The Supreme Court could rule against the Affordable Care Act in the next few days, creating a huge mess for millions of Obamacare enrollees, with premiums more than doubling and many dropping coverage.
Don't expect anyone to rush to fix it.
Depending on how they rule in King v. Burwell, the justices could end subsidies to 6.4 million Americans who buy their coverage through Healthcare.gov. And while Congress, the White House, and the states could step in and prevent the fallout in theory, in practical terms they can't. All three are either hamstrung by the limits of divided government or say they have no options.
"If there's no fix from Washington, it's chaos and becomes very hard to put the law back together," says Larry Levitt, vice president for special programs at the Kaiser Family Foundation.
The Obama administration wants to fix the law. But its hands are tied.
Of any actors, the White House would have the strongest motivation to patch the health-care law back together in the event of a the Supreme Court ruling Obamacare subsidies illegal. It has said again and again that it cannot keep subsidies flowing if the case comes out against Obamacare.
"To solve that problem, the critical decisions are going to sit with the Congress or states," Health and Human Services Secretary Sylvia Mathews Burwell told House Republicans in early June.
Some health-care experts have floated theories about how the White House could, theoretically, continue subsidies in all 50 states even in the case of a negative ruling for Obamacare. University of Michigan's Nick Bagley has written about one possible scenario in which the state establishes its own marketplace — and then contracts with Healthcare.gov to handle the nuts and bolts of actually running the marketplace, just like existing state exchanges contract with private technology companies.
"On the ground, nothing would change," Bagley writes. "But tax credits would be available where they weren’t before."
The White House, however, has steadfastly rejected the idea that it can do anything to keep tax subsidies flowing in the case of a decision against Obamacare.
"We know of no administrative actions that could, and therefore have no plans that would, undo the massive damage to our health care system that would be caused by an adverse decision," Burwell wrote in a February 24 letter to Congress. She reiterated that position in mid-June, days before an expected ruling.
It's hard to know, right now, how much of this is political posturing. The White House has decent reason to try to amp up how bad a Supreme Court ruling against Obamacare would be, and to amp up what's at stake. And it's possible the White House might, in post-King chaos, stumble into an administrative fix that does work. But right now, at least, the Obama administration is resolute that its hands are tied.
Congress has possible ways to extend subsidies. But they're all a mess.
The White House does have one possible way to fix Obamacare: signing off on a one-sentence bill that would tweak Obamacare to make clear that all 50 states ought to receive subsidies.
"Congress could fix this whole thing with a one-sentence provision," President Obama said at a recent press conference.
That proposal was essentially dead on arrival: Republicans have made it clear they don't want to pass a one-sentence fix. If they're going to patch up Obamacare, legislators want to get something in return.
The problem is that Republicans' demand, so far, has been repealing other big parts of Obamacare in return for extending subsidies — and that creates whole new messes in the insurance markets.
Take, for example, Sen. Ron Johnson's Preserving Freedom and Choice in Health Care Act. It would both extend the Obamacare subsidies and kill the health-care law's individual mandate, the unpopular requirement that nearly all Americans carry health coverage.
Without a requirement to purchase insurance coverage, health economists roundly expect that young, healthy people would no longer buy coverage. This, then, would lead to a spike in premiums as only really sick people, who use their coverage a lot, opt to buy insurance plans.
The transitional period Johnson's bill imagines is one where the individual market is smaller and a more expensive place to shop.
These types of problems turn up again and again in all Republican plans. When you try to repeal Obamacare and maintain the law's subsidies, it turns out you end up with some very bizarre policy outcomes that are not good for the individual insurance market.
States would be on an incredibly tight timeline
A ruling against Obamacare would mean that subsidies no longer flow in Healthcare.gov states — but will continue in states that build their own marketplaces.
Fourteen states and the District of Columbia currently run their own marketplaces. And some states are already thinking about joining them. Delaware, Pennsylvania, and Arkansas all recently got conditional approval to build marketplaces in 2016.
There are two big obstacles here, experts say. One is politics: states that have refused to implement any parts of Obamacare are unlikely to step in and build an insurance market to help make the law work. This is true of places like Texas and Florida, where the state government has refused to expand Medicaid under the health law. Their governors are staunch Obamacare opponents, and it's hard to imagine them taking actions to make the law work better. And there's even one state, Arizona, that has already passed legislation barring itself from setting up a state exchange in the case of a pro-King ruling.
Even in states that are enthusiastic — states that have expanded Medicaid, and do want to keep subsidies flowing — there are logistical obstacles to building a marketplace from scratch.
Experts say that building the technology to power an insurance market — the place where Healthcare.gov fell apart in 2013 — is actually pretty easy now. There are more than a dozen states who could share or sell the software they use to power their sites.
What's hard to do is build up the infrastructure: get a marketing campaign in place, hire all the people who need to sit at a call center, and do all of that before open enrollment starts in November.
"We'll share strategies," says Peter Lee, chief executive of Covered California, the country's largest state-based exchange, "but in the end, the ACA isn't self-implementing. And there are parts that just don't scale."