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SCOTUS Grants Cert. to Obamacare Subsidies Case From 4th Cir.

By Mark Wilson, Esq. on November 10, 2014 | Last updated on March 21, 2019

The Affordable Care Act, a.k.a. "Obamacare," is heading back to the U.S. Supreme Court for a third time. One more trip to the Court and the ACA gets a free Scaliawich from the court cafeteria (though admittedly it's just olives, pickles, onions, and week-old capicola on a very sourdough roll).

The Court has granted cert. to King v. Burwell, a case from the Fourth Circuit dealing with the federal tax subsidies offered in states that didn't set up their own insurance exchanges.

No Tax Credits for You

You'll recall that the ACA allows states to set up health insurance exchanges, but many right-leaning state governors opted out, forcing the federal government to set up and run exchanges on their behalf. Since the ACA's inception, no one questioned that federal tax credits would be available to offset the cost of health insurance in every state.

Until now.

Some people who didn't want to be required to purchase insurance (and who want to pay full price with no subsidies, I guess) sued under a novel theory: The statute doesn't permit the IRS to give subsidies to people in states that didn't set up their own insurance exchanges.

The Fourth Circuit in King said that the ACA provision limiting tax subsidies to state exchanges plainly didn't mean only states that set up their own exchanges; in order for the legislation to be given effect, it must be read to include state exchanges set up on behalf of states by the federal government, which amounts to 27 exchanges.

On the same day that King came out, the D.C. Circuit decided the opposite in Halbig v. Burwell. The D.C. Circuit read the statute literally, concluding that it wasn't clear what Congress meant, but that exchanges "established by" states means it's the states that establish them.

The Nachos Bell Grande of Lawsuits

The Court's decision to take King is odd, given that the losers in Halbig successfully petitioned for en banc rehearing -- meaning the panel opinion gets vacated. No panel opinion means only the Fourth has a valid determination, so there's no longer a circuit split. Halbig's en banc rehearing will probably be placed on hold pending the outcome of King at the Supreme Court.

In much the same way tortilla chips are just a vector for hot cheese, this lawsuit is another vehicle for neutering or destroying the ACA. Just check out the list of amici from healthcare organizations, pro-business lobbies, and Republican senators, which outstrip the number of actual plaintiffs and defendants.

Should the Supreme Court find in favor of King, it would, at the very least, become President Obama's albatross, as it would require citizens in non-state exchange states to not only purchase insurance, but pay full price for it, assuming the Supreme Court leave the individual mandate intact.

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