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Health-Law Foes Recalibrate Approach

Opponents weigh narrower attacks on aspects of Affordable Care Act

By Stephanie Armour
June 26, 2015 7:00 p.m. ET

Many opponents of the health law are putting away their legal wrecking balls and reaching for chisels.

Thomas Miller, one of the strategists behind the Supreme Court case that aimed to strike down subsidies on the federal exchange, said he thought he would be celebrating now. But after Thursday's decision upholding the subsidies, he is setting up meetings to discuss narrower attacks on the Affordable Care Act.

Efforts to get momentum for another legal case, however, could flag following the Supreme Court opinion.

“You know, this decision makes it harder,� said Mr. Miller, a resident fellow at the American Enterprise Institute, calling it “postdecision depression.�

ACA opponents on and off Capitol Hill suggest a new emphasis on dismantling the law in Congress and state legislatures piece by piece. An early target is the 2.3% federal excise tax on the sale of certain medical devices to help raise revenue to support the law. The repeal measure passed the House this month, and Senate Republicans are gathering Democratic support and strategizing on how it could pass that chamber without inviting President Barack Obama's veto.

A larger goal is getting states to seek federal waivers that opponents hope would let them opt out of individual and small-group health-insurance requirements. States can apply for the waivers beginning in 2017.

The waivers allow states flexibility to develop their own strategies for providing residents with affordable health coverage by pursuing alternatives to the health law. But the changes must meet specific criteria, such as not adding to the federal deficit. Any alternative plan must cover as many residents in the state as the ACA would and must ensure certain consumer protections.

It could be an attractive option to states such as Texas, Florida and North Carolina, which that have opposed the ACA.

“States could use it to opt out of the individual mandate or employer mandate,� said Bruce Gilbert, executive director of the Nevada exchange. “It should be attractive to the states.�

Other parts of the law that could be attractive targets for opponents include the so-called Cadillac tax, a cost-control measure that applies a tax on generous employer health plans. The provision doesn't kick in until 2018, but it is already in opponents' crosshairs.

“From a litigation perspective, things will calm down,� said Caroline Pearson, senior vice president at Avalere Health. “The short-term issues become the focus, such as the Cadillac tax. They will go after some of those pieces. That's the core play for Republicans in the big push to get ready for 2017.�

Either way, the approach now is a long-term whittling away rather than pinning hopes on a lawsuit that will lead to the law's rapid collapse. “Look, you can chip away at it and create portholes where people can escape,� said Mr. Miller. “It's a five to 10-year effort. That's where it will go next, on a long-term trajectory.�

Thomas Christina, the attorney in Greenville, S.C., who first spotted the language in the health law that led to the Supreme Court lawsuit, doesn't want to speculate on the next legal or political moves. But he said the wording of the majority decision makes one thing clear: “A subsequent administration would have a very difficult time reversing tax credits in federally facilitated exchange states.�

Many of the law's opponents eschew the incremental approach and have vowed to keep pushing to topple the law.

“We will continue to work toward real reform that lowers costs and helps Americans access high-quality health care,� said Senate Finance Committee Chairman Orrin Hatch (R., Utah). He and other GOP senators have introduced legislation to repeal and replace the law often called Obamacare.

“Full repeal is absolutely still the goal; it's just going to require a new president to sign it into law,� said Rep. Paul Ryan (R, Wis.), chairman of the tax-writing House Ways and Means Committee. “That's why we're now focused on having a replacement plan ready to move quickly in 2017 under a Republican president.�

Michael Cannon, a staunch opponent of the law, remains undeterred. Mr. Cannon uttered just one word—“Wow!�—when he heard about the 6-3 decision by the Supreme Court upholding subsidies.

As an architect of the lawsuit, Mr. Cannon, director of health policy studies at the libertarian Cato Institute, had argued that language in the statute never meant for subsidies to go to consumers using the federal marketplace known as HealthCare.gov. Chipping away at the law in bits and pieces will deflate the momentum needed to fully overturn the legislation, he warned.

“The push to repeal will survive,� he said.