The U.S. Supreme Court's
unprecedented, highly politicized and extremely activist decision to take on a challenge to the structure of subsidies for people enrolling in Obamacare threatens to fatally undermine the law. But, there is a
work around the White House could employ that could maintain subsidies for people who've purchased insurance on both the state exchanges and the federal exchange. At issue in the
King case, which the court is hearing, is whether subsidies can be provided to the people in the three dozen states which are using the federal exchange.
The specifics would need to be worked out, but the crux is this: States could continue to use HealthCare.gov as their technical backdrop, but they would be considered state-based exchanges. That would allow the law's tax subsidies to keep flowing, even if the Supreme Court were to invalidate them on the federal exchange, as the lawsuit's plaintiffs argue it should.
"I imagine the administration would try to make it as easy as possible for states to set up exchanges, possibly including having the nuts and bolts still operated through HealthCare.gov," Larry Levitt, vice president at the non-partisan Kaiser Family Foundation, told TPM this summer before the case reached the Supreme Court.
Joel Ario, a former Health and Human Services official who nows works at Manatt, Phelps and Phillips, also told TPM back then that the administration "could make it much easier for a second generation of state exchanges to be established now that the federal government has a viable IT platform for both state and federal exchanges to use."
Both Nevada and Oregon already essentially do that. They built highly problematic state exchanges, but have ended up transitioning to the federal exchange for the backbone of their system. They are still, however, state exchanges and their customers would still be eligible for subsidies even if the court rules against the government. States, however, would have to act in some way to do it, and whether they'd be willing to politically is a pretty big question.
Politically, though, putting the onus on Republican governors and legislatures to maintain insurance for well over four million people is a pretty good idea. All of those people with their new insurance—and all of the insurance companies with their new customers—certainly have a stake in this, and could exert a great deal of pressure. This effort by Republicans—and the conservative justices—could end up biting them in the ass.