The Volokh Conspiracy

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Volokh Conspiracy

How Republicans can repeal and replace Obamacare in 2015: My USAToday op-ed


Because the Supreme Court granted cert in King v. Burwell, there is now the real prospect of repealing and replacing the Affordable Care Act in 2015. But only if the Republicans in the House and Senate actually take the time to develop an alternative health insurance reform bill to send to the President's desk when the case is decided. In my USAToday column this morning, I explain why:

Until the Supreme Court agreed to hear King v. Burwell, which challenges the legality of the IRS rule allowing Obamacare subsidies in states that have not built their own insurance exchanges, the conventional wisdom was that Congress would pass a symbolic bill to repeal Obamacare that everyone knows would be vetoed by the president. Then they'd move on. Obamacare would survive at least until 2017. But the decision to hear King changes everything. Insiders know that this challenge has a decent chance of success. Rather than asking the court to establish some grand constitutional principle, the justices are merely being asked to hold the IRS to the actual wording of the law, which is not nearly so heavy a lift. The eventual outcome of the case doesn't matter as much as the decision to hear it. With the lawsuit now looming over them, all the "stakeholders"—such as insurance companies and health care providers—know that the subsidies for health insurance in [36 states] are in serious jeopardy. And the end of these subsidies means the end of the insurance mandate for businesses in those states, which kicks in only if employees are eligible for subsidies on an exchange. There is now a serious financial risk that did not exist before the Supreme Court agreed to hear this case. Insurance and health care companies need an insurance policy against the collapse of the insurance market. Republicans in Congress need a way to resist the enormous political pressure that will be applied to simply "fix" the health care law by allowing subsidies to flow through the federal exchange. And Democrats need to salvage something from all their efforts to pass the law. In short, now everyone needs to invest in devising a replacement for Obamacare.

Even better, by developing such an alternative, Republicans can make a favorable ruling more likely:

As a rule, Supreme Court justices are reluctant to invalidate a law on which many relied. It will be far easier for the justices to enforce the law's existing language if they know there is a viable alternative that can be enacted by both houses of Congress and signed by the president within a week of their ruling.

I then identify several features that such a market-based measure might have. In addition, given Obamacare's unpopularity, an Obamacare replacement bill might even attract Democrat support of it contains refundable tax credits to replace the current means-tested subsidies (which would eliminate the current incentive to limit one's hours and keep one's wages low to preserve one's subsidy). Democrats can even claim that, without Obamacare, Republicans would never have supported this sort of reform. But regardless of whether there is Democratic buy in,

Republicans need to have a well-vetted replacement in the pipeline. To make a favorable ruling in King more likely, the legislative wheels must be visibly in motion by the time of oral arguments in March. Before the Supreme Court took this case, Republicans in Congress were limited to symbolic action against Obamacare. Now, thanks to voters in November and the justices who voted to hear the case, beginning in January, Republicans in Congress can craft a bipartisan market-based replacement that the president will be compelled to sign in June when the court announces its decision. Simply by acting as legislators, Republicans in the next Congress can actually repeal and replace Obamacare.

But this would require them to be legislators. (Read the whole thing here.)