Nancy Pelosi is now predicting that Republicans will “rue the day” that the Supreme Court guts Obamacare subsidies for millions in three dozen states. “They’re going to then go out and say we’re going to take subsidies away from people who have health care? No, I don’t think so,” says Pelosi. “It would be really bad news for them.”
Meanwhile, if anything, Republicans may be moving away from their previously-stated vow to participate in providing a contingency fix to temporarily keep those millions covered. The Hill reports that GOP Rep. Tom Price, the chairman of the House budget committee and a leading conservative, has now come out against any plan to temporarily keep those subsidies going.
Price’s approach to the issue neatly foreshadows the chaos that could erupt if the Court does what Republicans say they want and sides with the challengers in King v. Burwell.
In coming out against a temporary subsidies fix, Price appears to be somewhat at odds with other Republicans, such as Rep. Paul Ryan and Senators like Ron Johnson, Orrin Hatch, and John Barrasso, who want to offer some kind of transitional plan for those who would lose subsidies, putting off the fallout until after the election and buying time for Republicans to produce a comprehensive Obamacare alternative.
Instead, Price wants to proceed straight to repealing Obamacare and replacing it with his new proposal. The simplified version of Price’s reforms is that it would do away with the individual mandate and the Medicaid expansion and the required minimum standards for health plans and the protections for people with preexisting conditions. It would subsidize people’s insurance, but it would replace the current subsidy system, which is based on income, with one based on age. Philip Klein, who has all the details, explains this component of it:
To assist individuals with the purchase of insurance in the absence of Obamacare’s subsidies, it would provide refundable tax credits…the new Price plan would adjust the value of the credits based on age. The credits would range from $1,200 for those between 18 to 35 and $3,000 for those over 50 – with an additional $900 credit per child up to age 18….
To address those with pre-existing conditions, Price would provide grants to states to offer coverage to those with such conditions, using mechanisms that spread risk.
Larry Levitt of the Kaiser Family Foundation tells me that the subsidies in Price’s plan are not necessarily that stingy — for some people, they might equate to what they’d get under Obamacare — but overall, a lot of people would probably get less in subsidies, because they are not set by income. That doesn’t mean those people would necessarily pay more, though, because the nixing of minimum standards might mean lower prices for insurance. Of course, Levitt adds, the insurance might not be as good as it is under Obamacare — this could mean a return to a pre-ACA universe of substandard plans that cover less and possibly carry greater risk of illness-induced financial catastrophe.
As for those with pre-existing conditions, Levitt says he doubts an approach such as this one would provide enough funding to states (however it would be paid for) to cover the same numbers of people in that situation that Obamacare does.
But in a way, it’s good to have a fleshed out GOP alternative, because it helps clarify the differences between the parties on health reform. GOP reforms would likely translate into lower-quality plans and a coverage expansion that would benefit fewer people. But that would be the tradeoff Republicans would make to achieve their goal of less government spending and interference in the market than that which occurs under Obamacare.
The rub is that if somehow we did switch from Obamacare to the Price alternative, there would be vast disruptions, Levitt says. “This would be a complicated set of changes to implement on one-sixth of the economy,” Levitt notes. “Insurers would have to change everything they’re doing. States would have to create high-risk pools. None of that can happen quickly. Changing the system would create disruption, just as Obamacare did when it was first implemented. Without some kind of transition, it’s unclear how you’d get from here to there.”
Of course, even if the Court does gut subsidies, the Price alternative isn’t going to happen. Even if Republicans could unite behind the Price plan, or some other alternative, Obama would veto it, and try to pressure Republicans — in Congress and the states — to implement a simple subsidy fix. But the fact that a leading conservative like Price is now opposed to a temporary subsidy patch even on Republicans’ own terms is a reminder that Republicans may prove too divided to accomplish even that.
Meanwhile, a Court decision gutting subsidies would force more debate among Republicans over what alternative they can unite behind, if any. More specificity might clarify the contrast between the two parties on what each really wants for reform over the long haul, and while Obamacare continues to poll badly, there’s no particular reason to assume that contrast would benefit Republicans. Indeed, the possibility that the GOP might not unite behind any contingency fix — and beyond that, the disruptions that repeal-and-replace would actually cause, after Republicans widely criticized the disruptions caused by Obamacare — suggest they might be better off if the Court just left the law as is.