Forget Hobby Lobby—This Case Could Wreck Obamacare

A ruling is expected any day now in a case that could tear the Affordable Care Act apart.

A Tea-Party supporter protest outside the US Supreme Court on the third day of oral arguements over the constitutionality of the Patient Protection and Affordable Care Act on March 28, 2012 in Washington, D.C.
Sam Baker
July 7, 2014, 1 a.m.

A fed­er­al ap­peals court might be on the verge of blow­ing a massive hole in the found­a­tion of Obama­care.

The U.S. Court of Ap­peals for the D.C. Cir­cuit is ex­pec­ted to rule any day now in a law­suit that aims to block the law’s in­sur­ance sub­sidies in more than half the coun­try. If the chal­lengers ul­ti­mately pre­vail, the Af­ford­able Care Act’s com­plex frame­work could be­gin to un­ravel as mil­lions of people lose fin­an­cial as­sist­ance.

For now, the stakes are a lot high­er than the odds of suc­cess—chal­lenges to the in­sur­ance sub­sidies have a 0-2 re­cord in fed­er­al courts. But the pending D.C. Cir­cuit rul­ing may be the one to break that streak, ac­cord­ing to leg­al ex­perts on both sides of the is­sue.

A three-judge pan­el heard or­al ar­gu­ments in the case, Hal­big v. Se­beli­us, in March. Two judges ap­peared to split along par­tis­an lines, leav­ing Judge Thomas Grif­fith, a George W. Bush ap­pointee, as the likely swing vote. Grif­fith seemed dur­ing or­al ar­gu­ments to at least be open to the chal­lengers’ ar­gu­ments, and per­haps lean­ing in their dir­ec­tion.

A rul­ing against the Obama ad­min­is­tra­tion wouldn’t im­me­di­ately dam­age the Af­ford­able Care Act, and it wouldn’t mean that the ad­min­is­tra­tion will ul­ti­mately lose. But it would give the chal­lengers their first vic­tory and en­sure that the is­sue keeps mov­ing through the courts.

“I “¦ think it’s go­ing to get far more at­ten­tion than it de­serves,” said Timothy Jost, a law pro­fess­or at Wash­ing­ton & Lee Uni­versity and a sup­port­er of the Af­ford­able Care Act.

Hal­big aims to cut off the law’s in­sur­ance sub­sidies in fed­er­ally run in­sur­ance ex­changes—sub­sidies that nearly 7 mil­lion people are already re­ceiv­ing.

Obama­care set up an in­sur­ance mar­ket­place in each state and au­thor­ized the fed­er­al gov­ern­ment to op­er­ate the ex­changes in states that wouldn’t set up their own. The ex­changes were de­signed primar­ily for people who buy in­sur­ance on their own, rather than get­ting it through their em­ploy­er, and the law provides tax sub­sidies to help most of those con­sumers cov­er the cost of their premi­ums.

The Hal­big chal­lenge ar­gues that the Obama ad­min­is­tra­tion—spe­cific­ally the IRS—is break­ing the law by of­fer­ing those tax sub­sidies in all 50 states. It re­lies mainly on the text of the stat­ute, which au­thor­izes sub­sidies in “an ex­change es­tab­lished by the State.”

That phras­ing clearly re­stricts sub­sidies to state-run ex­changes and does not au­thor­ize them to flow through the fed­er­ally run fall­back ex­change, the law­suit claims.

But the Justice De­part­ment says that read­ing is too nar­row, and the chal­lengers have had a hard time con­vin­cing judges that Con­gress in­ten­ded to set up a two-tiered sys­tem.

“The plain text of the stat­ute, the stat­utory struc­ture, and the stat­utory pur­pose make clear that Con­gress in­ten­ded to make premi­um tax cred­its avail­able on both state-run and fed­er­ally fa­cil­it­ated Ex­changes,” D.C. Dis­trict Court Judge Paul Fried­man wrote in his rul­ing on the sub­sidies.

Even tak­ing the “es­tab­lished by the State” lan­guage in­to ac­count, the Justice De­part­ment and lower courts said, the stat­ute as a whole in­dic­ates that Con­gress in­ten­ded to treat all ex­changes equally. The fed­er­al gov­ern­ment “stands in the shoes” of states, the Obama ad­min­is­tra­tion ar­gues.

“Con­gress is clearly in­dic­at­ing that it wants a sys­tem of ex­changes, na­tion­wide, to provide af­ford­able health care for all Amer­ic­ans. States have the first op­por­tun­ity to es­tab­lish those ex­changes un­der this frame­work, but if they don’t, that same ex­change is cre­ated by the [Health and Hu­man Ser­vices] sec­ret­ary,” Justice De­part­ment law­yer Stu­art Del­ery said dur­ing the Hal­big ar­gu­ments in March.

The chal­lengers in Hal­big and its com­pan­ion law­suits say Con­gress wanted to use the sub­sidies as an in­cent­ive for states to set up their own ex­changes. Fried­man, though, said “there is no evid­ence in the le­gis­lat­ive re­cord that the House, the Sen­ate, any rel­ev­ant com­mit­tee of either House, or any le­gis­lat­or ever en­ter­tained this idea.”

The chal­lengers ap­pealed Fried­man’s Hal­big rul­ing to the D.C. Cir­cuit on an ex­ped­ited timeline, which is why a de­cision is ex­pec­ted soon. Jost said the fact that the court hasn’t ruled yet might be a sign that Grif­fith, the swing vote, wasn’t ready to quickly sign on to a rul­ing ax­ing the sub­sidies.

A dis­trict court in Vir­gin­ia dis­missed a nearly identic­al law­suit, also say­ing there was no evid­ence that Con­gress in­ten­ded to make sub­sides avail­able only through state-run ex­changes. That case, King v. Se­beli­us, was ap­pealed to the 4th Cir­cuit Court of Ap­peals, which could also is­sue its rul­ing soon.

Sophie Novack contributed to this article.
What We're Following See More »
#NEVERTRUMP’S LONELY LEADER
Romney Talks Cost of His Futile Anti-Trump Fight
15 minutes ago
THE LATEST

Mitt Romney spoke in an interview with the Wall Street Journal about his decision to challenge Donald Trump. “Friends warned me, ‘Don’t speak out, stay out of the fray,’ because criticizing Mr. Trump will only help him by giving him someone else to attack. They were right. I became his next target, and the incoming attacks have been constant and brutal.” Still, "I wanted my grandkids to see that I simply couldn’t ignore what Mr. Trump was saying and doing, which revealed a character and temperament unfit for the leader of the free world.”

Source:
CONGRESS DIVIDED ON DEBT CRISIS PLAN
Puerto Rico Relief Stalled on the Hill
1 hours ago
THE LATEST

"A bill to help Puerto Rico handle its $70 billion debt crisis is facing an uncertain future in the Senate. No Senate Democrats have endorsed a bill backed by House Speaker Paul Ryan and Minority Leader Nancy Pelosi, while some are actively fighting it. ... On the Republican side, senators say they’re hopeful to pass a bill but don’t know if they can support the current legislation — which is expected to win House approval given its backing from leaders in that chamber."

Source:
LAWMAKERS RECESS WITH NO PLAN IMMINENT
Congress Slow-walking Zika Legislation
1 hours ago
THE LATEST

"Congress abandoned the Capitol Thursday for an almost two-week break without addressing how to combat Zika, even as public health officials issue dire warnings about the spread of the mosquito-driven virus with summer approaching. ... Instead of racing to fund efforts to thwart a potential health crisis, lawmakers are treating the Zika debate like regular legislation, approving Thursday the establishment of a House-Senate committee to hammer out differences in their competing bills."

Source:
LITTLE MARCO FOR SENATE
Trump to Rubio: Run for Reelection
5 hours ago
THE LATEST

Donald Trump may have defeated Sen. Marco Rubio's presidential ambitions, but he wants the man he dubbed Little Marco to keep his job in the Senate. "Poll data shows that @marcorubio does by far the best in holding onto his Senate seat in Florida," Trump tweeted Thursday evening. "Important to keep the MAJORITY. Run Marco!" Trump is not the first to urge Rubio to run, though the senator has said such a move is unlikely. The filing deadline is June 24. 

Source:
FIRST SITTING POTUS TO VISIT
At Hiroshima, Obama Calls For Nuke-Free World
5 hours ago
THE LATEST

President Obama called for an end to nuclear weapons Friday during a somber visit to Hiroshima Peace Park in Japan, where the United States dropped the first atomic bomb 71 years ago. "That is the future we can choose,” Obama said. “A future in which Hiroshima and Nagasaki are known not for the bomb of atomic warfare but as the start of our own moral awakening.”

Source:
×