Bench Memos

Obamacare Litigation Update

The Obama administration’s disastrous rollout of the health-care exchanges isn’t the only significant threat to President Obama’s ill-conceived health-care law. The Wall Street Journal has an update on the latest Obamacare lawsuit, which could invalidate the federal health-care- exchange subsidies and corresponding employer penalty in the 36 states where the federal government operates some, or all, of the health-care exchanges:

Federal judges in Washington, D.C., and Virginia will consider whether the text of the statute prevents the administration from offering subsidized health insurance to millions of low- and middle-income Americans.

The 2010 federal law says people qualify for subsidies if they obtain health insurance through an exchange “established by the state.” But dozens of states refused to set up their own marketplaces, leaving the task to the federal government.

The question before the courts is whether the Affordable Care Act’s wording is a drafting mistake contrary to what Congress intended—or a barrier to subsidies for coverage in the 36 states where the federal government is running some or all of the online exchanges.

On Monday, a federal judge in Washington will consider whether the Internal Revenue Service exceeded its authority when it issued a rule last year making clear that subsidies should extend to coverage acquired through federal exchanges.

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