The Corner

The Supreme Court To Hear the Case Against Obamacare Subsidies

Over at the Washington Examiner, Philip Klein explains:

President Obama’s healthcare law is heading back to the U.S. Supreme Court.

Justices on Friday agreed to review whether it was illegal for residents of 36 states to receive federal subsidies to help them purchase insurance.

Previous Supreme Court cases focused on the law’s individual mandate, Medicaid expansion, and employer contraception mandate. At issue this time are the subsidies that the federal government provides for individuals purchasing insurance through Obamacare. Though the text of the law says the subsidies were to go to individuals obtaining insurance through an “exchange established by the state,” a rule released by the Internal Revenue Service subsequently instructed that subsidies would also apply to exchanges set up on behalf of states by the federal government.

As detailed previously, a ruling against the Obama administration would have a number of significant ramifications. It would mean millions of Americans receiving insurance in 36 states would be stripped of those subsidies, and on the flip side, that taxpayers could save hundreds of billions of dollars. It would mean the employer mandate wouldn’t apply in those 36 states and the scope of the individual mandate would be narrowed. It would make life a lot more difficult for Republican governors politically and could lead to the re-opening of Obamacare for changes by Congress.

At the Incidental Economist, Nicholas Bagley thinks it is “troubling” news for the law:

In a significant setback for the Obama administration, the Supreme Court just agreed to review King v. Burwell, the Fourth Circuit’s decision upholding an IRS rule extending tax credits to federally established exchanges. The government had asked the Court to take a pass because there’s no split in the circuit courts over whether the IRS rule is valid. At least four justices—it only takes four to grant certiorari—voted to take the case anyhow.

As I see it, what’s troubling here is not that the Court took King in the absence of a split. Its rules permit it to hear cases involving “important question[s] of federal law that ha[ve] not been, but should be, settled by this Court.” It’s not remotely a stretch to say that Kingpresents one such important question. On this, I part ways with those who claim that granting the case marks a clear departure from the Court’s usual practices.

No, what’s troubling is that four justices apparently think—or at least are inclined to think—that King was wrongly decided….

None of this bodes well for the government. That’s not to say the government can’t win. It might. As I’ve said many times, the statutory arguments cut in its favor. But the Court’s decision to grant King substantially increases the odds that the government will lose this case. The states that refused to set up their own exchange need to start thinking—now—about what to do if the Court releases a decision in June 2015 withdrawing tax credits from their citizens

Needless to say, this has not been a good week for Democrats.



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