Obama's Health Care Law Has A Confusing Day In Court One U.S. appeals court panel tossed out federal subsidies for low-income insurance buyers, while another three-judge panel affirmed them. The issue has the potential to gut the health care overhaul.


Obama's Health Care Law Has A Confusing Day In Court

  • Download
  • <iframe src="https://www.npr.org/player/embed/334082413/334082414" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript


It was a wild legal ride today for Obamacare. Two appeals court panels issued conflicting decisions on an issue with the potential to gut the health care overhaul. The two rulings could lead to another Supreme Court showdown, and it's all because of what one of the law's opponents initially called a glitch. Our coverage begins with NPR legal affairs correspondent Nina Totenberg.

NINA TOTENBERG, BYLINE: That glitch has now become a legal spear aimed at the health care exchanges that are the heart of Obamacare. Under the law, each state is to set up its own marketplace for insurance, called an exchange. And for those states that refuse to set up exchanges themselves, the federal government is to step in to do the job on behalf of those states. As things have turned out, some 36 states have deferred to the federal government, most because of opposition from their Republican leaders. The problem - the glitch, as it were - is in one subsection of the Affordable Care Act. It says literally that subsidies can be paid to needy insurance buyers but mentions only exchanges established by the states. Opponents have seized on that language to argue that people buying insurance from the federally-run exchanges are ineligible for subsidies. Until today, all the lower courts that had looked at this claim had rejected it. But this morning, a federal appeals court panel in Washington, D.C. bought the argument by a 2 to 1 vote. Hours later, a federal appeals court panel in Virginia reached the opposite conclusion by a unanimous vote. The issue is do or die for Obamacare.

TIMOTHY JOST: It could have just catastrophic consequences.

TOTENBERG: Health law expert Timothy Jost, of Washington and Lee Law School, says that because of the way the provisions of the law are intertwined, if exchanges run by the federal government cannot give out subsidies, not only will millions of Americans see their premiums jump by as much as 75 percent, but employers in those states would no longer face penalties for failure to provide health care insurance. And the individual mandate would be greatly weakened as well.

JOST: You've kicked out all three legs of the stool.

TOTENBERG: Those challenging the subsidies for federal exchanges contend that this was Congress's way of essentially strong-arming states to do the job themselves. And they assert that the Obama administration violated the law by giving subsidies through the federally run as well as state-run exchanges. Sam Kazman is general counsel for the Competitive Enterprise Institute, which helped coordinate and fund the lawsuits.

SAM KAZMAN: The basic principle is that when Congress writes the law, agencies cannot rewrite the laws.

ELIZABETH WYDRA: The argument, frankly, is made up out of whole cloth in an attempt to get rid of a law that political opponents do not like.

TOTENBERG: Elizabeth Wydra of the Constitutional Accountability Center.

WYDRA: No one - not the people who wrote the law in Congress, frankly not even the people who opposed it at the time that it was enacted - no one understood the law to work the way that two judges of the D.C. Circuit said it does.

TOTENBERG: So what happens now, with the D.C. Circuit taking one view and the Fourth Circuit another? The Obama administration plans to ask the full, 11-judge D.C. Court of Appeals to review the issue. At the same time, the anti-Obama care forces who lost in the Fourth Circuit plan to appeal directly to the Supreme Court. And here, it's worth understanding some intricacies of procedure. If the D.C. Circuit undertakes a review by the full court, and most expect it will, the decision that was issued today by the three-judge panel is voided immediately. That means that, for now at least, there will be no conflict in the circuits. And it could mean that the Supreme Court would want to wait to see if any conflict arises in the future before it jumps headlong into another Obamacare controversy. On the other hand, the court may want to dive in right now. No matter how things play out, it will take time. There will be no resolution until next year. In the meantime, nothing will change about how the system works. Nina Totenberg. NPR News, Washington.

Copyright © 2014 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.