The Supreme Court decided Friday that it will hear a challenge to the legality of premium subsidies in the federal exchange. The court decided to hear the appeal in King v. Burwell, in which the Fourth Circuit Court ruled that Obamacare premium subsidies to customers in HealthCare.gov states were legal. The D.C. Circuit had ruled hours before in the best-known case, Halbig v. Burwell, that the text of the law restricts subsidies to state-run exchanges only– creating a circuit split that made it possible the Supreme Court would issue a final ruling.
At issue is the repeated requirement in the law that premium subsidies go to exchanges “established by the state.” Four lawsuits have cropped up that argue that the requirement makes subsidies in HealthCare.gov-run states illegal.
The Obama administration had asked the Supreme Court to wait to decide whether to take up the case until the D.C. Circuit Court issued a new ruling in Halbig v. Burwell. A December en banc hearing will force all judges on the circuit to rule on the case instead of the typical three-judge panel; and given the number of Democratic-appointed judges, the court is expected to find the federal exchange subsidies legal.
The Fourth Circuit’s decision in favor of federal subsidies took particular umbrage that the plaintiff neither wished to purchase health insurance nor pay the “tiny tax penalty” for refusing to, which will grow to $695 per person or 2.5 percent of their annual income.
“What they may not do,” the court wrote, “is rely on our help to deny to millions of Americans desperately-needed health insurance through a tortured nonsensical construction of a federal statute whose manifest purpose, as revealed by the wholeness and coherence of its text and structure, could not be more clear.”
If the court strikes down subsidies in federal exchanges, the vast majority of the 5.4 million Obamacare sign-ups in the federal exchange will see their prices increase dramatically, and it’s likely that without congressional changes to the law, many will no longer be able to purchase coverage on the exchanges.
Because the employer mandate is tied to the availability of subsidies, if the Supreme Court does strike down the subsidies to federal exchange states, the employer mandate would cease to apply to the majority of the country as well.
