The Day After King v. Burwell

November 7th, 2014

After learning of the cert grant of King this morning, my initial forecast was that the Court didn’t grant it to affirm. If they wanted to do that, they would have waited for the en banc D.C. Circuit to uphold the rule. But taking the case–and taking it now!–suggests that at least four Justices think there are grounds to invalidate the rule.

In this post, I want to flesh out what happens if the Court invalidates the IRS rule–specifically, I want to consider how a GOP controlled Congress and Democratic President would handle the aftermath of King.

Unlike NFIB v. Sebelius, this case presents a statutory, rather than a constitutional claim. It can be fixed by statute. As I noted, it would only take a single sentence by Congress to provide subsidies to all states, regardless of whether they provide subsidies or not.  But the odds of the Republican House and Republican Senate doing this–and this alone–are zero .

Though, the GOP may not be so limited. Imagine if the GOP Congress passes a bill that provides subsidies–a provision that is extremely popular–coupled with a repeal of another unpopular aspect of the law, it would put the President in a tough spot.

Imagine if the GOP passes a two part bill. Part I provides subsidies to the states without exchanges. Part II enacts the “If you like your health insurance, you can keep your insurance” provision. This would make it easier for people to keep old plans. Or it  repeals the draconian Cadillac Tax, which will kick in in 2017, and force millions of plans to be cancelled.

The President would be faced with a choice–repeal unpopular parts of the law, and save a popular part of the law. Vetoing that would not be easy. Here, the GOP Senate and Congress can force changes to Obamacare to keep the good and get rid of the bad.

Of course, this would decrease the revenues Obamacare receives, and make it non-budget neutral (like Obamacare ever was). But, Social Security and Medicaid have been running on deficits for decades, so join the club.