Obamacare Cases Move Toward SCOTUS

The Obama administration and its challengers filed appeals in lawsuits over the law’s insurance subsidies.

WASHINGTON, DC - JUNE 28: Obamacare supporters and protesters gather in front of the U.S. Supreme Court to find out the ruling on the Affordable Health Act June 28, 2012 in front of the U.S. Supreme Court in Washington, DC. The Supreme Court has upheld the whole healthcare law of the Obama Administration. (Photo by Alex Wong/Getty Images)
National Journal
Sam Baker
Aug. 1, 2014, 9:51 a.m.

The latest round of anti-Obama­care law­suits is inch­ing closer to the Su­preme Court.

Both the fed­er­al gov­ern­ment and its chal­lengers filed ap­peals this week in cases in­volving the law’s in­sur­ance sub­sidies. The chal­lenges, if they suc­ceed, would tear apart cent­ral pro­vi­sions of the Af­ford­able Care Act.

On Fri­day, the Justice De­part­ment asked a fed­er­al Ap­peals Court to over­turn a rul­ing that said in­sur­ance sub­sidies should not be avail­able in more than half the coun­try. That rul­ing would “evis­cer­ate the ACA”s mod­el of co­oper­at­ive fed­er­al­ism” and “thwart the op­er­a­tion of the ACA’s core pro­vi­sions,” the Justice De­part­ment ar­gued.

A three-judge pan­el of the D.C. Cir­cuit Court of Ap­peals said earli­er this month that the IRS broke the law by mak­ing in­sur­ance sub­sidies avail­able in every state. The fin­an­cial as­sist­ance should only be avail­able to people who live in states that es­tab­lished their own in­sur­ance ex­changes, the pan­el said in a 2-1 rul­ing.

As ex­pec­ted, the Obama ad­min­is­tra­tion asked the full D.C. Cir­cuit to hear the chal­lenge and re­verse the pan­el’s de­cision. It said the pan­el’s rul­ing was too nar­row and ig­nored the broad­er goals of the health care law.

On the same day the D.C. Cir­cuit pan­el is­sued its de­cision, an­oth­er three-judge pan­el in an­oth­er fed­er­al Ap­peals Court — the 4th Cir­cuit — also ruled in a nearly identic­al law­suit. That pan­el, though, sided with the Justice De­part­ment, say­ing sub­sidies are leg­al in all 50 states.

The chal­lengers in that case, King v. Bur­well, ap­pealed their case to the Su­preme Court on Thursday. Cit­ing the di­vi­sion between the D.C. Cir­cuit and the 4th Cir­cuit, the chal­lengers said the Su­preme Court needs to settle the dis­pute as soon as pos­sible.

“The dis­agree­ment is clear, and all of the ar­gu­ments on both sides have been thor­oughly aired. Only this Court can ul­ti­mately re­solve the is­sue,” the brief states.

Leg­al ex­perts had pre­dicted this leg­al strategy. The chal­lengers are try­ing to move quickly be­cause the split between Cir­cuit Courts might not last — and if it doesn’t, the Su­preme Court would be less likely to take up the is­sue.

If the Justice De­part­ment wins its ap­peal be­fore the full D.C. Cir­cuit, the D.C. Cir­cuit and the 4th Cir­cuit would be in agree­ment: The sub­sidies are leg­al every­where. Al­though the leg­al dis­pute might still be high-pro­file enough that the Su­preme Court would feel com­pelled to step in, the justices wouldn’t need to re­solve con­flict­ing rul­ings from lower courts.

The dis­pute over Obama­care’s sub­sidies stems from the word­ing of the law. The sec­tion that au­thor­izes premi­um sub­sidies says they should be avail­able in “an ex­change es­tab­lished by the State.”

The chal­lengers say that’s clear evid­ence that the sub­sidies should be avail­able only through state-run ex­changes — not in the 36 states that punted their mar­ket­places to the fed­er­al gov­ern­ment. They ar­gue that Con­gress lim­ited the sub­sidies to state-run ex­changes in­ten­tion­ally, so that states would feel pres­sure to set up their own mar­ket­places.

The Justice De­part­ment says that’s too nar­row a read­ing, and that Con­gress in­ten­ded for fed­er­ally run ex­changes to “stand in the shoes” of state-based mar­ket­places. Oth­er sec­tions of the law refer to state and fed­er­al ex­changes in­ter­change­ably, and the broad­er in­tent of the law was to ex­pand ac­cess to health in­sur­ance na­tion­wide, the gov­ern­ment ar­gues.

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