Cato’s Tanner asks: What happens next if the high court strikes down Obamacare subsidies?

The U.S. Supreme Court could rule next June that the language of the Affordable Care Act means what it says: that the federal government cannot provide health insurance subsidies to people who live outside states with state-based health insurance exchanges.

If the court rules that way, that would not mean an immediate end to Obamacare. Michael Tanner of the Cato Institute examines in a National Review Online column what would follow a decision striking down the unconstitutional subsidies.

If the Court upholds the challenge, some 5 million people in 32 states would lose their subsidies, meaning they would suddenly have to pay more, sometimes much more, for insurance. Not surprisingly, supporters of Obamacare have reacted to the possibility with near hysteria. The American Prospect warned of a “swath of human misery, stretching from horizon to horizon.” Salon concurs, arguing that “people will die.” Brian Beutler in The New Republic agrees that this decision is “a matter of life and death” and proclaims that the Supreme Court has become “a death panel.”

Back in the real world, such drastic outcomes are unlikely. Of course, the predictions do raise the question of why, if liberals truly believe such things, the administration continues to enroll people in Obamacare without even warning them that their subsidies might be at risk.

Still, it is true that, if the Court does insist on the law as written, a great many Americans are going to be very unhappy once they see their new insurance premiums. That means there will be a lot of pressure on legislators in both parties to do something to fix the problem. And, with President Obama, congressional Democrats, and many in the media ready to blame Republicans for the outcome, the GOP had better be ready to respond.

The easiest response, and the one most likely to be pushed by Democrats, would be simply to rewrite the law to reinstate the subsidies. All it would take is a one-page bill declaring that a federal exchange should be considered “an exchange established by a State.” Perhaps Democrats will even try to tempt Republicans with minor concessions on issues like the medical-device tax or the employer mandate. Or Congress might do what it so often does and kick the can down the road, preserving the subsidies until after the 2016 election.

But Republicans should resist any such quick fix. Not only would they be agreeing to lock Obamacare into place for the foreseeable future, they would, in effect, be acquiescing to the Obama administration’s illegal taxes and the usurpation of legislative power. …

… [I]f Republicans at both the federal and state levels can hold their ground, they will be able to use this opportunity to force Congress to open Obamacare up to wholesale revision, possibly even repeal.

To accomplish that, however, Republicans will have to be ready with their own replacement option. So far, they have shown no sign that they can agree on such a policy. Worse, most of the plans talked about so far are little more than Obamacare Lite.