Obamacare Cases Move Toward SCOTUS

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

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 provisionsof 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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