ACA at the Supreme Court: Subsidies Are Here to Stay, Even if SCOTUS Finds for King


Congress cannot repeal the ACA; the President would almost certainly veto a repeal bill, and Republicans lack the two-thirds votes required in both chambers to overturn. (Republicans have 56 percent of House and 54 percent of Senate seats)

And, Congress almost certainly cannot pass ‘post-King’ measures that fail to restore subsidies. Assuming all House Democrats oppose the Republicans’ post-King ACA reform measure(s), House Republicans can afford to have no more than 30 of their own number opposing. The trouble here is that 30 House Republicans are from districts in which at least 12% of voting age persons are currently receiving subsidies – so whatever post-King reforms Republicans might pass, ongoing subsidies (although potentially in some different form) almost certainly will be included

Congress only gets ‘control’ of the ACA if a sufficient number of states refuse to make their own ‘post-King’ deals with the Administration. It seems reasonably clear that the Administration has options to allow willing states to configure their exchanges so that subsidies continue – but the states have to be willing

In the immediate wake of a SCOTUS finding for King, we believe most of the FFM* states would refuse to make deals with the Administration, specifically in order to hand Congressional Republicans an opportunity to pass ACA reforms. However the FFM states’ willingness to give Congressional Republican a shot at ACA reforms only lasts as long as post-King subsidies are extended. If and when the FFM states begin to believe Congress cannot pass reforms in time to ensure subsidies flow uninterrupted, we would expect these states to make deals with the Administration, ending Republicans’ shot at substantive reforms

Thus on net, if SCOTUS finds for King, Republicans cannot repeal the ACA, and they almost certainly cannot pass any type of ACA reforms that do not continue subsidies. With very limited time to work, the scope and scale of what can be achieved is severely limited

This being said, the Republicans’ draft proposals, once stripped of plainly unworkable clutter (ACA repeal, tort reform, etc.) contain politically and economically feasible reforms which could, ironically, save the ACA’s health insurance exchanges (HIEs) from the very real likelihood of collapse as a result of adverse selection

If the Court finds for King, we would view falling share prices for providers (e.g. Hospitals), suppliers of consumable goods to hospitals, and/or insurers as a buying opportunity

For our full research notes, please visit our published research site

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