March 5, 2015


Red States Will Suffer (Walter Dellinger, 3/05/15, Slate)

During the oral argument in King v. Burwell on Wednesday, at least some of the Supreme Court justices seemed concerned about the consequences of a ruling against the government. Largely unstated was the most dramatic likely consequence of such a ruling: Citizens in blue states would continue to have major federal income tax breaks that are not available to their fellow citizens who live in red states. The result would be an extraordinary and anomalous federal tax regime. Moreover, it is one that neither Congress nor the states would be likely to cure, at least not in the foreseeable future.

First, a ruling against the government would not be a national disaster for Obamacare. It would be a disaster, to be sure, but basically only in red states in which conservative politicians might find it politically impossible to set up state-run insurance exchanges. Obamacare is doing just fine in the states that have established their own exchanges. They may be fewer than a third of the states by number, but they include major jurisdictions such as California and New York. And they are likely to be joined by a few other major states such as Pennsylvania where the politics will allow the establishment of state exchanges.

If the court's majority were to rule against the government, I would guess that when all this shakes out over the next year, states with (very roughly) half the population would have well-functioning health insurance markets because the working-class citizens in those states would be entitled to federal income tax subsidies enabling them to purchase affordable health insurance. Almost all of the states whose citizens will continue to receive those hundreds of millions of dollars in health insurance subsidies will be blue states. In most red states, the dollar amount of the subsidies would be zero, and the private insurance market would collapse.

Posted by at March 5, 2015 7:00 PM

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