GOP King v. Burwell ‘Fixes’ Not Fixes At All, Would Make Health Care Worse

Sometime near the end of June, probably between the 22nd and 29th, the Supreme Court is likely to issue its ruling in King v. Burwell. The King case will decide whether financial assistance to consumers in the form of premium tax credits (or “subsidies”) will continue to be available in all states, or whether they will be withdrawn from the approximately three dozen states with federally facilitated marketplaces.

There is ample reason to believe that the Court will rule for the government and allow the continuation of premium subsidies throughout the country. Abundant precedents in past Court decisions make clear that statutory interpretation requires an examination of the whole statute and its context to review meaning, rather than a blinkered focus on only a few words (see note). If the Court follows these clear precedents, it will find that an interpretation of the Affordable Care Act (ACA) that withdraws premium subsidies is contradictory to the law Congress crafted.

But what if the Court rules that the federal government cannot provide tax credits to individuals in states where the federal government runs the marketplace? Since the Court is often unpredictable, it makes sense to assess how Congress might address the damage caused by an adverse ruling, including millions of people losing coverage, an enormous spike in insurance premiums, and a “death spiral” for health insurance.

Senator Johnson’s Bill Is The Leading GOP King v. Burwell ”Fix”

Republicans, who control both chambers of Congress, have generated several proposals to address a ruling that withdraws subsidies. The proposal that has the broadest support within the Senate Republican caucus is the one developed by Senator Ron Johnson from Wisconsin. So far, Johnson’s proposal has 31 co-sponsors. Most significantly, it is co-sponsored by Senate Majority Leader Mitch McConnell (KY) and Senate Finance Committee Chairman Orrin Hatch (UT).

In terms of addressing the significant damage caused by an adverse ruling in King, Senator Johnson’s bill is inadequate—and harmful. It not only fails to solve problems created by an adverse Court ruling, it also creates many problems for health insurance markets that would make health coverage unaffordable for most families. The extent of the bill’s problems become clear when looking at the combined effect of the purported remedy for an adverse ruling and other provisions that the Senator has added to undermine the ACA.

Temporarily Extends Premium Tax Credits (Subsidies) For Existing Enrollees

With respect to the purported fix, the Johnson bill extends premium tax credits only for existing enrollees through August 2017. This would leave millions of people without the help needed to afford insurance premiums, such as:

• the currently uninsured;
• people who lose a job or whose employer drops health coverage;
• young adults who reach their 26th birthday and therefore lose coverage they had through their parents; and
• Medicaid beneficiaries who get a raise at work and become ineligible for that safety-net program.

By extending subsidies for approximately two years, the Johnson bill would enable members of Congress to escape political retribution during the 2016 elections from people at risk of losing subsidies. But beginning in 2017, when the extension of subsidies expires, millions more would join the ranks of the uninsured.

Repeals Portions Of The ACA Resulting In Weaker Consumer Protections

At least as significantly, the limited fix in the Johnson bill is held hostage to changes he proposes to the ACA that are designed to undermine the statute and would cause considerable harm in every state.

Among other changes, the proposal repeals the individual and employer coverage mandates and allows for skimpier health coverage by eliminating the ACA’s essential health benefits requirements. It also extends the life (and may increase the number) of ACA non-compliant plans and exempts these plans from additional ACA requirements, such as the provision allowing young adults to stay on their parents’ policies and those that prohibit insurers from placing lifetime limits on coverage, arbitrarily rescinding coverage, and devoting large portions of premiums to insurance company profits and administrative costs (the law’s medical loss ratio requirements).

Once the mandates were removed, younger and healthier people would be less inclined to secure coverage, and insurance pools would be disproportionately filled with older and sicker people. As a result, premiums would spike — and, in the process, an insurance “death spiral” would occur as increasing numbers of healthier people drop coverage. Perhaps most tragically, people with pre-existing conditions would find that the ACA’s protections against discrimination by insurers would become meaningless because they wouldn’t be able to afford skyrocketing premiums.

The Johnson Bill Would Hurt People In All States

Perhaps least understood about Senator Johnson’s proposal is that it would have a huge, adverse impact even in the states that are currently running their own marketplaces. The “death spiral” that would occur due to the elimination of the individual mandate would afflict all states, not just the approximately three dozen states with federally facilitated marketplaces. The promotion of skimpy health coverage, by eliminating the ACA’s essential health benefits requirements, would also harm people in the state-run exchange states.

The bottom line, therefore, is that the proposal provides a wholly inadequate fix for people in the federally facilitated marketplace states, and it does so by conditioning that inadequate fix on changes that would cause significant harm to people in all states.

What Happens Next?

The Johnson bill won’t become law. Most assuredly, President Obama would veto it if it ever reached his desk. But it is precious little comfort to understand that this is really a messaging bill for political purposes, not a realistic proposal that could take effect. It demonstrates that initial GOP proposals are designed mainly for political theater, posturing that they want to protect people who would be harmed by an adverse Supreme Court ruling.

A genuine intention to protect people from an adverse Court ruling, however, would involve a considerably simpler approach. Such a legislative approach, which could be written in a one-page bill, would simply guarantee that premium subsidies shall remain available in all states. Support for such a bill will be the real test of whether members of Congress truly wish to protect their constituents.

Note

See Antonin Scalia & Bryan Garner, Reading Law: The Interpretation of Legal Texts, page 63 (2012). As Justice Scalia indicates in his treatise, in interpreting a statute, courts must choose a textually permissible reading that furthers the evident purpose of the law over one that obstructs the statutory purpose. This well-worn canon of construction “flows inevitably from the facts that (1) interpretation always depends on context, (2) context always includes evident purpose, and (3) evident purpose always includes effectiveness.”