out in the past.

* CONSERVATIVES URGE GOP TO KEEP UP DEPORTATION FIGHT: Congressional conservatives are urging GOP leaders not to relent in the battle to use Homeland Security funding as a crowbar against Obama’s actions, but Republicans are worried about getting blamed for a shutdown, just as happened in 2013. GOP Rep. Steve King tells GOP leaders to stop being squishes and suggests the GOP paid no price for the 2013 shutdown:

“I don’t remember anybody noticing,” he said. “I don’t remember anyone complaining.”

Do conservatives really think that GOP leaders should allow Homeland Security to shut down for as long as it takes to force Obama and Democrats to cave on deportation relief for millions? Why do they think that would happen?

* GOP GROPES FOR ALTERNATIVE WAYS OUT OF DHS IMPASSE: The New York Times reports that Republicans are internally floating a series of other possible options to get out of their current jam. Two ideas: Temporary funding for Homeland Security, until the Senate and House can meet in conference and find some kind of “compromise” on Obama’s executive actions; or temporary funding that might “expire” if the Court does not end up blocking Obama’s actions.

The problem here, of course, is that these alternative ideas still presume an endgame in which Homeland Security funding ends up being used as leverage to roll back deportation relief. Democrats are not going to let that get through the Senate; Republicans need to let go of it.


House Minority Whip Steny Hoyer will not support a short extension to fund the Department of Homeland Security until legal questions around President Obama’s immigration actions are answered, the Maryland Democrat said Thursday.

And remember, the legal dispute may not be resolved for months, so Republicans can’t count on getting bailed out of their jam by the courts before the dispute over Homeland Security funding is resolved.

* AND BEHOLD THE HILLARY-MENTUM IN IOWA!!! A new Quinnipiac poll finds that Hillary Clinton holds a huge lead over Dem rivals among Iowa Dem caucusgoers: She has 61 percent, to 19 percent for Elizabeth Warren and seven percent for Joe Biden. Clinton leads Warren by 49-28 among “very liberal” caucusgoers and by 68-18 among “somewhat liberal” ones.

Obviously polls this far out tell us little, but they do influence insider chatter, and such findings could perhaps put a damper on the idea that Clinton has to worry about a challenge from the left.