Four Virginians have asked the Supreme Court to take up a lawsuit that says Obamacare’s subsidies should not flow to states that decided to rely on the federal insurance exchange, little more than a week after a pair of federal appellate courts issued conflicting rulings on the issue.
The plaintiffs in King v. Burwell were turned back July 22 by a three-judge panel of U.S. Court of Appeals for the Fourth Circuit, which sided with the Obama administration’s view that Congress intended to provide financial assistance to every state’s marketplace under the president’s signature overhaul.
Hours earlier, a panel for the U.S. Court of Appeals for the District of Columbia rejected the administration’s arguments, 2 to 1, and said the Affordable Care Act reserved subsidies for exchanges “established by the state,” meaning the non-federal exchanges run by 14 states and the District.
It is widely expected that the Obama administration will ask the entire circuit to review the case.
But with a circuit split in hand, the plaintiffs took their claims to the Supreme Court.
“Two Courts of Appeals have squarely divided over its facial validity,” their petition says. “The resulting uncertainty over this major plank of ACA implementation means that millions of people have no idea if they may rely on the IRS’s promise to subsidize their health coverage, or if that money will be clawed back.”
The uncertainty will result in chaos, they continued, as the subsidies trigger penalties under the so-called “employer mandate,” which requires large employers to offer adequate coverage or pay fines.
“And the Treasury has no idea if billions of dollars being spent each month were authorized by Congress, or if these expenditures are illegal,” the petitioners say. “Only this Court can definitively resolve the matter; it is imperative that the Court do so as soon as possible.”
At issue is whether lawmakers intended to treat all of the states the same, even if they decided to let the federal government run their Obamacare exchange, or if Congress restricted the subsidies to state-established exchanges to entice state leaders to take responsibility for their marketplace.
The subsidies help people earning 100-400 percent of the federal poverty level afford their insurance premiums on the new exchanges.
A vital piece of the law, Obamacare would be much less attractive to people if subsidies were taken away from people in the 36 states that have relied on the federal exchange so far.
If the justices accept the case for the next term, it would mark the third clash over Obamacare before the high court.
The justice upheld the law as constitutional in 2012 — particularly the “individual mandate” requiring almost all Americans to hold health insurance — and last month held that corporations do not have to insure forms of birth control they object to on moral grounds, even though an Obamacare rule requires them to as part of company health plans.
The Competitive Enterprise Institute is funding and coordinating the latest efforts over the subsidies.
“A fast resolution is also vitally important to the states that chose not to set up exchanges, to the employers in those states who face either major compliance costs or huge penalties, and to employees who face possible layoffs or reductions in their work hours as a result of this illegal IRS rule,” CEI general counsel Sam Kazman said. “Our petition today to the Supreme Court represents the next step in that process.”
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