GOP lawmakers tell Obama’s team to prep for a loss in pivotal Obamacare subsidies case

Top congressional Republicans accused the Obama administration Wednesday of failing to steel themselves and Obamacare customers for a Supreme Court ruling next year that could cut off the law’s subsidies to two-thirds of the states.

Incoming Senate Majority Leader Mitch McConnell of Kentucky and four other Republicans said the health overhaul is in great peril as the justices hear King v. Burwell, a challenge that argues the administration unlawfully extended tax credits to people who use the federal marketplace.

The Affordable Care Act of 2010 reserved the subsidies to people who use health exchanges “established by the state.” To the challengers, that means portals established by 15 states and the District of Columbia, and not the states that asked the federal government to run their exchanges for them.

Republicans are cheering on the case, because they view it as the most direct way to dismantle President Obama’s controversial reforms. Without the subsidies, the law would be much less attractive because many Americans would be unable to pay their monthly premiums.

“Obamacare’s tax credits were important for the administration since they obscure the true cost of the law’s many mandates and regulations by passing these expenses to taxpayers. Although the tax credits in federal exchanges may therefore be the administration’s preferred policy, they are unambiguously inconsistent with the law,” the GOP lawmakers wrote in a letter to Health and Human Services Secretary Sylvia Mathews Burwell and Treasury Secretary Jack Lew.

The administration has not incorporated the threat into its outreach materials.

Instead, it is trying to build a thriving marketplace by retaining the 6.7 million customers it had going into the second round of enrollment this fall, while adding millions more.

It says Obamacare’s framers never intended to treat residents of certain states differently than others, and that cutting off subsidies would be a cruel and unfounded move motivated by politics.

Republicans countered that the administration should be preparing enrollees for an adverse outcome before the high court.

“Without the tax credits, millions of people will be confronted with Obamacare’s [true] cost and will face much higher premiums,” the lawmakers wrote. “Some could see their coverage canceled. It is imperative that people understand this risk as they contemplate signing up for coverage.”

Allowing subsidies to flow to states on the federal exchange, they said, also exposes businesses in federal exchange states to the law’s employer mandate, which requires large firms to provide health insurance or pay fines.

The fines are triggered when at least one employee takes advantage of the tax credits.

GOP lawmakers also accused the administration of letting insurers opt out of contracts with the exchanges should the justices strike down the subsidies, but without sounding the alarm among customers.

“It is troubling that the administration decided to protect insurers from a King ruling that restricts the law’s tax credits to state exchanges while at the same time [failing] to inform people enrolled or considering enrolling in federal exchanges of the potential consequences of such a decision,” they wrote.