Following the travails of President Obama’s health reform is a bit like watching successive episodes of the movie serial, The Perils of Pauline, in which the eponymous damsel weekly faced death from assorted villains. Whether the would-be slayers of Obamacare are villains or heroes is, of course, debatable. That they are tireless is not. Calendar year 2015 brings two more threats, or opportunities, depending on one’s politics.
The first is yet another Supreme Court challenge. The second comes from various measures that the Republican-controlled Congress may send to the president’s desk to weaken or undo his flagship reform when they take over in January. And, as some opponents of Obamacare stress, the two are related.
The court challenge results from less-than-artful wording of the health reform law itself. The law requires most people to carry insurance. To make that mandate affordable, the law also provides tax credits to low- and moderate-income households to help them pay premiums and additional help complying with cost-sharing requirements. Congress, the Congressional Budget Office, and everyone else understood that this assistance was necessary to make sure that nearly everyone carried insurance—how could Congress require almost everyone to carry insurance if they couldn’t afford it? And making coverage nearly universal was a precondition for the provisions that prevent insurance companies from denying coverage, or charging sky-high premiums to sick people, and for imposing other insurance regulations.
Although these core principles were clear enough, the law was crafted in five different Congressional committees. Some drafters envisaged a single national health insurance exchange; some wanted to allow states to manage their own. In the end, the law explicitly authorized the payment of premium and cost-sharing assistance by exchanges ‘established by a state.’ Opponents now allege that this wording bars payment of financial assistance to anyone in the 34 states that have chosen to let the federal government manage operations within their borders. They have asked the courts to embrace that reading of the law.
That interpretation ignores the provisions in the law that indicate that in those 34 states the federal government is acting as an agent for the states, not as a substitute for them. It ignores legislative history that shows Congress clearly intended to provide financial assistance in all states. It also ignores a well-established legal principle that courts are bound to interpret a law in light of the intent of those who enacted it and the logic of the legislation. This last point is central, as requiring people to buy insurance, simultaneously denying them the financial assistance to make if affordable, and punishing them if they don’t buy insurance would have been nonsensical and perverse.
Although the legal challenge to the health reform’s financial assistance is based on a strained and peculiar interpretation of the law, it is impossible to be sure how a deeply riven Supreme Court will rule on a politically red-hot issue. Against this background, one law professor has even called on Republicans to fashion a palatable alternative to Obamacare on the grounds that the Supreme Court should find it easier to rule that financial assistance is impermissible in states with federally-facilitated exchanges. The suggestion by a legal scholar that the Supreme Court’s decision will or should be shaped by one party’s political agenda is depressing evidence of the politicization of the courts.
Against this background, what is Congress likely to do in 2015 regarding the health reform law? Should the Supreme Court rule that financial assistance cannot be paid in the 34 states where the federal government helps administer the health exchanges, the pressure for Congressional action will be overwhelming. Some states that previously delegated management to the federal government may discover that they want to set up exchanges after all. But doing so would take many months. And some states would likely continue to refuse to do so. Meanwhile, millions of people would lose financial help and drop coverage. Those who continue to buy insurance would tend to be sicker than average. As a result, insurance premiums would rise–quite a lot according to the best economic modeling. That would cause millions more to drop coverage. Insurance markets might even collapse. Insurance companies were persuaded by the promise of expanded markets to accept limits on medical underwriting and other regulatory restrictions. When coverage narrows, as it surely would if financial assistance ended, companies may find those regulations intolerable and stop selling individual health coverage altogether.
In that situation, Congress could take any of a number of different steps. It could agree to authorize payment of financial assistance in all states, effectively reversing the hypothetical Supreme Court decision. But given Republican opposition to the Affordable Care Act, such a move is conceivable only if the Administration accepts other changes in the health reform law that it has so far resisted. Congress could enact legislation authorizing states to opt out of the health reform law. It could, once again, try to replace Obamacare with an alternative law more to Republican liking. All these approaches would require Republicans to agree on an alternative health reform strategy that accomplishes many of the goals of Obamacare, most elements of which are quite popular. So far they have been unable to do so. All would require some Democratic support to overcome an inevitable filibuster in the Senate. All would require negotiation between Congressional Republicans and the Democratic White House to avoid a veto, which could be overridden only with concurrence of two-thirds of both houses of Congress, a virtually insurmountable obstacle.
Even if the Supreme Court sustains the health reform’s tax credits and cost-sharing assistance, unified Republican control of Congress means that efforts to slow, amend, or repeal Obamacare will intensify. The menu of options will include many of the steps listed above, plus one more. Congress controls how much and on what the Executive branch can spend money. These controls include normal appropriation bills to which provisions may be appended of the ‘no money shall be spent on X’ variety. The Democratic minority can filibuster limits on spending to administer the health reform, and the president can veto them. But such resistance is hard for a minority to sustain when the restrictive appropriations are part of a larger bill that contains popular provisions that are jeopardized if the whole bill is blocked.
Congress has an additional weapon to bend a resistant Administration to its will…budget reconciliation. Congress can pass a budget resolution directing committees to craft and report out spending bills to achieve various broad purposes. At the end of the session, if legislation effecting those purposes has not been acted on, Congress can pass a so-called ‘reconciliation’ bill to achieve those goals. Under Senate rules, reconciliation bills cannot be filibustered. Accordingly, they require only a simple majority for Senate passage. Reconciliation bills are limited to provisions that involve taxes and expenditures. Thus, reconciliation cannot be used to repeal or change the structure of the Affordable Care Act. But the Affordable Care Act requires continued spending by various federal government departments to make it work. And a reconciliation bill could cap or bar expenditures to administer health reform. The president can still veto budget reconciliation. But, the stage is set for the Republicans to try to modify or weaken the Affordable Care Act or to substitute different legislation. They will doubtless try to package such changes in ways that the Democratic minority in Congress will find hard to oppose and that the president will feel forced to accept.
The Obamacare wars are now six years old. Those wars will continue at least two years more in both legal and political venues and may well continue even longer than that. In one sense, the intensity and duration of the debate on health policy is unsurprising. Health care accounts for nearly one-fifth of the U.S. economy. Deep philosophical divisions separate the two parties. Neither has achieved a stable political majority. The political serial named The Perils of Obamacare will continue for several more reels.
Will the American business community sit idly by and watch Trump undertake a trade war with China? They have a lot at stake in this. [Trump's stream of anti-Chinese Tweets poses risks of being misunderstood.] China would regard a potential challenge as more dangerous than it actually might be.