Justice

How A Stray Remark By A Republican Governor Could Save Obamacare From The Supreme Court

CREDIT: AP Photo/Jacquelyn Martin

Wisconsin Gov. Scott Walker’s (R) plan if the Supreme Court reinterprets Obamacare to take health care away from hundreds of thousands of his constituents is to “do nothing,” according to a local news report, even though he and his fellow Wisconsin Republicans have the power to save these individuals from that fate. This may not be a particularly surprising revelation, as Republican elected officials throughout the country have done little to conceal their disdain for the Affordable Care Act, yet Walker’s willingness to admit this fact could have the ironic result of saving Obamacare from the justices. As Brian Beutler explains in the New Republic, the Court’s five Republican members are much more likely to “play along” with an effort to undermine health reform “if the repercussions are likely to be modest.” Walker’s admission drives home the fact that these repercussions will be quite severe.

This March, the Supreme Court will hear oral arguments in King v. Burwell, a lawsuit seeking to gut the Affordable Care Act by cutting off tax credits that help make health insurance affordable for people who purchase it through Obamacare exchanges. Under Obamacare, states have a choice whether to set up their own exchange or to allow the federal government to set it up for them. As one of Walker’s fellow Republican governors, Nebraska Gov. Dave Heineman, explained in 2012, “[o]n the key issues, there is no real operational difference between a federal exchange and a state exchange.” Nevertheless, the plaintiffs in King claim that the law denies tax credits to people who live in states that elected to let the federal government operate their exchange.

These plaintiffs rely on seven words of the Affordable Care Act which, if read entirely in isolation, seem to suggest that tax credits are only available to people who enrolled in a health plan purchased “through an Exchange established by the State.” Yet, reading the law this way is a bit like reading one line of The Hunger Games and concluding that it is a treatise about the dangers of eating poison berries. Another provision of the law makes clear that any exchange, regardless of whether it is set up by a state or the federal government will be deemed “a governmental agency or nonprofit entity that is established by a State.” And this is just one of several provisions which make clear that the King plaintiffs’ reading of the law is erroneous.

The Supreme Court has long held that, when interpreting an act of Congress, “a reviewing court should not confine itself to examining a particular statutory provision in isolation” as the “meaning—or ambiguity—of certain words or phrases may only become evident when placed in context.” So if the justices follow their own precedents in King, they will hold that tax credits are available in all fifty states.

Nevertheless, the lead attorney representing the King plaintiff bragged that he did not expect to “lose any Republican-appointed judges’ votes” when this issue was pending before a lower court. He may be right that the justices themselves will live up to these partisan expectations. A Washington Times review of voting patterns in cases involving the Affordable Care Act found that the single most important predictor of how a judge would vote is their political party — “Democratic appointees ruled in favor of Obamacare more than 90 percent of the time, while Republican appointees ruled against it nearly 80 percent of the time.” The Supreme Court has five Republicans and only four Democrats.

Which brings us back to Scott Walker. Even under the King plaintiffs’ reading of the law, tax credits are allowed in Wisconsin so long as the state agrees to run its own health exchange. Yet, according to WisconsinEye‘s Steven Walter’s, Walker said he would do “nothing” if the Supreme Court cuts off tax credits in Wisconsin and many other states “because the problem would be too big for Wisconsin or any one state to try to fix.”

Walker is certainly correct that, as governor of Wisconsin, he wouldn’t be able to save the lives of people in Texas or Florida or Kansas who would lose the ability to pay for lifesaving care if the Supreme Court sides with the plaintiffs in King. But he’s hardly powerless within the borders of his own state. According to recent report by the Minority Staff on the House Energy and Commerce Committee, approximately 362,000 people will lose tax credits in Wisconsin alone if the Supreme Court decides to take these credits away. Walker and his fellow Wisconsin Republicans have the power to help these people, though Walker has now said that he refuses to do so.

It’s worth noting, moreover, that the impact of a decision to gut Obamacare in King would extend far beyond the people who lose their tax credits. Without these credits, the actual premiums paid by most consumers in the health exchanges will spike massively, leading many healthy individuals to drop their coverage. Yet, as healthy people drop out of the market, they will no long pay premiums that insurance companies need to cover the costs of their sick customers — which will force the insurers to raise premiums even more. The likely result is a death spiral, where higher premiums beget fewer customers which beget higher premiums, until the entire insurance market collapses.

As Beutler explains, the justices are much more likely to let this happen if they are able to convince themselves that it won’t happen. The King plaintiffs’ attorneys, moreover, appear to be acutely aware of this problem. Indeed, they argue in their brief that a major reason why many states elected not to set up their own exchanges is because the IRS told them that their residents could have tax credits regardless of who runs the exchange in each state. “Because the IRS Rule promised states the quid of subsidies without demanding the quo of state-run Exchanges,” the lawyers opposing Obamacare argue, “34 states predictably declined to assume the difficult responsibility of establishing exchanges.” They add that, if the Supreme Court reinterprets the law to deny subsidies in states with federally-run exchanges “states may well establish Exchanges going forward.”

Walker’s plan to do nothing in the face of a decision cutting off health care to his citizens gives the lie to any claim that such a decision would not be disruptive. If the Supreme Court sides with the plaintiffs in King, the governor of Wisconsin has now made it absolutely clear that he will allow hundreds of thousands of people to lose their tax credits — most likely setting off an insurance death spiral in the process.

Nor is Walker likely to be alone in his willingness to let this death spiral happen. In the blood red state of Texas, nearly 1.8 million people will lose tax credits, most likely triggering a death spiral in that state as well. In conservative South Carolina, 295,000 will be stripped of their credits. In Mississippi, another 164,000 will meet this fate.

The Affordable Care Act does not say what the plaintiffs in King say it says, and that alone should be enough to resolve this case. Should the justices chose not to follow the law in this case, however, they should have no illusions about what will happen. Scott Walker has already told them.