June may be the cruelest month.
The U.S. Supreme Court is expected to rule soon on a case involving tax rebates for the purchase of health insurance. The impact of this ruling cannot be overstated.
The Affordable Care Act allows states to create their own health insurance markets through which state residents can buy policies. Depending on income and other individual factors, residents may be eligible for tax rebates for the purchase of insurance. If a state declines to establish its own exchange, state residents may still buy government-subsidized insurance through the federal exchange (healthcare.gov).
Without these tax rebates, however, health insurance would become too expensive for many otherwise healthy policyholders, driving them out of the market. If those healthy policyholders left, prices would skyrocket for those who remained, especially the sick.
The more prices soar, the more people leave.
The more people leave, the more prices soar — and the more sick people are forced out.
About 9 million residents in more than 30 states may be affected by the court’s ruling. Many could die because they can’t afford insurance, as they did in the old system before President Barack Obama and congressional Democrats passed this law in 2010.
Among actuaries and policymakers, the above description is called a “death spiral” — the slow, and then precipitous, unraveling of a health insurance market after a keystone (federal tax rebates) has been removed. If the U.S. Supreme Court rules in favor of the plaintiff in King v. Burwell, all of the above could happen, and fast.
You’d think the GOP would be happy with the judicial branch doing what the legislative branch could not. No Republicans voted for the law. Mitt Romney campaigned on repealing it. House Republicans have voted to repeal it more than 60 times. Virginia congressman David Brat recently said the health care law, also called “Obamacare,” was crippling the U.S. economy, making it more like Communist North Korea’s.
But now that the Supreme Court is poised to strike down parts of the law, the Republican Party’s leadership appears to be in a state of paralysis. If the justices rule in favor of the government, conservatives will rage. If they rule in favor of the plaintiff, the GOP, having control of both chambers of Congress, will be responsible for doing something to save a health care system, and individual lives, spinning out of control.
There is little evidence the Republicans will do anything.
Indeed, on Monday, House Majority Leader Kevin McCarthy said in essence that the Court’s conservatives are on their own. “Don’t expect us to predetermine the Supreme Court,” he said. “We have to first see what their decision is and what we have to solve.”
Why no action? Party leaders probably want to avoid appearing culpable. In doing nothing, the party can plausibly blame the Court for what will be an actuarial disaster.
Rank-and-file Republicans, however, disagree.
They believe that doing something, anything, will reassure the high court’s conservatives that it’s OK to invalidate key provisions of the health care law without fear of jeopardizing the lives and security of an estimated 9 million Americans. Florida congressman Tom Rooney told the Wall Street Journal that “if we look like we are caught flat-footed, we may be putting into the justices’ brains that the opposition is not ready.”
But the opposition isn’t ready. It never was.
In a new report, the American Academy of Actuaries found that nothing the GOP has proposed will stop “the massive disruption of the health care marketplace that would result from a ruling against the Obama administration,” according to The Hill newspaper.
The Republicans have proposed eliminating the “individual mandate,” but if healthy individuals are not required to buy insurance, only the sick will be left in the risk pool. That, the report found, would “threaten the viability” of the entire market.
The Republicans have also proposed extending tax rebates temporarily, but that, the report found, would only “delay the market disruption.”
Moreover, a ruling against the Obama administration would be detrimental to the insurance industry itself. Companies cannot adjust rates mid-year, the report said, so a sudden change in the law may trigger huge losses. “That’s really the biggest worry for most us working in the field,” Cathy Murphy-Barro, the author of the report, told The Hill.
Thing is, it’s unlikely the Republicans will ever be ready.
There is no conservative alternative to a conservative law.
The framework for the Affordable Care Act was devised decades ago by conservative policy analysts searching for a free-market alternative to government-run health care. The result of their search was something very much like the Affordable Care Act. In other words, the law we have now is what conservative Republicans wanted back then.
This is why Republican proposals for replacing the law sound like what’s already in the law. Indeed, the Republicans, including those who brought King v. Burwell, have been seeking the destruction of a conservative law built on conservative principles.
One would hope that reason would prevail among Supreme Court justices.
Don’t hold your breath.
During oral arguments in March, administration lawyers tried to explain the “death spiral,” but Justice Antonin Scalia was dismissive. He said, “If the consequences are as disastrous as you say, so many million people without—without insurance and whatnot, yes, I think this Congress would act.”
Photo: SEIU International via Flickr