The stakes in the House GOP's lawsuit are much bigger than policy experts have recognized: Not only would it deal a blow to the working of the exchanges, but it could effectively render ObamaCare unfixable at the state level.
The House voted last year to sue the Obama administration for spending billions on cost-sharing subsidies that Congress never appropriated. Over the coming decade, these subsidies that reduce out-of-pocket expenses for low-income insurance customers will add up to $136 billion, the Congressional Budget Office projects.
While that would be a hefty sum to spend without authority, analysts have downplayed the potential impact of a GOP win. Even if the cost-sharing aid is lost, they say, it wouldn't be nearly as destructive as the loss of premium subsidies at stake in the King v. Burwell case won by the White House.
While true, here's what these analysts are missing:
First, a ruling for the House would effectively kill off the Basic Health Program, a public-option-like version of ObamaCare adopted so far by New York and Minnesota to serve low-income households, because states would immediately lose roughly one-third of their funding.
Second, the loss of cost-sharing subsidies also would likely kill any chance that states can take advantage of waivers beginning in 2017 to design a more consumer-friendly, less heavy-handed alternative to ObamaCare. Policymakers across the political divide have been eyeing that opportunity.
Third, as a result of a White House loss, exchange premiums might jump in the neighborhood of 6% to 12%, with higher increases in poorer states more dependent on cost-sharing subsidies. That would only add more problems on top of ObamaCare's shaky foundation, leading more relatively young and healthy people to forgo coverage.Read the rest of this IBD op-ed HERE.
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