SCOTUS May Rule against Federal Subsidies on Federal Exchange — Then What?

America is awaiting the U.S. Supreme Court’s King v. Burwell decision, which will decide whether federal subsides can continue to be paid in states without their own health insurance exchange in accordance with the Affordable Care Act.

The Court is widely expected to rule in favor of King, which would be another great victory for Republicans and conservatives in the rally against Obamacare. It would again prove conservatives’ were right in ringing alarm bells over the monstrous bill and having to pass it to see what’s in it… That is, except for one big problem: a ruling in King’s favor could be just as catastrophic as it is triumphant.

More than 6 million Americans across 34 states — including around 200,000 Missourians — are waiting with some anxiety and uncertainty over their ability to afford insurance and care should the federal subsidies cease. Even with the subsidies in place, Americans are about to see an uptick in health insurance premiums, with widespread double-digit increases expected in 2016 resulting from solid data on the size and quality of the risk pool. To many already struggling to make ends meet in their current situation, the struggle will be very real should the subsidies stop flowing, with one study forecasting premiums to spike an average of $3,300 in Missouri, which would be par for the nation.

Post-King v. Burwell Legislation

Those in Congress, who will ultimately decide how to proceed in the event the subsidies are ruled unconstitutional, continue to consider a path forward. Unfortunately, only one plan exists and there is limited Hill-wide support for it. There is little open discussion of a solid path forward.

This ironic situation has placed the Republican Party in an amazing position to overhaul the Affordable Care Act, which is probably one of the biggest legislative misnomers in history. The Senate has contrived the Preserving Freedom and Choice in Health Care Act, which would allow subsidies to continue through September 2017, despite a Supreme Court ruling deeming them unlawful. The House has little to directly address an eventual crisis outside of a broadly focused full Obamacare repeal and replacement.

Passing a bill to continue the subsidies following the high court’s ruling against them only glorifies Obamacare and the irresponsible, illegal provision. It is rather un-conservative-like as well. The Republican Party has an opportunity here, and it must be the party with the solution. After all, merely proposing a plan brings hope of a solution and grants optimism that we so badly need.

Proposal: A Paul Ryan-style Idea to Replace Direct Subsidies

We need to brainstorm ideas now — really, we should have one by now — to keep the bottom from falling out from beneath 200,000 fellow Missourians and 6.5 million Americans.

Here’s a idea — It is worth taking a gander at implementing an Obamacare Exchange block grant program to states. Congressman Paul Ryan, R-Wis., has proposed this approach to Medicaid in his recent budget plans. The Congressional Budget Office has scored his plan to “substantially” reduce the growing federal spending on Medicaid, while also noting a potential that services may be squeezed. However, if we put this in the context of federal insurance subsidies, the squeeze may not apply, because the subsidies would be a form of premium support rather than a total payment. Federal block grants to states could be based on the number of Medicaid beneficiaries in the state, the average health care cost in the state and could provide incentives for states to plan their exchanges or an alternative path forward. At the very least, this could be a temporary program to provide time for states to prepare and transition.

Doing this will cap federal spending on subsidies while giving states the flexibility to do as they wish to supplement funding for the exchange and keeping Tenth Amendment rights in place. It would be difficult for any potential law to mandate states set up their own exchanges; this is due to the legal precedent set with the Supreme Court’s 2012 ruling declaring mandatory Medicaid expansion — a state initiative — unconstitutional, as it was a violation of states’ rights.

All told, this idea would have the most viability if Obamacare’s Medicaid expansion remains. The burden would still remain with states to address expansion challenges — a mess the 2010 law created with no great way to clean up — and would not help those in the infamous coverage donut hole. That is a state issue.

Realities and Other Alternatives

A block grant subsidy plan may be the best path forward without fully glorifying a provision that had just been ruled unconstitutional, as would be the case with the Senate’s bill. It would be more apt to earn President Obama’s signature since it does not dismantle his signature mess/”achievement.” Another alternative is to take up the American Health Care Reform Act, which would repeal Obamacare and implement a patient-centered, portable, savings-friendly, tort reform approach to health care overhaul without the $2 trillion in taxes. That, however, is politically unattainable until 2017- and that is only if we elect a Republican president.

The block grant proposal may not be the best plan in the world, but it is better than nothing when it comes to saving the American people headaches that can be avoided. The time is now to be thoughtfully proactive rather than ignorantly reactive.

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