A Year of Conflict or Compromise?

Already a narrative seems to be taking shape. Republican leadership in Congress, cognizant of its party’s still-damaged reputation, is looking to be as constructive as possible. Eschewing the brinkmanship that characterized 2011-2013, John Boehner and Mitch McConnell seem intent on proving that congressional Republicans can govern responsibly, so as to make voters comfortable supporting the party’s presidential nominee in 2016.

Meanwhile, Barack Obama—now a lame duck—is left to hope that economic growth burnishes his reputation enough to give the Democratic nominee, presumably Hillary Clinton, a victory in 22 months. The president has few allies left on Capitol Hill, and beyond unilateral executive action he will struggle to dictate the political agenda this year. Increasingly, attention will turn to the pre-primary phase of the presidential campaign; the Republican contest looks to be broad and rollicking, while Democrats are waiting to see whether Hillary Clinton gets a real challenge.

In other words, 2015 won’t be a year of conflict. Instead, we seem set for a period of quiescence, a nice change of pace from the rough-and-tumble year that just ended. This conventional wisdom rests on a fairly shaky assumption, though: that the Supreme Court will rule with the government in King v. Burwell.

The case involves subsidies provided in Obamacare’s exchanges. As written, the Affordable Care Act permits subsidies only to residents of states that created their own insurance exchanges. Better than two-thirds of states balked at this task, however, so the federal government set up exchanges for them, and the Internal Revenue Service ruled that their residents could receive subsidies anyway. This gave individuals and employers standing to sue, because the distribution of subsidies triggers various taxes and penalties under the ACA.

A number of lawsuits followed. The Fourth U.S. Circuit Court of Appeals ruled for the government in King, while the D.C. Circuit ruled for the plaintiffs in Halbig v. Burwell. The latter decision, made by a three-judge panel, was vacated in September, though, when the D.C. Circuit agreed to rehear the case en banc, meaning the court’s entire complement of judges would weigh in. This was widely seen as a signal that the government was set for a victory. Such en banc hearings are rare in cases like this, suggesting that the whole circuit court—now dominated by liberal judges—planned to rule in reverse.

Shortly after the midterm election, the Supreme Court shocked the political world by agreeing to hear King. Normally, the Court does not insert itself into a situation where there is no split among circuit courts, and the split between the Fourth and D.C. Circuits disappeared when Halbig was vacated—and looked unlikely to reappear. This implies there is a substantial bloc on the High Court ready to rule in favor of the plaintiffs. Whether it is a majority of the justices remains to be seen, but the Court’s interjection suggests the very real possibility that the government could lose this case.

What would happen then? In a word: trouble. Millions of people would lose their insurance subsidies, increasing their out-of-pocket costs. Given the high cost of unsubsidized insurance on the exchanges—thanks to the broad array of coverage requirements and pricing restrictions—this could create a problem of adverse selection: Healthy people drop out of the exchanges because insurance is too expensive, leaving only the sick, which in turn pushes prices up further, driving more healthy people out.

A potential solution is for recalcitrant state governments to design their own exchanges. But that fails to account for the scope of Republican dominance on the state level. The GOP has staked its ground in opposition to Obamacare; how likely are Republican state governments to salvage it? Such a rescue operation, moreover, would trigger those levies upon private individuals and enterprises. When has the Republican party ever agreed to higher taxes on business?

The alternative is a federal answer. But that seems just as improbable. Barack Obama is the most liberal president since at least Lyndon Johnson, and Congress is now as Republican as it has been since the 1920s. Obamacare has dominated debate over the last five years. Just how likely are the two sides to broker a deal? Adding to the ideological divide is a mutual suspicion; Boehner and Obama have come to distrust each other since negotiations on a grand bargain for deficit reduction collapsed in 2011. And both leaders have had trouble persuading their allies in Congress to support them.

Liberals, of course, will blame the Supreme Court—and the Republican party—for such a mess. But the reality is that Obamacare is a terribly written piece of legislation. Put aside the big ideological question of the debate—how involved should the government be in the provision of medical care?—and that fact becomes even more apparent.

By furnishing public support to for-profit medical service providers, the law doubles down on the worst aspects of the American welfare state. It is a breeding ground for inefficiency, cronyism, and corruption. It was drafted by legislators who used budgetary legerdemain to hide its true costs, mask its effect on the broader market, and curry favor with special interests. And its Rube Goldberg design has far too many moving parts that could break down and ruin the whole scheme—which is exactly what might happen after King. If the government loses the case, liberal Democrats will have nobody to blame but themselves. They could have written a better law; indeed, they should have. It is inexcusable to redesign one-sixth of the American economy in such a shoddy manner.

Of course, pointing fingers will do nothing to fix such a mess. But there might be nothing else the major players could do. The current partisan breakdown is ill-suited to solve such a divisive problem, even if everybody agrees a solution must be found. In our system, it is not enough for all parties to agree that the status quo is intolerable. There has to be consensus that a given alternative is preferable. There is no such consensus today.

The most likely result of a government defeat in King is thus another protracted period of partisan gridlock, mutual animosity, and vicious recriminations. In that instance, it will be up to the American people in 2016 to finally break the logjam over health care—something they have so far chosen not to do—by voting for one party or the other. That will make for an epic campaign next year, but a miserable prelude in 2015.

Jay Cost is a staff writer at The Weekly Standard and the author of A Republic No More: Big Government and the Rise of American Political Corruption.