Good question. The Supreme Court will hear oral arguments shortly in King v Burwell about the legality of ObamaCare subsidy payments through the federal exchange, and the White House claims it has no Plan B if they get thrown out. Democrats in Congress certainly have reason to look for a fix that restores those subsidies, since ObamaCare has (a) forced everyone to buy health insurance, and (b) driven up the costs with artificial mandates. The voter backlash over the incompetent legislative effort behind ObamaCare will threaten their already low chances of winning back control of Congress in 2016.
That may be a problem for Democrats, Jindal argues in National Review today, but it’s an opportunity for Republicans to dismantle ObamaCare:
Eliminating the subsidies nationwide would therefore cut Americans’ tax liability by approximately $48 billion on net. Granted, these sums from CBO apply to all 50 states, while the King ruling would apply only to the 37 states that have not established exchanges. But the trend from the numbers is crystal clear: The tax reduction from eliminating the employer mandate, and weakening the individual mandate, outweighs any tax increase from eliminating the subsidies — meaning a favorable ruling in King v. Burwell would cut Americans’ taxes by many billions.
And here’s where some on the right want to snatch defeat from the jaws of victory. Conventional wisdom in Washington has assumed that, should the Court strike down the subsidies in 37 states under King, states will immediately act to establish their own state-run exchanges — allowing the subsidies to flow once more. Alternatively, Congress might be tempted to pass language extending the subsidies to the federally-run exchange, allowing Obamacare to comply with the Court ruling.
That’s a “solution” in search of a problem. If eliminating the subsidies represents a net tax cut, then restoring the subsidies — whether by states creating their own exchanges, Congress passing new legislation, or some combination of the two — would re-impose a sizable tax increase. Americans would pay billions more in higher taxes to fund the newly restored subsidies, making Obamacare that much more entrenched. What self-proclaimed conservative of sound mind would do such a thing?
Alternatively, some have talked about enacting a “compromise” that would restore the Obamacare subsidies while reforming some of the law’s new insurance requirements and regulations. But restoring the flow of subsidies means restoring the employer mandate, thus raising taxes. And even if such a “compromise” weakens or eliminates the employer mandate, the Obama administration — to say nothing of the insurance companies themselves — will hardly countenance a repeal of the individual mandate, which restoring the subsidies will only strengthen. So those seeking to restore the flow of subsidies will likely end up having to raise taxes on millions of Americans, in some way, shape, or form.
It seems especially strange, given that Republicans just rolled out their own Plan B if King prevails, one that does not sustain the ObamaCare subsidies and the taxes that produce them:
The plan would roll back ObamaCare’s mandates to buy insurance while also providing tax credits to help people afford coverage.
The proposal is framed as an “off-ramp” from ObamaCare because it allows states to opt-out of mandates. Gone would be the requirement for individuals to buy insurance and for employers to provide it.
ObamaCare includes protection for people with pre-existing medical conditions buying insurance, whether they already have coverage or not.
This plan guarantees that people who already have coverage are able to renew it. It also includes some elements of ObamaCare, such as letting people stay on their parents’ plans until they are 26 and prohibiting lifetime limits on benefits.
The second main element of the plan would offer people in states losing ObamaCare’s subsidies some tax credits to help them buy insurance. The size of the refundable credits would be adjusted for age, with the elderly getting more support.
That’s still too much federal regulation, where open markets would work better, such as selling policies across state lines. To control health costs, we need better price signaling — more retail care with HSAs to use for pretax cash, and insurance that deals with significant health events instead of covering every little exam. That would greatly reduce risk, both overall and in terms of most pre-existing conditions, and return insurance to its original purpose rather than becoming a mini-nanny state. Providers would save a fortune by dealing with their customers honestly on price, and the open market would encourage both new providers and real price competition.
Jindal has a big opportunity to vault himself to the top of the GOP pile with the ObamaCare issue. He’s got a lot of experience in both health care and political reform. Let’s hope other Republicans take notice.
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