Gauging the fallout from King.

I have a new piece at the New England Journal of Medicine, co-authored with David Jones and Tim Jost, that grapples with the practical consequences of a Supreme Court decision against the government in King v. Burwell. As we explain, the fallout could be much worse than is commonly appreciated.

In particular, we are not optimistic that the states that lose tax credits would rush to establish their own exchanges. You can read the piece to get a sense of the full range of the operational, legal, and political obstacles, but there’s one point that hasn’t received enough attention:

[G]overnors can act on their own only if they can identify a “clear” source of legal authority, according to an HHS blueprint for state-operated exchanges. A few governors — including those of Kentucky, New York, and Rhode Island — have proceeded without legislative involvement. But not all governors in the states that declined to establish exchanges have the statutory authority to go it alone. Indeed, at least seven of those states, including Missouri and North Carolina, have flatly prohibited their governors from establishing exchanges. Even governors who could identify a legal basis for moving forward would be reluctant to press ahead in the face of legislative resistance, lest they imperil the rest of their political agenda.

In most states, then, legislatures will have to put their imprimatur on state exchanges. Yet only 8 of the 34 states using the federal exchange have legislative sessions extending beyond June. In order to avoid a gap in financial assistance for their residents, the other 26 states would need to create an exchange during the 2015 legislative session — well before the Supreme Court is likely to rule. Otherwise, they might be unable to operate their own exchanges until 2017.

Austin and Aaron’s colleague at the New York Times, Margot Sanger-Katz, has a terrific article out this morning that mentions the NEJM piece and hits on many of the same themes. As she concludes:

[T]he effect of a court ruling dismantling federal subsidies could be both substantial and lasting in large parts of the country. States will have the power to get subsidies to their residents. But not easily, and not right away.

Now is not the time for complacency. For the millions of people who stand to lose their tax credits, King is a deadly serious case.


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