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If SCOTUS kills Obamacare subsidies, Republicans don’t have an exit strategy

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If the Supreme Court rules for the plaintiffs in King v. Burwell, a decision expected later this month, it would eliminate billions of dollars in subsidies received by Americans who bought coverage on Healthcare.gov. And Republicans, fresh off a victory of knocking a major hole in Obamacare, would face a vexing question: what now?

During a February panel discussion at the American Enterprise Institute, Bloomberg View's Ramesh Ponnuru gave an especially helpful overview about the options in front of Congressional Republicans should the Supreme Court rule against Obamacare in King v. Burwell. It was the best run through I've heard of how legislators could react — and underscores why a victory in the courts might become a problem for Republicans on Capitol Hill.

1) Acquiesce to President Obama's demands

In a world where the Supreme Court rules against Obamacare, the first thing the White House will do is ask Congress to simply fix the errant sentence in the law. The legislation would be simple — hell, it would fit onto one page.

If they wanted to, Republican legislators could end it right there: they could pass the bill that Obama proposes and the Affordable Care Act could continue apace.

This, however, will not happen. Republicans have voted more than 50 times to repeal Obamacare. Republicans really, really, really don't like Obamacare — and legislators have made it pretty clear they want to get at least something in return for making the law work.

2) Strike a deal with Obama

This seems a bit more likely than Republicans simply signing off on a law to save Obamacare. They could sign a bill fixing the law if they got some kind of victory — probably the repeal of another part of the health law.

The problem here is that it's hard to find a piece of Obamacare that would satisfy both parties. Republicans have rolled out at least five plans to restore subsidies that also repeal really big parts of Obamacare. Most of them kill the individual mandate and at least one ends the ban on pre-existing conditions.

The White House has said it won't bargain on those parts of the law. "The president has said he will not sign something that repeals the act" or its biggest programs, Sylvia Matthews Burwell told legislators in mid-June.

The White House might be willing to do some tampering around the edges; they've previously signed off on small tweaks to how the subsidies in Obamacare work, and also agreed to repeal a tax-reporting provision for small businesses. But those are just too small for Republicans to claim as a victory.

"There are a lot of folks on the Hill who are attracted to the idea of a deal," Ponnuru said back in February. "But as we move from idea to reality, there's going to be less to negotiate there."

And, flash forward a few months, and this seems to be playing out: Republicans are putting big ticket repeal items on the table, and the White House is saying no thanks.

3) Do nothing

In Washington, the likeliest outcome is always no outcome at all. If no deal is struck, that could be what happens in the aftermath of King. The insurance subsidies would expire in many states, likely causing a few million Americans to lose health insurance coverage.

The politics of this situation are, however, tough for Republicans to weather. How bad would the politics get for Republicans? That's a bit hard to game out. Democrats would no doubt blast Republicans for taking away coverage from low-income Americans, demanding that they take some action.

At the same time, most Americans won't feel the effects of a negative ruling. There are 151 million people who get their health insurance at work — and only 6.4 million getting Obamacare subsidies. Maybe there's a world where Republicans can count on the outrage dying down, as most Americans see that their benefits won't change. But that still leaves millions of people, and their families and friends, who might be pretty angry at the GOP.

4) Repeal and replace Obamacare

If the Supreme Court strikes a major blow to the Affordable Care Act, that could be the exact right moment for Republicans to introduce an alternative to Obamacare — and push for that to replace the Affordable Care Act.

Since Obamacare passed, Republicans have thought through a few different alternative options. But the party hasn't coalesced around one option; legislators just don't seem to have taken the effort to find a replacement plan that seriously. Perhaps that's with good reason: President Obama is near certainly not going to sign legislation repealing and replacing the law his administration passed five years ago, one that he happens to think is quite good.

5) Build an "exit ramp" from Obamacare

This is the option that Ponnuru personally favors — and one that a few senior Republican legislators back: a deal where states, particularly those using Healthcare.gov, would be given the right to opt-out of big parts of the insurance expansion. This could include things like getting rid of the individual and employer mandates, the requirements that insurers cover a large set of benefits, and allowing insurers to once again reject consumers who have pre-existing conditions.

This deal would involve some sort of transition period, maybe a year or two, as to make the change less disruptive for those using Obamacare benefits.

Ponnuru talks about this as a distinct option, although it seems pretty similar to the idea of "striking a deal" with Obama — and, as a result of that, faces the same obstacles. The White House has been pretty firm in not allowing states to pick and choose which parts of Obamacare they want. There are already state innovation waivers in Obamacare — which let states dodge numerous health reform requirements, if they meet a set of conditions — and those waivers seem to be as far as the White House is willing to go in this space.

While a negative Supreme Court decision would certainly be bad for the administration, it's hard to see it being bad enough for the president to reconsider that stance. Ponnuru acknowledges this challenge and the fact that it's "very hard to see the Democrats going for this."

The dog that caught the car?

This beagle literally has no idea what to do now that he has landed in the driver's seat. Arf. (Shutterstock)

This beagle literally has no idea what to do now that he has landed in the driver's seat. Arf. (Shutterstock)

Here's what Ponnuru's list of options drives home for me: a win for Obamacare challengers is no walk in the park for Republican legislators. A positive outcome would make Congressional Republicans the dog who caught the car: they've managed to eliminate a huge part of Obamacare, but don't have a great exit strategy for what happens afterwards.

None of the options above are especially appealing or easy to pull off — and they suggest that, as much as Republicans will celebrate a win at the Supreme Court, they will also face a huge challenge figuring out how to ultimately use that victory to their advantage.

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