Potential Fork in the Road on Subsidies

Greg Sargent makes a very important point today on the dynamics of where states will find themselves if SCOTUS declares Obamacare subsidies unauthorized for the 36 states currently that did not originally create their own health insurance purchasing exchanges:

Many of those states that didn’t set up exchanges also declined to opt in to the Medicaid expansion for the same reason — resistance to Obamacare.

However, there are a number of states that declined to set up their own exchanges but have nonetheless opted in to the Medicaid expansion. There are some 15 states in this latter category.

In these states, declining to set up exchanges appeared — at first — to have no practical consequences in terms of the law’s benefits. The federal government set them up, and subsidies are now flowing to residents who qualified for them — because they have incomes from 100 percent to 400 percent of the federal poverty line — thus helping them get coverage. Meanwhile, federal money is also enabling those states’ poorer residents get coverage through the Medicaid expansion.

But now, in these states, if the subsidies are nixed, the Medicaid expansion will remain. And that means, suddenly, a situation in which poor people’s health coverage is being subsidized by the feds, while the health coverage of slightly better off people, folks who are more likely to be working, is not — leaving them potentially without it.

This is a very different situation than the one facing GOP governors in states that didn’t set up an exchange or opt into the Medicaid expansion. In those states, federal money for health care would now go to nobody. But in these other states, a situation that seems politically hard to defend — poor people get federal money for coverage, but slightly better off people, who are more likely to be working, will now likely lose it — will arise.

Greg doesn’t think it’s necessary to point out the the subsidy-beneficiaries are significantly more likely than Medicaid beneficiaries to be Republican voters. As the SCOTUS decision approaches–and again, we can’t really assume we know what that decision will be since only four justices were necessary to take up the case–it will be interesting to see if this group of people makes some noise.

Ed Kilgore

Ed Kilgore, a Monthly contributing editor, is a columnist for the Daily Intelligencer, New York magazine’s politics blog, and the managing editor for the Democratic Strategist.