Obamacare's Road Back to the Supreme Court

Larry Downing/AP

The Affordable Care Act landed in a new level of legal peril Tuesday, courtesy of a duo of conflicting court rulings that threaten to send the law back to the Supreme Court—and once again put the law's foundation at the mercy of the justices.

Two federal Appeals Courts issued conflicting rulings Tuesday in lawsuits that challenge the subsidies that Obamacare provides to help people cover the cost of their premiums. One Appeals Court said the subsidies should be available only in states that set up their own insurance exchanges and ruled that the IRS broke the law by providing them nationwide.

Hours later, another Appellate Court said the IRS did nothing wrong and the subsidies are legal everywhere.

But the conflicting rulings don't automatically send the law back the land's highest court. Instead, Obamacare's immediate future will be determined as both sides appeal the decisions that didn't go their way.

Obama's next move
The Justice Department lost the first of Tuesday's cases, Halbig v. Burwell, in which a three-judge panel of the D.C. Circuit Court of Appeals limited Obamacare's subsidies to state-run exchanges.

The Justice Department said Tuesday it will appeal the panel's ruling to the full D.C. Circuit Court. The full D.C. Circuit is dominated by Democratic appointees, so the Justice Department has a good chance of winning this appeal.

The challengers' next move
The administration won the day's second case, King v. Sebelius, which was decided by a three-judge panel of the 4th Circuit Court of Appeals.

The challengers who lost in King could also seek a review before the full 4th Circuit, but they would probably lose. (That court is also mostly made up of Democrats.) So they'll probably skip that step and appeal straight to the Supreme Court, says University of Richmond law professor Kevin Walsh.

Why a Supreme Court appeal might work
The Supreme Court is more likely to take a case when there's a split between circuit courts, the situation the two conflicting rulings created Tuesday. That's why the challengers are likely to appeal directly to the high court—the landscape right now is favorable to them.

But if the Justice Department wins its appeal in the Halbig case—which, again, is likely—there will no longer be a split between Appeals Courts, and the case could become less attractive to the Supreme Court justices. So it's in the challengers' interests to move quickly, before the full D.C. Circuit Court rules.

But even afterward, they still might have a shot, according to Walsh.

"The Court has discretion whether to grant [the appeal], of course, but a circuit split on such an important part of a massive regulatory scheme is the sort of thing that the Supreme Court should hear," he wrote.

Why it might not work
Does the Supreme Court really want to get involved in this case? That's the biggest question.

If it does, it'll have an opportunity to. But the Court could also simply sit on the King appeal pending the final outcome in Halbig. At that point, there's a good chance lower courts won't be divided—both will have said the subsidies are legal. So there would be no open question the Supreme Court needed to address, and it wouldn't have to wade back into another politically charged election-year fight over a lawsuit that threatens to derail the Affordable Care Act.

The implications in King and Halbig are just as big as the case against Obamacare's individual mandate. That one was on track for the Supreme Court from the day it was filed, but it raised constitutional questions thatKing and Halbig don't.

In other words, the real-world and political implications are just as big this time around, but the legal issues at stake are smaller. If the Supreme Court wants to avoid the Obamacare fray, there's a way out.

But, after Tuesday, if the justices are determined to have another shot at President Obama's signature legislative achievement, they can.

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