Now that the Supreme Court has held its oral arguments in King v. Burwell, the case has somewhat receded from the headlines. But conservatives would be wise to use this period between the oral arguments and the Court’s ruling, expected in late June, to encourage Republicans to unite around a conservative alternative that would effectively repeal and replace Obamacare in the 37 states that would be affected (and in any other states that want to jump ship).
If the Court rules that the Obama administration has been illegally paying out Obamacare subsidies, and if congressional Republicans fail to unite around a conservative alternative, the result will be predictable. Some Republican governors and/or states legislatures, some of whom have already facilitated Obamacare’s Medicaid expansion in their states, will respond by setting up state-based Obamacare exchanges — something that most GOP-led states have so far resisted. Thus, not only would Obamacare expand and become more entrenched, but more Republican fingerprints would be on it.
Why would Republican politicians in the states turn a win at the Court into a loss for repeal? Because they’ll be under great political pressure to do so. A family of five in Milwaukee, with parents aged 59 and 55 and an income of $30,000, gets a whopping $20,439 a year in Obamacare subsidies at taxpayer expense, plus additional subsidies for out-of-pocket costs. (A single 27-year-old living next door to them and making $35,000, gets nothing — as Obamacare is for the near-poor and near-elderly, not the middle class or the young.) Let’s say that one of the kids in that family has leukemia. The rest of the story more or less writes itself. Anyone who doesn’t think many Republican officeholders would fold in the face of such political pressure hasn’t been watching how Republicans usually respond to political pressure.
To stiffen Republicans’ spines at the state level, Republicans at the federal level need to unite around a winning conservative alternative and then — if the showdown comes — make it clear that it is President Obama who, by refusing to sign the GOP alternative into law, is keeping people from getting or keeping health insurance. In other words, if the child in Milwaukee doesn’t get leukemia treatment, it’ll be because the president cares more about putting the government in control of one-sixth of the economy than he cares about making health insurance more available and affordable.
Republican congressional efforts to get members to unite around such a conservative alternative are being led by Chairmen Paul Ryan, Fred Upton, and John Kline. In an op-ed last month, they called for a conservative alternative that would “make insurance more affordable by ending Washington mandates” — including the hated and unprecedented individual mandate — and by offering refundable, age-based tax credits to people who buy health insurance through the individual market.
Ideally, such Republican tax credits would contrast dramatically with Obamacare’s subsidies in at least seven different ways:
One, whereas Obamacare subsidies are paid directly to insurance companies, the GOP tax credits should go directly to the American people, with most people receiving them in the form of a tax cut.
Two, whereas Obamacare subsidies are available only for Obamacare-compliant insurance, the GOP tax credits should be available for pretty much any health insurance anybody chooses to buy.
Three, whereas Obamacare subsidies are usable only through government-run exchanges, the GOP tax credits should be usable on the open market (and the federal exchanges should be shut down).
Four, whereas the Obamacare subsidies are exceedingly complicated (varying across more than 3,000 different rating areas, varying with each additional dollar of income, varying with each year of age, etc.), the GOP tax credits should be extremely simple — so simple that every person or family could quickly compute in their head what they’d be getting.
Five, whereas Obamacare subsidies pretty much only go to the near-poor and the near-elderly — and hence (for this reason and because they aren’t really tax credits) don’t solve the longstanding inequality in the tax code (between employer-based and individual-market insurance) — the GOP tax credits should go to all people who have to buy insurance on their own because they don’t get it through their employer.
Six, whereas the highly redistributive, income-based nature of Obamacare subsidies imposes work disincentives and necessitates a huge role for the IRS in income-verification, the GOP tax credits should not be income-based and would therefore avoid imposing such work disincentives, eliminate any need for the IRS to verify incomes, and solve the longstanding inequality in the tax code for everyone.
Seven, whereas the Obamacare subsidies are use-it-or-lose-it (and therefore shopping for value will just get you a smaller subsidy), the GOP tax credits should let people put any savings they achieve (from finding a cheaper premium) into a health savings account.
More overarchingly, the Obamacare subsidies are the financial support structure that underlies Obamacare’s unprecedented effort to consolidate money and power in Washington at the expense of Americans’ liberty, and the GOP tax credits are the wrecking ball that could demolish that structure and pave the way to full repeal.
A conservative alternative in response to King v. Burwell that’s centered on such tax credits would be consistent with the core notion of the repeal movement — that the proper response to Obamacare isn’t to try to fix it but rather to repeal it and replace it with real conservative reforms. Otherwise stated, congressional Republicans shouldn’t respond to King v. Burwell by trying to make Obamacare better. They shouldn’t try to negotiate “fixes” with the Obama administration. They shouldn’t punt the matter to the states, sending them a huge chuck of federal tax money and inviting them to try to fix Obamacare as they see fit. (Fixing is fixing, whether it’s done by the federal government or by the states.) Instead, they should set up a clear contrast between Obamacare and a conservative alternative.
If passed, such an alternative would effectively repeal and replace Obamacare in 37 states. President Obama would balk at the proposal, of course, but it would be hard for him to explain why he wouldn’t support something that would be worth thousands of dollars to millions of Main Street families, would help millions of people get or keep health insurance, and would liberate all Americans from Obamacare’s coercive mandates. But Republicans will have to unite to make this work, and conservatives should take the lead in helping to bring about that result.
One of the favorite adages of John Wooden, the great UCLA basketball coach, was, “Failing to prepare is preparing to fail.” In this case, failing to prepare is preparing to let Republicans expand or “fix” Obamacare — and conservatives can’t afford to let that happen.
Jeffrey H. Anderson is executive director of the 2017 Project, which is working to advance a conservative reform agenda — including “A Winning Alternative to Obamacare” — to re-limit government, secure liberty, and promote prosperity.
