A three-judge panel at the D.C. Circuit Court of Appeals has ruled that the Affordable Care Act cannot provide subsidies to millions enrolled under the federal health care exchange because the law, as written, does not allow it.
Simply put, the judges ruled that when the Affordable Care Act states that federal subsidies are available only through “an Exchange established by the State," that means just what it says.
The ruling came the same day that the 4th Circuit Court took the opposite position on the same question. There, the judges held that expanding the subsidies outside the limits spelled out in the statute was “a permissible exercise of the agency’s discretion,” the New York Times reported.
The D.C. Circuit Court decision will have immense ramifications if it stands, pulling out subsidies for the 4.7 million who signed up for health care on healthcare.gov, CNN reported, because the law states that subsidies are available only through state exchanges.
White House spokesman Josh Earnest said that this is the first setback on this issue, which is being tested in four separate cases.
"There is decidedly mixed legal opinion on this," Earnest said. Earnest argued that the plain language of the statute should be subordinated to the obvious intent of its authors.
“You don’t need a fancy legal degree to understand that Congress intended for every eligible American to have access to tax credits that would lower their health care costs, regardless of whether it was state officials or federal officials who were running the marketplace,” Earnest said. “I think that is a pretty clear intent of the congressional law.”
One person with a legal degree was less confident. Harvard law professor Laurence Tribe told the Financial Times that he would not "bet the family farm" on the law being vindicated on appeal. Tribe is a longstanding supporter of the Affordable Care Act.
“It looks like the panel is quite divided over what to do with what might [have been] an inadvertent error in the legislation or might have been quite deliberate,” Tribe told the Financial Times. “But it’s very specific that only people that go onto a state exchange are eligible for the subsidies. And if that becomes the ultimate holding of the U.S. Supreme Court, where this is likely to end up — that’s going to have massive practical implications for the administrability of Obamacare.”
The White House has signaled that it will quickly appeal to the full D.C. Circuit. There, the health care law stands a good chance of recovery, in large part because the Democratic Senate used the "nuclear option" to put additional liberal justices on the bench by ditching traditional filibuster rules in the Senate.
"The administration is likely to ask the entire D.C. Circuit to review the decision 'en banc,’ ” notes Danny Vinik at the New Republic. "Here’s where the Democrats’ use of the nuclear option is important. The D.C. Circuit has 11 judges on it, seven Democratic appointees and four Republican ones. The only reason Democrats have a majority is due to the nuclear option."
The judges who issued the decision in Halbig v. Burwell stated that they did so "with reluctance," noting that millions of those currently receiving subsidies may be affected.
"But, high as those stakes are, the principle of legislative supremacy that guides us is higher still," the judges wrote. "Within constitutional limits, Congress is supreme in matters of policy, and the consequence of that supremacy is that our duty when interpreting a statute is to ascertain the meaning of the words of the statute duly enacted through the formal legislative process."