The Huffington Post’s Jeffrey Young has a great piece today detailing that Republican officials in Alabama who debated whether to set up an exchange under Obamacare — and ultimately decided against it — had no Earthly idea that the failure to do so would cost their state subsidies. They did not read the statute as denying subsidies to states that opted for the federal exchange — as the King v. Burwell challengers do.
All this matters because it could — could — help persuade the Supreme Court to uphold the subsidies on federalism grounds. As some 20 states have argued, reading the statute the way the King challengers do would raise serious Constitutional concerns, because it would impose dramatic, hidden penalties on states that had no clear warning that they faced such consequences for failing to set up exchanges. The Justices should instead opt for the interpretation of the ACA that doesn’t raise these concerns.
And those consequences would indeed be dramatic. If you don’t believe me, ask Scott Walker, who has now confirmed that any such decision would unleash “incredible pressure” on Republican governors to set up exchanges to keep the subsidies flowing — which likely means an epic bout of finger-pointing will erupt, as GOP governors demand that Congress fix the problem.
In an interview last week with radio host Charlie Sykes, this exchange happened:
SYKES: You may have a major decision coming up in a few months. If the Supreme Court rules in this King v. Burwell case that nobody in Wisconsin can continue to receive federal Obamacare subsidies, there is going to be tremendous pressure on Republican governors — including you — to create a state exchange. What are you gonna do? Do you have contingency plans in place?
WALKER: We’re gonna push back. This is a problem that was created by this president and the Congress that was in the majority at that time. There’s gonna be incredible pressure — we heard it about a month and a half ago when I was at the White House with all the other governors from across the country. The president doesn’t have a fallback plan. But this is not something the state created. This is something the federal government — this president and the Congress created. They’ve gotta come up with a solution.
Blaming post-King chaos on Obama and Democrats will obviously be the first thing GOP governors like Walker try to do. But Democrats don’t control Congress anymore. And according to law professor Nicholas Bagley, who has taken a close look at the administration’s options for a forthcoming legal paper, there is little Obama can do on his own.
“The Obama administration has no good options for picking up the pieces after an adverse ruling in King,” Bagley tells me. “It can probably make it slightly easier for states to establish their own exchanges and it might even be able to treat some federally facilitated exchanges as state-based exchanges. But, even under the most optimistic scenario, millions of people will still lose their health coverage and the insurance markets in many states will collapse. The notion that the administration has the unilateral authority to restore tax credits nationwide is just wrong.”
What this means is that, if Walker really is going to demand that the “federal government” fix the problem, that would mean demanding that Congressional Republicans participate in any such fix. The post-King mess could be particularly acute in Wisconsin: Because of a decision Walker made to shift people from Medicaid to subsidized private insurance, significantly more people may be on subsidies than otherwise might have been, meaning Walker could be on the political hook for the mess. Some 185,000 Wisconsinites qualify for subsidies.
Walker is implicitly conceding that he — and other GOP governors — will not be able to simply shrug at the sight of their own constituents losing health care; the political blowback will be real. He suggests these governors will pass the buck to the “federal government,” which is to say, not just to Obama, but also to the GOP-controlled Congress. Yet Congressional Republicans will be under pressure from conservatives to do nothing, in hopes that the exchanges collapse, and it’s hard to imagine them coalescing behind any contingency plan.
Which would then lead back to the question of whether Walker will set up an exchange to keep tens of thousands of his constituents from losing health coverage. But at that point the GOP presidential primary will be well underway, and acting could anger conservatives. Yet not acting could alienate swing voters: Large majorities of independents think Congress and/or the states should restore the subsidies.
Which would probably lead Walker to again yell about how this is all Obama’s fault.
One can imagine Congressional Republicans agreeing to a temporary patch to the subsidies, if only to prevent the GOP from getting damaged from political fallout, heading into the 2016 elections. But even that might prove difficult for them to pull off.
It’s all a reminder of what a political mess a court ruling with King could inflict not just on Obama and Democrats, but on Republicans, too.