So Obamacare is on the ropes again. There is currently a split in the circuit courts of appeals over whether the ACA permits health care exchanges established by the federal government to provide the subsidies that make the coverage affordable in those states which have declined to establish their own exchanges. As Tom Goldstein over at SCOTUSblog succinctly explains:
Here is the legal dispute. The law establishes a formula for determining the tax credits. It applies to insurance that is purchased through an exchange “established by the State.” It does not mention the federal exchange. The challengers argue that this language is clear: the tax credits are available only for purchases through the state exchanges.
Courts are required to apply the laws that Congress enacts and to strike down rules that violate clear statutes. On the other hand, Congress passes a lot of laws that aren’t clear. In those cases, courts are required to uphold rules that reasonably resolve ambiguities in the statutes.
One court of appeals (the D.C. Circuit) ruled in a split decision that the ACA clearly prohibits the subsidy for purchases from the federal exchange. Another court of appeals (the Fourth Circuit, based in Richmond, Virginia) held unanimously that, because the law is unclear, the subsidies can be provided to everyone. Two other challenges to the rule are still waiting for decisions from the lower courts.
(The success of the challenge thus far is quite ironic given the trend toward the federal exchange.)
Of course, the functionality of the law turns in large part on whether the subsidies are available in the 36 states with federally-run or partially-run exchanges. In part for that reason, I seriously doubt the challenge will ultimately succeed. I may say more on this when I get a chance…