King v. Burwell Threatens GOP

Joshua Green details the threat to the Republican Party if they get their wish and the Supreme Court cripples the Affordable Care Act on Bloomberg.com (h/t Kevin Drum).

(Conservative health care wonk Stuart) Butler’s worry is grounded in an understanding that voters with skyrocketing premiums may not blame Obama, as Republicans assume. They’ll expect the party hellbent on destroying the law to have a solution—and react badly if none is forthcoming. Because 16 states operate their own exchanges and therefore won’t be affected by the court’s ruling, Butler believes the ACA will stagger on and eventually recover, since voters won’t abide a system wherein some states have affordable, federally subsidized health-care coverage and others do not....“People who believe the ACA instantly goes away are deluding themselves,” he says. “By not doing anything to develop a Republican vision of how to move forward, they could end up with the very nightmare they’re trying to avoid.”

On the political front, lawmakers would have to decide what to do about the people in 34 states who would lose their subsidies. In theory, Congress could tweak the law to restore them. But Republicans have no interest in this, nor have they shown any sign of being able to agree on any other fix, much less one that Obama would support. That would throw responsibility to the states, which would each have to try and devise their own solution. Some would probably manage; others, especially those with Republican governors or legislatures implacably opposed to the ACA, almost certainly would not.

On the business front, the effects would be no less significant....Entire segments of the health system redesigned their business models to take advantage of the ACA’s incentives. Hospitals, for instance, were given a trade-off: They stopped receiving government payments to offset the cost of treating the uninsured, cuts that amount to $269 billion over a decade. In return, they were promised millions of new patients insured through federal subsidies. “All the major hospital systems and big insurers like Kaiser and Geisinger spent a ton of money adapting to the ACA,” says Butler. If subsidies vanish, “suddenly the market is misaligned. If you’ve hired all these new doctors and health-care workers to cover all these new people walking in the door, and they don’t come, what do you do? You lay them off.”