The Supreme Court and the Democrats' Preemptive Surrender on Obamacare

03/09/2015 08:38 pm ET | Updated May 09, 2015

As the Supreme Court listened to arguments over subsidies in the state exchanges, Democrats were making their plans for preemptive surrender. Many were warning that an adverse ruling would be the death of Obamacare.

There is no doubt that a ruling for the plaintiffs would be bad news. It would deny millions of people subsidies in the states without their own exchanges. If the situation is not quickly remedied, it will also lead to the collapse of the exchanges in these states, as more healthy people stop buying insurance. With only less healthy people in the insurance pool, the price of insurance is likely to become unaffordable to almost everyone.

An adverse decision also will mean that the Republican appointees to the Supreme Court are nothing more than adjuncts to the Republican Party who care nothing about the law or the constitution. If the Republicans decide they want to take away the vote from African Americans or Jews, they can count on five votes on the Supreme Court.

But even a bad decision from a court that has no respect for the law need not be the end of the Affordable Care Act (ACA). The immediate impact is to stop the flow of tens of billions of dollars in subsidies from the federal government to millions of lower middle income and middle income families in the states without exchanges.

This is a situation that can be quickly remedied by having these states set up their own exchanges. Since a state exchange is not well-defined in the law, presumably the federal government can relatively quickly break off the Texas, Kansas, Florida, etc. sections of the federal exchange and make them into that state's exchange. (Of course the Republican members of the Supreme Court may also want to become experts on the definition of "state exchanges.")

It is generally assumed that these states will not create state exchanges because they are controlled by Republicans who are opposed to Obamacare. This means that Florida would effectively throw $3.9 billion a year in federal subsidies into the toilet rather than allow 1.6 million of its residents continue to get subsidized insurance through the ACA. Texas would be pissing away close to $4.8 billion each year.

Republican office holders may not care about these people (many of whom are white and middle class), but let's imagine the roles were reversed. Suppose a Republican president and Congress were able to push through a great tax giveaway that handed $1 million a year to every person in the country who had at least $50 million in assets. The Democrats then regain control of Congress and refuse to cooperate in any way with the giveaway, but can't overturn the law as long as a Mitt Romney equivalent is sitting in the White House.

Then a Democratic majority on the Supreme Court decides that the giveaway only goes to rich people in states where the legislatures and governors opt to get it. Would the Democratically controlled states stand tough and tell the millionaires and billionaires in their states they are out of luck?

That doesn't seem likely. It is seems more probable that the Democratically controlled states would rush to adjust their laws as quickly as possible to ensure that their rich can share in the national giveaway. After all, they may not like the idea of giving all this money to the rich, but if rich people in Indiana and Wisconsin can get the dough, why shouldn't the rich people in Illinois also cash in?

There may seem a difference in the stories in that the Democrats also rely on rich donors, just not quite as much as Republicans. Therefore many people on the inside of the Democratic Party will be pushing to let them share in the loot.

But there is a similar story with ACA. Part of the story of health care spending is providing people with health care, but part of the story is redistributing money to the insurance industry, the pharmaceutical industry, the medical supply industry, and highly-paid medical specialists. The patients are just intermediaries. That is why we pay close to twice as much per person for our health care as people in other wealthy countries.

Many of the one percenters in the health care industry are card-carrying Republicans who regularly buy tickets to top of the line fundraisers. These folks will not be happy about Republican state officials needlessly reducing the size of their trough. This group could be a powerful fifth column leaning on their representatives in the legislatures to create exchanges so that they can benefit from the subsidies. This shouldn't sound far-fetched; we have seen exactly this situation develop as a number of states controlled by Republicans are now accepting federal support for Medicaid expansion under the ACA.

The point is that a bad court ruling should fairly quickly put Republican officeholders in an untenable position. It would be awful to see millions of people needlessly denied insurance and to have tens of millions have to worry about this possibility. But if the Democrats can resist the urge for preemptive surrender, the dynamics should work in the direction of pushing the Republican states towards creating exchanges.

We just need Democrats who will act a bit like Republicans in standing up for what they supposedly believe.