Standoff Likely After Obamacare Ruling

February 25, 2015 Updated: February 24, 2015

With the first hearing for the Supreme Court case that could strike down key components of Obamacare a little more than a week away, Capitol Hill is buzzing with speculations about how Congress would fix healthcare in the aftermath of a disruptive ruling.

Healthcare advocates are already predicting doom and gloom if the Court rules against Obamacare in King v. Burwell; 9 million people would lose their healthcare subsidies, and the American Public Health Association predicts that 9,800 Americans would die as a result.

Republicans have proposed various modifications to Obamacare if the court were to rule the federal exchange for subsidies illegal, but the prospects of Democrats agreeing to them seem unlikely.

At a panel at the American Enterprise Institute, visiting fellow Ramesh Ponneru outlined the likely scenarios after a ruling against Obamacare and concluded that, at least in the short term, Congress would likely do nothing and try to pin the blame on the other side.

The first scenario would be for Congress to pass a brief legislation legalizing the federal exchange. The case doesn’t contest the constitutionality of Obamacare, merely that its current form doesn’t abide by the letter of the Affordable Care Act. However, it’s unlikely that Republicans would grant such a wholesale concession to Democrats.

A second possibility would have Republicans offer to legalize the federal subsidies in exchange for scaling back some parts of Obamacare such as the medical device tax or the individual mandate.

“It’s pretty hard to thread the needle here” Ponneru said. “It’s pretty easy to think of things that would fail on both counts, that Democrats would want to block and Republicans wouldn’t go for.”

It’s pretty easy to think of things that would fail on both counts, that Democrats would want to block and Republicans wouldn’t go for.
— Ramesh Ponneru

That leaves the default option of doing nothing, which Ponneru calls “politically unsustainable,” especially for politicians at the state level, who don’t like “throwing away federal money,” and could set up state exchanges as a result.

A fourth option would be a wholesale repeal of Obamacare and instituting an alternative proposed by Louisiana governor Bobby Jindal, which replaces tax breaks for employer health insurance plans with a standard deduction for individuals.

Ponneru called this plan “worse than” doing nothing because it would create a massive disruption of existing healthcare coverage, the single most unpopular effect of any type of healthcare reform.

Ponneru himself favors an “exit-ramp” approach that would allow states to opt out of Obamacare as much as possible, and allow for a transition to a system similar to that proposed by Sen. Orrin Hatch (R-Utah.), but also finds its unlikely as a plan Democrats would agree to.

Another problem with any alternative is that it might “box the next Republican presidential nominee” into an idea, even in “embryo” form, and preclude large-scale reform that might be possible if Republicans controlled both Congress and the White House.

“You could have a standoff that lasts for a while,” Ponneru said.

Another member of the panel was more optimistic about the prospects of a standoff, and said even in the absence of legislative action, few would lose their healthcare or even their subsidies.

“Nobody is going to lose coverage, it might be more expensive,” said TBC Solutions LLC’s Tom Hayne, who has experience selling healthcare plans. “I don’t think it’s a Day After Tomorrow scenario.”