This is How Republicans Want to Fix Obamacare
If the Supreme Court rules against the administration, the GOP will attempt to use its leverage to make some big changes.
If the Supreme Court invalidates Obamacare's subsidies in 30-plus states, any solution will come down to what each side is willing to give up to get the financial aid flowing again and avert disaster for more than 6 million Americans.
President Obama thinks the answer is easy: Authorize the tax credits in every state—quick and clean. "Congress could fix this whole thing with a one-sentence provision," he said recently.
But that isn't going to happen.
"Republicans aren't interested in a one-sentence fix unless that sentence is, 'Obamacare is repealed,' " Sen. John Barrasso, the No. 4 Republican, said on the floor the next day. But that isn't happening either.
Republicans hold a lot of the cards. They control Congress, and they don't support the law anyway. But they're also wary of taking the blame for millions of people losing health coverage because of a lawsuit they support. So they'll likely agree to fix it, but they'll want to extract some concessions, too.
Which means the big question is: What can they actually get?
The lowest-hanging of low-hanging fruit, the device tax might well get repealed on its own, or as part of some other compromise, even if the administration wins in the King v. Burwell case. All things considered, it's not that much money. It's not intertwined with any other part of the Affordable Care Act. And, despite or because of those factors, it has become the top repeal target for congressional Republicans.
If the goal is to actually pass a fix, each possible bargaining chip needs to check three boxes: It needs to be significant enough to count as a real concession for Republicans; it shouldn't divide Republicans any more than they already are; and it can't be a deal-breaker for Democrats.
The employer mandate hits the trifecta.
Every Republican could support repealing the employer mandate, or at least weakening it substantially. Realistically, Obama and Obamacare can live without it (some liberal policy wonks would honestly prefer to live without it). But its outsized political weight would give Republicans a lot to claim credit for. Unlike the medical-device tax, the employer mandate is big enough that Obama wouldn't agree to a stand-alone repeal bill, and populist Democrats would likely put up a fight in Congress—just enough resistance to make Republicans' victory count (and, by extension, to help build support among reluctant conservatives).
The Independent Payment Advisory Board has been an outsized part of the ACA debate, even though it hasn't had to do anything yet. Conceived as a way to keep Medicare costs from spiraling out of control, it was quickly labeled a "death panel" by its opponents—despite all fact-checking to the contrary—and Republican leaders were still deriding it as a "de facto rationing body" as recently as this week. The House is already set to vote on repealing it before the Court ruling comes down, and it's easy to imagine them packaging it into a subsidy-restoring plan.
The board is supposed to suggest Medicare reforms if costs are growing too quickly. But thus far, it hasn't been necessary. The Congressional Budget Office has said repealing IPAB would add to the deficit, but that hasn't stopped conservatives from pursuing its demise.
Liberals think the board will be useful and is better than the alternatives for pursuing Medicare savings—and it might eventually have a lot of work to do if Medicare spending increases as expected over the next few decades. But it's possible, if far from certain, that Obama would be willing to let it go to secure the subsidies.
A different kind of subsidy
If the Court strikes down Obamacare's tax subsidies, congressional Republicans wouldn't simply face a binary choice between fully restoring those payments or letting chaos reign in states' insurance markets. Several lawmakers have already floated one middle-ground option: fully restoring the subsidies, but only temporarily. There are plenty more. And some of them could bend Obamacare in a much more conservative direction, without repealing it—if conservatives are willing to admit such a thing is possible.
Consider the plan from Sens. Richard Burr and Orrin Hatch. It would roll back the number of people eligible for financial assistance. Under Obamacare, it's anyone making up to four times the federal poverty limit; Burr and Hatch's plan would cap it at three times the poverty line. Poorer people also wouldn't get bigger subsidies; the size of your tax credit would be based on age, not income. And the financial help would come in a fixed dollar amount, whereas Obamacare's subsidies are tied to the cost of insurance.
All those changes together might be too much for Democrats to swallow, but there's a lot for Republicans to work with in there—if they can agree to accept Obamacare as the framework within which they have to work. And that's a big "if." Modifying the law's subsidy structure could be a big policy win for Republicans, but some conservatives would surely complain that such an approach assumes Obamacare is here to stay.
Again, for all the emphasis on Republicans' internal disagreements, Obama would not be entering this negotiation in a position of strength. If he wants his signature domestic achievement to live on, he'd have remarkably little power to draw red lines with the Republican Congress. But the individual mandate would probably be one. The concession Republicans most want Obama to make is one he just can't give them.
The individual mandate, the subsidies in question before the Supreme Court, and the requirement that insurers cover preexisting conditions form a "three-legged stool." If the Supreme Court destabilizes one of those legs, don't expect the White House to respond by agreeing to knock out another one.
The GOP certainly could vote on mandate repeal, and there would be an obvious political upside to doing so. But if the ultimate goal is to get a fix through Congress and across the president's desk, the individual mandate probably can't be part of it.
For obvious reasons, Obamacare at the very worst continuing unaltered in a dozen or so states, including big ones like California and New York, is better for Obama's legacy than undoing the law altogether. Repeal is never going to happen while he's in the White House.
The opt-out plans proposed in the House and Senate—letting states choose to do away with almost all of Obamacare's central insurance provisions—are likely out for the same reasons. They would amount to repealing the law in more than half the states.
But some of the most conservative members are still going to advocate for an absolutist position. Part of the challenge for Republican leaders will be convincing some of their caucus to accept anything less.