A decision in the much-anticipated Supreme Court case of King v. Burwell is expected by the end of June, just in time for the NAHU Annual Convention in New Orleans! While the final decision remains a closely guarded secret among the nine justices, their clerks and a few lucky flies that live on the SCOTUS walls, policymakers on the other side of First Street are continuing deliberations on what to do in response to their decision. Over the past several weeks we have seen several proposals, but now Republicans are beginning to coalesce around a proposal drafted by Senator Ron Johnson (R-WI) that would keep subsidies in place through September 2017 while repealing the law’s individual and employer mandates. There are 31 senators who currently support Johnson’s plan, although the House remains more skeptical and is looking to institute a new tax credit plan instead of extending the existing PPACA subsidies.
There are other critics too. A new study by the American Academy of Actuaries that analyzes the proposals responding to the King decision found that these approaches only provide limited stability within the marketplace and eliminating the law’s mandates could lead to adverse selection. Another study released earlier this month by the conservative-leaning American Action Forum argues that Congress can’t sit idly while consumers lose their subsidies. However, they do support the effective loss of the individual and employer mandates should subsidies be stricken.
While the question of which way the Court will decide is on the top of everyone’s minds, the bigger question may be what happens should it side with the plaintiffs and strike down the subsidies. Republicans would be put in a tough situation of potentially having to support a key component of a law that they have spent the past five years tearing apart, while President Obama and Democrats would have to concede the inherent weakness of their prized legislation and plead to the Republican majority to patch it back together to restore coverage, with the potential tradeoff of having to tear down other key components of the law. Making all of this even more interesting is looking at the class of senators up for re-election in 2016, with 24 Republicans due up compared to just 10 Democrats. Of those 24 Republicans, all except for Kentucky’s Rand Paul represent states covered by the federal marketplace and not a state-based exchange. This would put an even greater onus on these senators to put forward some sort of a solution for the millions of Americans enrolled in subsidized coverage in their states that could be suddenly snatched by the Court.
The Senate Judiciary Oversight Subcommittee is scheduled to hold a hearing next Thursday to examine the IRS regulations on the subsidies. This week, Senator Ted Cruz (R-TX) issued a letter to Treasury Secretary Jack Lew imploring him and other Administration officials to testify before the committee, including Assistant Secretary for Tax Policy Mark Mazur, Deputy Assistant Secretary for Tax Policy Emily McMahon and Deputy Tax Legislative Counsel for Tax Policy Cameron Arterton.