Commentary

Who Wins if the Supreme Court Disables Obamacare?

In the next few days, the Supreme Court will issue a decision in King v. Burwell, the most contentious case of the year. (I’m not counting same-sex marriage because everyone thinks it’s a foregone conclusion.) For those still unfamiliar with what is probably the last existential legal challenge to Obamacare, King asks whether the text of the Affordable Care Act, which provides for subsidies for people who buy health insurance from exchanges “established by the state,” also allows the IRS to give these tax credits to those buying from the federal healthcare.gov.

If you believe the recent hype surrounding the case, particularly that generated by President Obama, it’s a case the Court should never have taken — and if it sides with the challengers, it would “take coverage away from millions of people; to take care away from people who need it the most; to punish millions with higher costs of care and unravel what’s now been woven into the fabric of America.”

Parades of horribles about how the economy would implode and people would be left dying in the streets abound. We’ve all heard, for example, that somewhere between 6 and 6.5 million Americans will no longer be able to afford coverage. And it’s certainly true that if Obamacare is enforced as written, there will be losers — there have already been plenty! But let’s look at who wins if the justices rule the way the president fears.

Although a ruling for the King plaintiffs will involve some short-term losers …the decision will ultimately result in cheaper and better insurance, more jobs, higher incomes, and constitutionally proper governance.

First, and most importantly to the average American, overturning the illegal IRS rule will put more money back into Americans’ pockets and allow them to buy insurance without a subsidy. According to a study by Douglas Holtz-Eakin & Brittany La Couture of the American Action Forum, in the event that King comes out in favor of the petitioners: nearly 250,000 new jobs will be added; nearly 1.3 million workers will be added to the labor force; pay per worker will increase approximately $800-$950 (with a $13.6 billion increase overall in total pay); and almost 3.5 million part-time workers stand to gain hours with the dissipation of the 30-hour work week mandated by the ACA.

This effect will be particularly felt by those who need it most, part-time and minimum wage earners and, as Jared Meyer and Diana Furchtgott-Roth of the Manhattan Institute point out in their new book, Disinherited: How Washington is Betraying America’s Young, it is America’s economically vulnerable and politically disenfranchised youth who are most burdened by Obamacare’s mandates. The freeing of 57-60 million people from various mandates will allow them to spend their money on catastrophic coverage policies and other tailored products, rather than the plans the government thinks is best.

Second, allowing Obamacare to function as written will serve to make government more accountable to the people. The executive branch has amended the ACA time and again through “administrative fixes,” from suspending the individual mandate, to delaying the employer mandate, and then rewriting the employer mandate by regulation. The collective effect of these actions is to muddy the waters such that voters aren’t fully aware that it’s the legislation itself that’s unworkable. Moreover, a Kingruling against the government would lay bare the full cost of Obamacare, making government more transparent.

Finally, the Supreme Court stands to restore the rule of law that the president has abrogated in trying to get his healthcare law to work without revisiting congressional action. As I wrote in Cato’s brief: “After Congress painstakingly arranged a very complicated ACA, the executive treated the law as a misbegotten jigsaw puzzle, arbitrarily rearranging the pieces and capriciously jamming them where they did not fit.”

Each time the president or his agents “reinterpret” the law, it erodes the foundation of the separation of powers. In this season of Magna Carta celebrations, I could note that such a process is decidedly more analogous to the arbitrary decrees of the Norman King and his Curia Regis than to anything resembling our system of government. Because the president isn’t a king, he can’t rewrite laws at will for policy or political expediency.

Now, even if the president and his acolytes were correct about the outcomes of an administration-adverse decision, Congress is more than prepared to act. Despite claims that “Republican’s don’t have a plan,” there are several alternatives already on the table. All of them would increase choice, reduce cost, introduce competition among insurers, and maintain popular provisions like coverage for preexisting conditions.

The conventional wisdom, of course, is that President Obama would veto any reform other than a “clean” ratification of the heretofore illegal subsidies. Let him — and let him try other administrative gimmicks like “deeming” that federal exchanges are state exchanges. If that’s the way he wants to play the three-dimensional game of chicken among the White House, Congress, and the states, let the people judge his actions. Obama won’t be on the ballot in 2016, of course, but Hillary Clinton won’t want that albatross around her neck.

Although a ruling for the King plaintiffs will involve some short-term losers — who are losers only because the IRS illegally induced them to rely on something other than Obamacare’s statutory language — for many more, and for the country as a whole, the decision will ultimately result in cheaper and better insurance, more jobs, higher incomes, and constitutionally proper governance.

Ilya Shapiro is a senior fellow in constitutional studies at the Cato Institute and editor-in-chief of the Cato Supreme Court Review.