With oral arguments in King v. Burwell just eight days away, Republicans are talking more and more about what they’ll do if the Supreme Court sides with them and effectively wipes out subsidized Obamacare insurance in two-thirds of the states.
On Monday, it was Sen. Orrin Hatch (R-Utah) speaking at the Heritage Foundation, where he promised to unveil a “short-term” fix that would avoid disruption -- thereby giving Republicans time to come up with a permanent alternative to the Affordable Care Act. On Tuesday, former Sen. Phil Gramm (R-Texas) joined the fray with a Wall Street Journal op-ed that sketched out what such a plan might look like.
Should you take this talk seriously? Republicans have been promising to craft alternatives to Obamacare for as long as they’ve been trying to wipe it off the books -- in other words, for nearly the entire five years that the law has been in existence. They've come nowhere close to coalescing around a serious proposal. In this case, inaction may speak louder than words. At best, improving access to health care doesn't seem to be a priority for the GOP. At worst, it's not something they appear inclined to do at all.
Gramm’s op-ed reveals this as well as anything you’ll read or hear these days. In the piece, Gramm warns his fellow Republicans that if they get the ruling they hope for in King v. Burwell, it will unleash policy and political chaos. Without Obamacare’s subsidies, which can be worth hundreds or thousands of dollars a year, millions of lower- and middle-income Americans would suddenly find insurance unaffordable -- and would almost certainly have to give up coverage altogether. This, Gramm says, would place enormous pressure on state and federal officials to take immediate action.
In theory, Congress could meet that demand easily by passing a one-sentence amendment to the Affordable Care Act, thereby clarifying the ambiguous section in the law that gave the Obamacare critics pretext for bringing their lawsuit to court in the first place. Obamacare would continue to offer subsidized private insurance in all of the states, just like it does now. Gramm, as you might expect, has something else in mind.
In the op-ed, Gramm proposes what he calls the “freedom option.” He doesn’t describe it in much detail, except to say that by "freedom" he means eliminating regulations on insurer practices and doing away with the financial penalties on consumers who decline to buy coverage when it's affordable.
“If Republicans crafted a simple bill that guarantees the right of individuals and businesses to opt out of ObamaCare, [and] buy the health insurance they choose from any willing seller ... millions of Americans would rejoice and exercise this freedom,” Gramm writes. “Such a proposal would be easy for Republicans to articulate and defend. And it would be very difficult for Democrats to attack.”
Gramm's proposal might indeed have political appeal. Who doesn't like the sound of “freedom”? But the policy reality is a bit more complicated than Gramm lets on. Without requirements that insurers sell only comprehensive policies, at uniform prices, even to people with pre-existing conditions -- and without the financial penalties for people who turn down affordable coverage -- the insurance market would start to look like it did before Obamacare. Insurers selling directly to individuals would focus on young, healthy customers, to whom they could market ultra-cheap, frequently skimpy policies. Older and sicker people, seeking more comprehensive coverage to pay their predictably larger medical bills, would find such policies available only at much higher prices -- if they could find any policies at all.
At one point in the op-ed, Gramm depicts his plan as the best of all worlds -- with coverage both for those who like Obamacare and those who don’t. “Every American should have the right to decide not to participate in ObamaCare,” Gramm writes. “If you like ObamaCare and its subsidies, you can keep it. If you don’t, you are free to buy the health insurance that fits your needs.” But it's difficult to see how those realities could co-exist, as Gramm more or less admits a few sentences later. “By extinguishing coercion,” he writes, “the freedom option would put ObamaCare on the path to extinction. Without the ability to exploit the young and healthy, the Affordable Care Act will collapse under its own funding weight, all but guaranteeing a 2017 revision of the entire law.”
To be clear, Gramm is right about the trade-offs that have come along with Obamacare. Young, healthy people buying coverage on their own now face higher premiums than they did before the law took effect. But that’s how insurance works in large groups, whether you're talking about companies that provide health benefits to employees or the new Obamacare exchanges through which millions have purchased insurance. These schemes spread the cost of medical bills broadly, so that the financial burden doesn’t fall so heavily on the relatively small number of people with serious health problems.
Conservatives like Gramm may object to such arrangements on principle, and they are of course entitled to that view. But a world without such requirements would almost certainly be a world where fewer people would have comprehensive insurance -- and where the people who really need help paying their medical bills would struggle most to get it.