Former GOP Texas Senator, Phil Gramm, penned this Op-Ed for the Wall Street Journal. In it he discusses how “The GOP needs a politically defensible alternative if the Supreme Court overturns federal-exchange subsidies:”
On March 4 the Supreme Court will hear oral arguments in King v. Burwell, with a decision expected in late June. If the court strikes down the payment of government subsidies to those who bought health insurance on the federal exchange, Republicans will at last have a real opportunity to amend ObamaCare. Doing so, however, will be politically perilous.
The language of the Affordable Care Act states that subsidies should only be paid through state exchanges. The bill’s authors perhaps believed that pressure from citizens and the health-care providers who would benefit would entice states to set up exchanges. But, faced with mounting technical problems in setting up the exchanges, the Obama administration decided—legally or illegally—to allow subsidies to be paid through a federally run exchange. Therefore, political pressure that might have convinced states to set up exchanges never developed.
The political pressures to set up state exchanges if federal subsidies are now struck down will be enormous. The Kaiser Family Foundation used Congressional Budget Office data to estimate that 13 million people will receive subsidies in 2016 through the federal exchange. If the Supreme Court strikes down these subsidies, 13 million people would lose an average of $4,700 a year, and health-care providers would certainly fight to protect some $60 billion a year in subsidies.
The president’s most likely response to an adverse court decision would be to refuse to work with Congress to fix ObamaCare. Instead he will likely mount an effort to force the 37 states now using the federal exchange to set up state exchanges to qualify for the subsidies. His administration could make it easy for states to continue to use the federal exchange while nominally taking ownership through a shell state entity. Ten states already have some form of partnership with the federal exchange.
Absent a strong Republican alternative, the president’s strategy would unleash powerful political pressure on Republican governors and legislators and force them to establish state exchanges. Such a result would saddle Republicans with a partial ownership of ObamaCare, alienating their political base and producing substantial fallout in the 2016 elections.
Republicans need a strategy that is easy to understand, broadly popular and difficult to oppose. It must unite Republicans and divide congressional Democrats, while empowering Republican governors and legislators to resist administration pressure. I believe that strategy is what I would call “the freedom option.” Every American should have the right to decide not to participate in ObamaCare: If you like ObamaCare and its subsidies, you can keep it. If you don’t, you are free to buy the health insurance that fits your needs.
The freedom option would fulfill the commitment the president made over and over again about ObamaCare: If you like your health insurance you can keep it. If Republicans crafted a simple bill that guarantees the right of individuals and businesses to opt out of ObamaCare, buy the health insurance they choose from any willing seller (with risk pools completely separate from ObamaCare), millions of Americans would rejoice and exercise this freedom. Such a proposal would be easy for Republicans to articulate and defend. And it would be very difficult for Democrats to attack.
Of all potential Republican proposals, the freedom option seems the most likely to garner the six Democratic votes in the Senate needed to break a filibuster, pass the bill and put it on the president’s desk. If the freedom option were combined with a provision that allowed federal-exchange subsidies or state actions setting up state exchanges, existing providers and recipients of subsidies would not be threatened.
The opposition would come solely from those who understand that ObamaCare is built on coercion—and that unless young, healthy Americans are forced into the program to be exploited with above-market insurance rates, the subsidies will prove unaffordable. That will be an exceedingly difficult case to make to the public.
By extinguishing coercion, the freedom option would put ObamaCare on the path to extinction. Without the ability to exploit the young and healthy, the Affordable Care Act will collapse under its own funding weight, all but guaranteeing a 2017 revision of the entire law.
Whether in large states like Florida and Texas—with 2.5 million and 1.7 million people receiving subsidies through the federal exchange, respectively—or in small states like North Dakota and Iowa—with 26,000 and 70,000 recipients—Republican governors should have the political high ground in demanding that their citizens be given the right to opt out of ObamaCare.
Restoring this freedom would be what Republicans demand for setting up state exchanges or supporting the restoration of federal-exchange subsidies. Public opinion would strongly favor the Republican position and put pressure on the Obama administration to relent.
Adopting the freedom option will require a level of discipline that Republicans have yet to show in this Congress. It is imperative that the message not be muddled with other amendments that Democrats and Mr. Obama could use as an excuse for opposing it. The leadership that will be required in this effort will test the courage of a Republican congressional majority and Republican governors across the country; victory will require a determination to govern. The alternative will almost certainly be a long or a short path to capitulation.