Obamacare Scores a Win in Court, Hours After a Big Loss

A federal appeals court said the law’s insurance subsidies are legal in all 50 states.

WASHINGTON, DC - MAY 23: U.S. President Barack Obama announces his nomination of San Antonio, Texas, Mayor Julian Castro as his next choice to lead the Department of Housing and Urban Development May 23, 2014 in Washington, DC. Castro would be replacing current HUD Secretary Shaun Donovan who, if approved by the Senate, will head the Office of Management and Budget. (Photo by Chip Somodevilla/Getty Images)
National Journal
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Sam Baker
July 22, 2014, 8:40 a.m.

A fed­er­al ap­peals court said Tues­day that Obama­care’s in­sur­ance sub­sidies are all per­fectly leg­al — just hours after a dif­fer­ent court said the same sub­sidies were il­leg­al.

A three-judge pan­el of the 4th Cir­cuit Court of Ap­peals re­jec­ted a law­suit that aimed to block the law’s sub­sidies in more than half the coun­try. The chal­lengers said the sub­sidies, which help people cov­er the cost of their premi­ums, should only be avail­able in states that set up their own in­sur­ance ex­changes — not in the 36 states that turned to the fed­er­al gov­ern­ment to run their mar­ket­places.

They cited a sec­tion of the law that refers to sub­sidies flow­ing through “an ex­change es­tab­lished by the state,” say­ing that pro­vi­sion fore­closed sub­sidies in fed­er­ally run mar­ket­places.

The Justice De­part­ment says that’s too nar­row of a read­ing.

The 4th Cir­cuit pan­el said the stat­ute it­self was un­clear. It al­lowed the IRS to con­tin­ue provid­ing fin­an­cial as­sist­ance in all 50 states, say­ing the agency’s in­ter­pret­a­tion of the law was en­titled to de­fer­ence in the courts.

Just hours earli­er, a three-judge pan­el of the D.C. Cir­cuit Court of Ap­peals came to the op­pos­ite con­clu­sion, rul­ing in a 2-1 de­cision that the IRS broke the law by mak­ing sub­sidies avail­able through fed­er­ally run ex­changes.

The Justice De­part­ment will ap­peal that rul­ing to the full D.C. Cir­cuit.

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