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Ryan Budget Depends on Obamacare Subsidies GOP Wants Courts to Strike Down

July 23, 2014

When two appeals courts issued conflicting rulings Tuesday on whether Obamacare's health insurance subsidies apply to the 34 states that chose to let the federal government run their exchanges, Republicans were quick to pounce on the one decision they liked. Senator Ted Cruz (R-TX) called the DC Circuit's decision a "repudiation of Obamacare" which "should shield citizens from Obamacare's insidious penalties, mandates, and subsidies." House Speaker John Boehner concurred, insisting that the ruling constituted "further proof that President Obama's health care law is completely unworkable."
Of course, what is completely unworkable is any Republican alternative to the Affordable Care Act. After four years of failing to put forward their own plan, Boehner's pledge Tuesday that "Republicans remain committed to repealing the law and replacing it with solutions that will lower health care costs" is laughable on its face. And as it turns out, the Paul Ryan budget that 95 percent of Congressional Republicans voted for three years in a row depends on every single dollar Uncle Sam now raises to fund subsidies in all 50 states.
In June 2012, Chief Justice John Roberts upheld the constitutionality of Obamacare's individual mandate, arguing that Internal Revenue Service under the government's taxation power could collect penalties from Americans in all 50 states who failed to obtain health insurance as required by the ACA. For the Republicans who voted to repeal Obamacare's coverage provisions as part of the Ryan House GOP budget, it's a good thing he did. As I explained when Ted Crux and his allies sought to shut down the federal government last fall if Obamacare wasn't repealed and defunded:

While repealing Obamacare, slashing Medicaid funding by a third and leaving roughly 38 million more people uninsured, the Ryan budget still runs up trillions in new red ink thanks to its massive tax cut windfall for the wealthy. Paul Ryan's blueprint does not, as Republicans claim, balance in 10 year because it does not identify a single tax break it will close to fill the gaping hole left by almost $5 trillion in tax cuts. And yet, the Ryan plan still assumes every single dollar in revenue generated to fund the Affordable Care Act. The $716 billion in savings from Medicare providers, the capital gains and Medicare payroll tax surcharges for households earning over $250,000 a year and other new revenue raisers are all still in there.

In the spring of 2013, Ezra Klein summed up" Paul Ryan's love-hate relationship with Obamacare" this way:

Every Ryan budget since the passage of Obamacare has assumed the repeal of Obamacare. Kinda. Ryan's version of repeal means getting rid of all the parts that spend money to give people health insurance but keeping the tax increases and the Medicare cuts that pays for that health insurance, as without those policies, it is very, very difficult for Ryan to hit his deficit-reduction targets.

Not difficult, but impossible. As the nonpartisan Congressional Budget Office repeatedly forecast, Obamacare reduces the U.S. national debt precisely because its savings and new revenues exceed the cost of the Medicaid expansion and health insurance subsidies that the New England Journal of Medicine found enabled 20 million Americans to get coverage. And without those revenues, the budget Paul Ryan and his math-challenged Republican colleagues in the House and Senate backed utterly falls apart. Chris Van Hollen (D-MD), the ranking Democrat on the House Budget Committee, called out his Republicans for precisely that hoax:

[House Republicans] have to explain to the American people how they voted for a budget that includes all of the Medicare savings from ObamaCare, that includes the same level of revenue generated from ObamaCare and, in fact, would not even balance in 10 years, if not for the Affordable Care Act.

For its part, the Fourth Circuit Court of Appeals unanimously upheld the IRS tax credits paid to 4.7 million residents of the 34 states which chose to use the federal exchange, saying that a rule issued by the Internal Revenue Service was "a permissible exercise of the agency's discretion." Most observers believe the full DC Circuit will ultimately reach the same conclusion that "it is therefore clear that widely available tax credits are essential to fulfilling the Act's primary goals and that Congress was aware of their importance when drafting the bill."
If the Supreme Court were to ultimately rule otherwise, Chief Justice Roberts would have to argue that residents in states with a federally-run exchange still must purchase insurance or pay penalties if they do not. That won't go down well with the millions of newly and very happily insured (including Republican voters) who would lose their subsidies and likely their coverage. And Republicans like Ted Cruz succeeded in repealing Obamacare "root and branch," they'd have to come up with a trillion dollars in new revenue over the next decade.
To quote John Boehner, that sounds completely unworkable.


Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

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