The Wall Street Journal: In Search of an ObamaCare Breakout

May 22, 2015 

“The best response we’ve heard comes from Mr. Johnson and has broad support among Senate Republicans.”

Originally published here in the Wall Street Journal.

How to prevent a legal victory from becoming a political defeat.

We often ask Congressional Republicans how they prefer the Supreme Court to rule in the ObamaCare subsidies case—as a matter of politics, putting aside the law. The smarter ones usually demur, because they know the risks are real, the damage is potentially large, and many of their colleagues are complacent even at this late hour.

With a ruling in King v. Burwell approaching in June, there are troubling signs that Republicans in Congress are headed for another friendly-fire massacre that ends in a victory for President Obama. To borrow the novel idea of Wisconsin Senator Ron Johnson, this time Republicans would be smarter to try to win the inevitable debate with a unified and politically defensible strategy.

If the High Court upholds the plain text of the Affordable Care Act and vacates the insurance subsidies in the 37 states that did not establish their own exchanges, the White House will try to turn the disruption to its advantage. Some 7.7 million people are now part of the entitlement in those states, and their largely Republican Governors will come under intense industry and constituent pressure to restore the subsidies by joining ObamaCare.

In private, the Governors are petrified that dysfunction in Congress will force them into a lose-lose trench. If they set up a state exchange, they’ll be pilloried by their GOP base. If they don’t, they’ll be blamed for cutting people off medical care.

Yet a view has taken hold among some conservatives in Congress that the danger from King is overblown. The conceit is that the GOP can blame the White House for any disruption, and the public will agree. So do nothing for now and wait two years for a Republican President, who will repeal ObamaCare, sign a replacement and usher in a glorious future.

This do-nothing caucus points to an estimate by Brittany La Coutureand Doug Holtz-Eakin of the American Action Forum that if Congress fails to act the labor market would add as many as 237,000 jobs and 1.3 million people would join the workforce. The reason is that ObamaCare’s employer mandates and other regulations that harm the incentive to work are conditioned on the subsidies. If the subsidies are withdrawn, so are these economic cement shoes.

That may be true over time, but the immediate and persistent headlines through Election Day in 2016 will be about people who have lost or can’t afford their insurance. GOP Governors need a better argument to survive than claiming that things will get better in 2017. And all Republicans need a better response than blaming Mr. Obama and telling Americans to suck it up.

House and Senate working groups are trying to reach a consensus about a GOP contingency plan, and a particular point of contention is whether to extend the subsidies in some form for some period of time. This week Budget Chairman Tom Price came out publicly in the negative, the highest-profile Republican so far.

Mr. Price is a thoughtful health-care leader among Republicans and his office says he’ll support a transitional safety net for those currently receiving subsidies. But without cash, it’s not much of a safety net and doesn’t address the immediate problem. Some money is needed to offset the ObamaCare rules and mandates that drive up the cost of coverage. Many people of modest means simply can’t afford ObamaCare’s overinflated policies without subsidies, and insurance contracts don’t change overnight.

The best response we’ve heard comes from Mr. Johnson and has broad support among Senate Republicans. In the event the Court overturns the subsidies, Mr. Johnson proposes a straight extension of the subsidies through August 2017 for anyone enrolled as of this summer. That insulates people who through no fault of their own would suddenly be victimized by ObamaCare.

In return, he’d restore to states the freedom to deregulate ObamaCare’s central planning diktats and offer more policy choices to consumers. Over time, the subsidies would be less necessary as markets healed.

Mr. Johnson’s plan will disappoint those on the right who think any concession to political reality is ObamaCare Lite™, but he is acknowledging that the law can’t be repealed immediately. For the time being, his plan would move policy in the right direction on the continuum to markets from government. The 2017 deadline guarantees a health-care debate during the presidential campaign and would lend the winner a mandate.

President Obama may refuse to sign any subsidies-for-deregulation deal, and he and Hillary Clinton may think they can win by refusing to compromise. But in that case the Johnson plan gives Republicans an answer that is easy to sell and understand, and liberals would then need to explain why they’re willing to deny health insurance simply because they want more political control over insurance.

Sometimes it takes a crisis to reach a consensus, and perhaps Republicans will unite when the time comes. But their track record is less than reassuring, and better to plan ahead than count on panicky improvisation. It would be a tragedy if a legal victory turned into a political defeat and perhaps even a rout in 2016 because Republicans couldn’t settle on a clear, simple political strategy.