Con­trast­ing judg­ments on health law hours apart Pow­er­ful ap­peals court calls sub­si­dies un­law­ful

The Washington Times Weekly - - Politics - BY TOM HOW­ELL JR.

Op­po­nents of Pres­i­dent Obama’s health care law notched their big­gest le­gal win to date Tues­day, when the sec­ond-most­pow­er­ful court in the coun­try said the ad­min­is­tra­tion had un­law­fully ex­tended Oba­macare sub­si­dies to mil­lions of Amer­i­cans.

But their vic­tory party was short-lived, as hours later another fed­eral ap­peals court sided with the Obama ad­min­is­tra­tion on the sub­sidy ques­tion, al­most cer­tainly set­ting up an ex­tended le­gal bat­tle that could reach the Supreme Court.

A fi­nal loss for the White House would strip pre­mium as­sis­tance from dozens of states and blow a mas­sive hole in Pres­i­dent Obama’s sig­na­ture health over­haul, which Demo­cratic ma­jori­ties mus­cled through Congress in 2010 with no Repub­li­can sup­port.

“To­day’s con­flict­ing court rul­ings high­light the flaws and am­bi­gu­ity of Oba­macare,” said Sen. Rob Port­man, Ohio Repub­li­can. “This is the pre­dictable re­sult of forc­ing a par­ti­san piece of leg­is­la­tion through Congress with­out amend­ment, proper con­sid­er­a­tion or bi­par­ti­san in­put.”

The Court of Ap­peals for the D.C. Cir­cuit held that peo­ple liv­ing in states that re­lied on the fed­eral govern­ment to set up their in­sur­ance mar­ket ex­changes can­not re­ceive the sub­si­dies con­sid­ered crit­i­cal to mak­ing cov­er­age af­ford­able.

The panel’s 2-1 de­ci­sion in­val­i­dated an IRS rule that, plain­tiffs in Hal­big v. Burwell had ar­gued, stretched the mean­ing of the Af­ford­able Care Act, which said fi­nan­cial aid to low- and mid­dlein­come peo­ple should flow to ex­changes “es­tab­lished by the State.”

If that means only ex­changes es­tab­lished by the state, it cuts off sub­si­dies to about two-thirds of the na­tion. In 2011, the IRS is­sued a reg­u­la­tion declar­ing that res­i­dents of all states were el­i­gi­ble for sub­si­dies re­gard­less of whether the state es­tab­lished ex­changes. Crit­ics of Oba­macare called that a law­less at­tempt to cover up a flaw in the law as writ­ten.

“We reach this con­clu­sion, frankly, with re­luc­tance,” Judge Thomas B. Grif­fith said in his opinion for the court. “At least un­til states that wish to can set up Ex­changes, our rul­ing will likely have sig­nif­i­cant con­se­quences both for the mil­lions of in­di­vid­u­als re­ceiv­ing tax cred­its through fed­eral Ex­changes and for health in­sur­ance mar­kets more broadly.”

Hours later, the 4th U.S. Cir­cuit Court of Ap­peals said sub­si­dies may flow to all states, cre­at­ing a split in the fed­eral ap­pel­late courts. The judges in Rich­mond rea­soned that Oba­macare’s lan­guage was am­bigu­ous and that the IRS rule was “a per­mis­si­ble ex­er­cise of the agency’s dis­cre­tion.”

The Obama ad­min­is­tra­tion said it plans to ap­peal the D.C. Cir­cuit’s de­ci­sion be­cause the sub­si­dies are a huge draw for Oba­macare cus­tomers. With­out that sell­ing point, the re­forms would ef­fec­tively col­lapse un­der the weight of pre­mi­ums that are no longer af­ford­able.

The White House likely will ask the en­tire D.C. panel to hear the case as the makeup of the court leans in Democrats’ fa­vor. The losers in the 4th Cir­cuit may make a sim­i­lar re­quest.

Some le­gal an­a­lysts said the de­ci­sions to date have been swayed by judges’ po­lit­i­cal des­ig­na­tions, a key fac­tor if the is­sue reaches the Supreme Court.

“Given the 5-4 par­ti­san split on the Supreme Court, this does not bode well for the ACA,” said David Bern­stein, a pro­fes­sor at Ge­orge Ma­son Univer­sity School of Law.


The E. Bar­rett Pret­ty­man Fed­eral Court­house that houses the U.S. Court of Ap­peals for the D.C. Cir­cuit. Obama’s health care law is en­meshed in another big le­gal bat­tle af­ter two fed­eral ap­peals courts is­sued con­tra­dic­tory rul­ings on a key fi­nanc­ing is­sue within hours of each other.

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