While everyone’s attention in the Beltway media was focused on the Hobby Lobby case before the U.S. Supreme Court on Tuesday, an equally important case regarding the Affordable Care Act aka “ObamaCare” was taking place about a mile away at the D.C. Circuit Court of Appeals.

ObamacareThe case is Halbig v. Sebelius, an appeal from the D.C. Circuit Court. The appeal turns on an alleged drafting error in the ACA and congressional intent. Appellants argument is based on a line in the ACA which provides that the insurance subsidies shall be available to individuals enrolled in insurance “through an Exchange established by the State, under section 1311,” which Appellants argue excludes individuals enrolled through the federally-assisted Exchanges.


The import of this is that GOP-controlled state legislatures which sought to sabotage the ACA by not setting up their own state-run Exchanges, could further sabotage the ACA by eliminating the insurance premium and tax credit subsidies to enrollees in the federally-assisted Exchanges (including Arizona) if the plaintiffs are successful with this specious argument.

Just 14 states and the District of Columbia are running their own exchanges in 2014, while the Department of Health and Human Services is operating 36 state exchanges.

The D.C. Circuit Court granted summary judgment to the government, which can only be granted where no material facts are genuinely in dispute and the movant is entitled to judgment as a matter of law.

The Court found that “The legislative history that is available . . . supports defendants’ (the government) argument that Congress intended that state-run and federally-facilitated Exchanges operate identically.” “Furthermore, there is no evidence that either the House or the Senate considered making tax credits dependent upon whether a state participated in the Exchanges. To the contrary, Congress assumed that tax credits would be available nationwide.” “In sum, the Court finds that the plain text of the statute, the statutory structure, and the statutory purpose make clear that Congress intended to make premium tax credits available on both state-run and federally-facilitated Exchanges. Read the Opinion Here.

The D.C. Circuit Court of Appeals has a history of being dominated by conservative activist judges appointed by Republican presidents. Only recently did President Obama correct this imbalance on this court with four recent appointments confirmed by the Senate. It is still possible to draw a three judge panel with a majority of conservative activist judges, which is what has occurred in this case.

The New York Times reports, Arguments Against Health Law Subsidies Gain Traction:

Federal judges in the D.C. Circuit Court of Appeals appeared split this morning on whether Obamacare allows federal subsidies in states with federal-run health insurance exchanges – a legal challenge that threatens the very structure of the law.

Opponents of the health care law argue that the text of the statute only authorizes people living in states with state-run exchanges to access insurance subsidies in the marketplaces, contrary to a 2012 IRS rule. Further, they say this was a design of the law and not a drafting error, meant to incentivize states into setting up their own insurance marketplaces.

[This claim was examined and rejected by the D.C. Circuit Court. It was based on a single commentator, Timothy S. Jost, Health Insurnce Exchanges: Legal Issues 7, O’Neil Institute, Georgetown Univ. Law Ctr., no. 23, April 27, 2009  . . . “But there is no evidence in the legislative record that the House or Senate, or any relevant committee of either House, or any legislator ever entertained this idea. At p.37.

In the D.C. Circuit Court of Appeals, plaintiffs  are challenging the law on the grounds laid out in 2011 by Case Western University law professor Jonathan Adler and Cato Institute health policy analyst Michael Cannon, an avowed Obamacare foe. […]  See, Alec MacGillis at The New Republic, The Final, Last-Ditch Anti-Obamacare Challenge: A Courtroom Dispatch.]

From the Washington Post, An appellate court appears split on whether federal-run exchanges can access Obamacare subsidies:

During Tuesday morning oral arguments in Halbig v. Sebelius, it was immediately clear that there will be a split decision of the three-member panel, with two of the judges staking out opposing views on the subsidy question. Judge Harry Edwards, an appointee of President Jimmy Carter, accused the defendants of making a politically motivated attack on the law. Judge Raymond Randolph, an appointee of President George H.W. Bush, said the text of the law and legislative history clearly blocks subsidies from federal-run exchanges.

[Judge Thomas Griffith, a President George W. Bush appointee,  is the panel’s apparent swing vote.]

Stuart Delery, the administration’s attorney, argued that a full reading of the law indicates that Congress intended for HHS to set up fully operating exchanges, complete with subsidies, if the states didn’t – but Griffith seemed skeptical on this point.

Delery also argued the congressional debate on the law more than four years ago shows that Congress always meant for federal-run exchanges to provide subsidies. Michael Carvin, arguing for the plaintiffs, said the distinction between state- and federal-run exchanges was clear at the time.

“[Congress] knew there were two kinds of exchanges,” he said.

But Griffith, the apparent swing vote, seemed ready to ignore what happened during Congress’s debate on the law’s drafting.

“There doesn’t seem to be any clear legislative history here,” he said. “If [Congress] didn’t legislate clearly enough, is it our job to fix the problem?” Griffith also questioned the administration’s argument that should it lose the case, that the IRS rule would only be invalidated for the four Halbig plaintiffs.

It will likely be at least another couple of months before the appeals court issues its decision. Even if the administration loses, it could then request that the entire circuit court (en banc) hear the case, slowing things down.

A federal district judge in Richmond, Va., James R. Spencer, appointed by President Ronald Reagan, reached a similar conclusion as the D.C. Circuit Court in a separate case last month, and the appeal will be heard by the Fourth Circuit in April.

If Congress had wanted to make subsidies contingent on a state’s creation of an exchange, “it would have needed to provide clear notice” to states, and it did not do so, Judge Spencer said.

A legal brief filed in the appeals court by top congressional Democrats agreed, saying, “Congress never intended — or suggested to the states — that tax credits would only be available to individuals who purchased insurance on state-run exchanges.”

Remember that the ACA was passed almost exclusively with Democratic votes, so certainly  Congressional Democrats should be heard as to what they intended. As opposed to conservative commentators from right-wing think tanks who are not members of Congress, and thus are not competent witnesses to congressional intent.

Two other cases in Indiana and Oklahoma are still awaiting a decision in federal district court.

One final point: in years past the language of this bill would have been treated as a scrivener’s error and remedied by a simple amendment for a technical correction to the language.  Instead, the right-wing has chosen this as the last hill to die on in an effort to derail the ACA. They are pissing away millions of dollars on needless litigation and wasting the time and resources of courts across the country. This extreme ideological partisanship is insane.