Obamacare will survive Supreme Court challenge

A key portion of President Barack Obama's health care policy could fall at the U.S. Supreme Court this week. Just when Republicans are close to achieving one of their top goals, however, the party is in disarray. As a result, I'd bet that Obamacare is going to survive this challenge — whatever the court decides — pretty much unscathed.

The court is considering whether the Affordable Care Act permits the government to offer tax subsidies to people who buy health insurance on federal exchanges. Because most states opted to rely on federal exchanges rather than setting up their own — and because the letter of the law authorizes subsidies only for state-run exchanges — a lot of people would no longer be able to afford insurance if the court upholds this challenge.

This possibility has been clear for months. So Republicans should have been prepared to respond. Ideally, they'd be ready to advance a bill that would ensure that Obamacare's regulations — such as its required package of essential benefits — no longer apply in the affected states while offering tax credits to people who could lose their insurance and who lack access to employer coverage. Then Congress would pass the bill and Obama would sign it.

But after months of observing and talking to Republicans, I don't expect this to happen. Instead, I expect Obama to get most of what he wants. My guess is that if the court strikes down the subsidies, Congress will extend them pretty much as is.

To understand why, consider the Republican Party's internal dynamics on this issue. Its members can be roughly divided into three groups.

Group 1, which includes a few senators and several dozen representatives, is unwilling under any circumstances to support giving subsidies to people who have gotten coverage through Obamacare exchanges. If the court strikes down the subsidies, they want to respond by repealing the Affordable Care Act and reverting to the system that existed before it was enacted. Because they can't do that, they might settle for providing regulatory relief from Obamacare while ensuring the subsidies stay dead. That would mean that a lot of people who now have insurance would lose it.

Group 3 is desperate to avoid that outcome. (Yes, I know I skipped group 2; bear with me.) They'd like to repeal and replace Obamacare, too, but they fear sending Obama anything he'd veto because they think he'd win the political fight over which party deserved blame for an impasse. In practice, then, they just want to extend the subsidies. This group includes a lot of senators and a few members of the House.

Group 2 is a swing vote. They think Republicans should be on record favoring subsidies to protect people who relied on Obamacare, but they want to put conditions on those subsidies. They're open, for example, to letting the affected states out of Obamacare's regulations even if Obama objects — and they're willing to fight the political battle if there's a filibuster or veto. (I'm with this group.)

Republicans won't be able to muster a majority of the House for Group 1's preference: Too many Congress members want to protect people from losing their insurance, or at least don't want to be blamed if they do. Group 2's preference won't get a majority either: Group 1 won't vote for it because it keeps the subsidies, and Democrats won't vote for it because it weakens Obamacare.

In the end, I predict that Republican leaders will end up going with Group 3's favored extension of the subsidies with little in the way of change to the Affordable Care Act.

Nobody in Group 1 will vote for this option. Group 2 will split: Some of its members will say they want to keep the subsidies but that they can't vote for them without reforming Obamacare, while others will say they want reform but will extend the subsidies without it if that's the only way to protect people.

Passing legislation to this effect will require Democratic votes, and Democrats will be able to extract concessions as a result — for example, on the law's requirements that larger employers must offer coverage and that individuals must be insured. Those are relatively unpopular features of Obamacare, and they'll be severely weakened by a decision invalidating subsidies. Congress could in theory offer subsidies without resurrecting those mandates. But empowered Democrats may well insist that the mandates return in full force. If they do, the legislation will probably have to pass with mostly Democratic votes.

This scenario involves Democrats getting their way even though Republicans have majorities in both chambers, and even though they won those majorities partly by opposing Obamacare. Conservatives around the country will feel betrayed.

But I'll further predict that Republican leaders won't face any serious mutiny. Group 3 will be behind them. So will most of Group 2. And many of those who ultimately don't vote for the subsidy extension will be grateful that others did. (Some in Group 1 are more eager to avoid voting for anything that smacks of complicity in Obamacare than they are to see Obamacare actually weakened.)

This forecast isn't that far-fetched: The same basic dynamic governed Republican behavior during the fiscal cliff debate in late 2012 and the government shutdown of 2013. If I'm right this time around, the best outcome remaining for Republicans will be to extend the subsidies only through the middle of 2017. In that case they could say that a new Republican president will be able to revisit the Affordable Care Act — and that maybe, by then, they'll have their act together.

Ramesh Ponnuru
Bloomberg News
(TNS)

Previously:

• 06/17/15: 6 things Jeb Bush revealed about his candidacy
• 06/11/15: Yes, Rubio made bad financial choices
• 06/03/15: Why replacing Obamacare is dividing Republicans
• 05/26/15: Sixteen questions Hillary Clinton should answer
• 05/14/15: Free-trade opponents get less logical by the day
• 02/25/15: Republicans unite to ignore immigration in 2016
• 02/11/15: 6 questions as Scott Walker eyes 2016 campaign
• 02/09/15: Bobby Jindal shows how not to replace Obamacare
• 02/02/15: Republicans should plan for post-Obamacare world
• 01/29/15: Why Obamacare should lose in next Supreme Court case
• 01/22/15: Proving they can work with Dems isn't GOP's most important political task
• 01/13/15: Newly empowered Congress passing tax reform in 2015? Not a chance, and here's why

Comment by clicking here.

Ramesh Ponnuru has covered national politics and public policy for 18 years. He is an author and Bloomberg View columnist.