What Will Republicans Do if Obamacare Subsidies are Blocked?

Kevin Drum had a strange post Tuesday on the Republican suit, now in the DC Circuit, to block large numbers of people from getting subsidies under Obamacare.  The case is simple.  The statute provides for subsidies for people getting insurance through state exchanges, but not for anyone getting insurance through federal exchanges.  Most states then refused to set up exchanges, thus disqualifying their citizens from subsidies, but the IRS (which handles the subsidies) set up a regulation allowing subsidies for people purchasing on the federal exchange as well.  The regulation is constitutionally and statutorily dubious, so Republicans have filed suit to block its implementation.

Drum games out various scenarios as to how this might be handled, whether the Supreme Court will dare strike it down, whether the prospect of people losing their subsidies will inspire states to set up their own exchanges, and so forth, but omits the obvious.  The whole issue is simply a statutory oversight that Congress could easily correct and render the whole issue moot.

Come on, you may say, don’t be silly.  Congressional Republicans would never fix a mistake in the Obamacare statute.  They have their hearts set on making it work as badly as possible and would never actually do anything to make it work.  At least so far, that is certainly true, but Drum should at least mention this possibility if only to discount it.  And I am not certain it can be discounted so easily as not to be worth even discussing.  After all, there will be winners as well as losers in Obamacare.  At present, Republicans are pointing up the losers and trying to minimize the number of winners in order to create pressure for a repeal.  And it is certainly true that the people who lose their insurance under a new statute (or the ones who see its price go up or quality go down, or who resent paying a fine for not having it) tend to be a lot more vocal than the people who gain under it.  It is easier to block a benefit than to take one back.  But that is precisely the problem.  Assume that either the DC Circuit in 2014 or the Supreme Court in 2015 block the subsidies to people buying insurance on federal exchanges.  Suddenly a non-trivial number of people who had affordable insurance will see its price needlessly skyrocket.  Republicans will cheer and celebrate.  People losing their insurance (or seeing it priced out of their range) will not be amused.  Obama will propose a simple solution.  Just change a few lines of statute and the subsidies will be restored.  Republicans who refuse will start getting a lot of angry phone calls.  Now, presumably the majority will look over their right shoulders at a potential Tea Party challenge and vote no.  The most moderate Republicans will be from states with their own exchanges, so their constituents will not be harmed.  But can we be sure there won’t be enough defectors joining the Democrats to make passage impossible?  I am not so sure.  Championing the losers under the reform and trying to limit the number of winners is one thing.  Actually setting out to harm the winners, with no discernable benefit to anyone else is quite another.

The Republican argument for seeking to block the subsidies is apparently that the employer mandate penalizes employers who do not provide their employees with health insurance, but only if their employees are eligible for subsidies, so we have to strip those employees of subsidies.  Their argument is unconvincing.  The more obvious approach is simply to repeal the employer mandate.  But the Democrats would never agree, Republicans may protest.  Well, given that Obama has already unilaterally delayed the mandate by a year, I am inclined to think they would.  Besides, even if Democrats resist, you could always package repeal of the employer mandate with correction of that statutory error.   Democrats are guaranteed to bite then.  But, of course, that would be utterly unacceptable to Republicans because it might make the Act work, and their whole goal is to keep it from working, no matter who they hurt.  The question is how long such a position will be politically viable.