I’ve written at some length about what happens the day after the Court invalidates the subsidies to states that have not established exchanges (see here, here, here, here, here, here, here, here, and here). As we inch closer to June, this clash between the President and Congress is shaping up to be a game of chicken.

Senator Barrasso (R-Wyo), whom Philip Klein refers to as the “Paul Revere” of King v. Burwell, lays out the stakes.

“The King decision is going to force the president’s hand to sign legislation and it’s going to give us an opportunity to work on ways of trying to eliminate some of the most damaging parts of the healthcare law,” Barrasso said.

Barrasso expects the President to push a one-page, technical fix that does nothing else, while Republicans will want to repeal mandates:

Obama would likely push Republicans to pass a simple technical “fix” that would change the language of the statute to allow for subsidies to be used toward purchasing coverage on the federal exchange. …

Instead, Barrasso said Republicans are likely to demand that Obama agree to make changes to Obamacare that would eliminate objectionable features of the law, such as the individual mandate, in exchange for a temporary restoration of the subsidies.

“This president is going to try to force Republicans to pass a one-page fix that says, make all that he has done illegal, and make it legal with a one-page bill,” Barrasso said. “I don’t see Republicans doing that. I think if he does want to continue subsidies for some period of time — which will be a limited period of time — that he’s going to have to agree to make some significant, what he would consider concessions, that I would consider differently. I’d consider as removing more damaging parts of the healthcare law. And that would be eliminating the mandates, giving more freedom and flexibility to those 37 states who haven’t set up their own exchanges.”

Barrasso suggests any compromise offers temporary relief so subsidies would not be cut off:

“We are working on a transition plan from what the President’s health care law is now, that does provide for those people who are getting subsidies and would possibly be abruptly cut off, as we transition to a more market-based health care plan,” he said.

Barrasso expects the President to try to force the states to act, or act alone.

If Obama can’t come to an agreement with Congress after a ruling, Barrasso said he’d probably take his case to the states, or try some sort of executive or administrative action.

“I think he’s also going to try to either influence or intimidate and browbeat governors, and bully governors, in those 37 states, to set up state exchanges,” Barrasso said. “But he may try to go around the law again another way by redefining state exchanges to say these all qualify, when in fact they don’t qualify. A reading of the law is very clear. Subsidies through state exchanges were supposed to be there for people. But if a state chose not to set up a state exchange, people from those states were not supposed to get subsidies.”

 

First, the states will not, and in many cases, cannot act to create exchanges over the summer. Even if a state was so inclined to create exchanges, there’s no way the states can pull together all of the resources, and meet all of the statutory requirements necessary before September, which is when the subsidies stop flowing. Some states may, as Nick Bagley suggested, designate a non-profit to serve as the administrator for their exchange, and in turn that non-profit can contract with the federal government. But a number of these states do not have full-time legislatures. Odds are, unless governors call for emergency sessions, the states would not even be able to act quickly enough to accomplish this.

Although, the President could issue some executive order workaround that would ignore King v. Burwell, but take another 2 years to litigate. This process could go on indefinitely. Maybe ask the Court to rehear King v. Burwell if the President flouts it? That could be interesting.

If the Senate doesn’t pass a clean bill, or the President vetoes a bill that repeals mandates, then subsidies are cut off in September.  So who blinks first?

Barrasso expects the President to call their bluff.

“As the president said to me in the White House [earlier this month], he said, ‘There are five million people [who receive subsidies through the federal exchange] — and I know who they are.’ He spoke like a community organizer who was going to try to use those people that he has actually caused significant damage to by not applying the law,” Barrasso said from his senate office.

Disclosure: I filed a brief on behalf of the petitioners in King v. Burwell.