A three-judge panel of the United States Court of Appeals ruled by a 2-1 margin that the Affordable Care Act does not permit the federal government to subsidize premiums in states that employ the federal Obamacare exchange, a verdict that would cut off assistance to millions and blow a potentially fatal hole in the law.
The ACA “does not authorize the Internal Revenue Service to provide tax credits for insurance purchased on federal exchanges,” said the ruling in the case, Halbig v. Burwell. The text of the statute “plainly makes subsidies available only on exchanges established by states.”
The ruling would disembowel the law – I like that better than “gut the law” – because it makes the mandate at the heart of Obamacare meaningless. How do you force people to buy health insurance when they can’t nearly afford it?
But don’t get too excited yet. The panel is stacked 2-1 in favor of Republican appointees, while the full court, where the administration will next bring the case, is majority Democrat. If Justice John Roberts couldn’t bring himself to put an end to Obamacare, these cats certainly aren’t going to.
Nevertheless, things could get interesting if this gets to the Supreme Court.
The clear text of the law does not allow subsidies for those on the federal exchange. Congress simply expected that states would adopt their own exchanges. The famous federal website was really just a backup. Instead, 36 states have adopted the federal exchange, while only 14 states and the District of Columbia have their own.
The Obama administration argues that the “intent” of the law was to cover everybody, so please ignore the text. They may eventually need five Supreme Court justices to agree that the Affordable Care Act doesn’t mean what it says.
They’ll certainly be persuasive. After all, the White House has lots of experience arguing that the language of the ACA should be ignored.
UPDATE: A separate U.S. court of appeals in Richmond issued a contrary ruling, upholding the subsidies. The Richmond court ruled the language of the law is unclear.
The contrary rulings suggest the Supreme Court may address the issue sooner rather than later.