What Happens The Day After King v. Burwell?

November 20th, 2014

Sarah Kliff interviews Michael Cannon about his role in King and Halbig. Here is Michael’s response to what happens the day after King is decided. In short people will lose subsidies, and then no longer be subject to the individual mandate.

Michael Cannon: Unfortunately, there’s going to be a lot of dislocation that we would not have seen if the President had followed the law and we’d addressed all these issues in 2013.

There are going to be a lot of people who lose their subsidies. The reason it will be so painful for them to lose their subsidies, for most of those people, is because Obamacare increases the cost of the insurance to the point where they can’t afford it.

Sarah Kliff: You’re also knocking out the individual mandate in a way, too, because so many of these people would qualify for hardship exemptions. They wouldn’t be able to afford coverage without the subsidies.

Michael Cannon: Right. They won’t be able to afford exchange coverage once they are exposed to its full cost. That will be painful. But they also won’t be penalized for not buying it.

So what you do then is, you let the political process work. I would get rid of all the features of the law that are making their coverage so expensive. You get rid of community rating. You get rid of all the coverage mandates that are in Obamacare.

I guess what I’m talking about, if that happens and the Supreme Court rules in our favor, is my preference would be that Congress should repeal the whole thing.

For purposes of atmospherics, I think some policy shops should come up with plans of how states can react creatively to this decision, and offer policies that are non-compliant with Obamacare, but would be appealing to those no longer subject to the mandate. An amicus should address just this point.

Update: With “fodder” for Linda Greenhouse, Michael Greve explains what should happen the day after King:

To illustrate how far this has gone and how difficult it will be: in helping the ACA over the hurdle, the health insurance lobby, AHIP, sold the entire industry into government dependency. Unless the mandates stay intact and the subsidies keep flowing, the industry will cease to exist. So if the King plaintiffs win, it won’t be five minutes before Karen Ignagni—AHIP’s chief lobbyist—darkens Speaker Boehner’s and Senator McConnell’s doorway and begs for a fix. A bailout.

In that sure event, I ask my friend James Buckley to let mercy prevail and to entertain a friendly amendment to his phase-out proposal: one more federal grant, in the amount of $2,000. Conditional on Ms. Ignagni’s purchase of a one-way ticket to Siberia.