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A plea to leave fate of health care subsidies to the Court (UPDATED)

UPDATE 7:01 p.m.  Additional material has been added to this post.


Challengers to a key part of the Obama administration’s plan for enforcing the new health care law urged a federal appeals court on Monday to stand aside and let the issue be decided finally — and soon — by the Supreme Court.  A sixteen-page brief opposed the government’s plea for a new review of that dispute before the en banc U.S. Court of Appeals for the District of Columbia Circuit.

At stake in this controversy is a government rule that extended a system of tax credit subsidies to enable lower-income individuals to buy health insurance on marketplaces, or “exchanges,” set up and run by the federal government.  If that rule is struck down, as the challengers want, it would undermine much of the economic basis for the entire Affordable Care Act.  Federal exchanges exist in thirty-four states.

The challengers have argued that Congress spoke clearly, in enacting the ACA, and specified that the subsidies would be available only to those who bought insurance on an exchange created and run by state governments.  So far, those exist in only sixteen states..  A three-judge panel of the D.C. Circuit agreed with that argument, and nullified the rule — adopted by the Internal Revenue Service.

“Continued uncertainty over the validity of the IRS Rule,” the challengers’ brief contended, “is simply not tenable, given its enormous consequences for millions of Americans, hundreds of thousands of businesses, dozens of states, and billions of dollars in monthly federal spending.”

The challengers have already filed a petition for Supreme Court review (King v. Burwell), and are pressing the Court to act quickly on the issue soon after it returns in September from its summer recess.  That petition challenged a ruling by the U.S. Court of Appeals for the Fourth Circuit, which upheld tax subsidies for those obtaining coverage on a federally run exchange.

If the D.C. Circuit refuses to reconsider the issue before the full bench of judges, or if it does so and rules as the three-judge panel did, there would be a conflict in the appeals courts.  But the challengers have gone to the Supreme Court already, on the premise that there is already a conflict — between three-judge panels of the two circuits.

If the D.C. Circuit were to take up the issue anew, the new brief contended, “that would cause delay without providing any certainty — regardless of how the en banc court ultimately rules.  Thus, for the same reasons that this court expedited review of this case,the en banc petition should be denied and this matter should proceed immediately, as it ultimately must in any event, to final resolution by the Supreme Court.”

At the least, the filing asserted, the D.C. Circuit should put the government’s en banc request on hold until after the Supreme Court has acted on the pending case of King v. Burwell.  That approach should be taken, the challengers said, if the D.C. Circuit has any doubt about whether the Supreme Court will step in this fall, at or near the opening of the new Term.

If it should turn out that the Justices did deny review then, the filing said, the D.C. Circuit could then undertake en banc review.  And, if the Justices did grant review, the D.C. Circuit could then deny review of the issue, according to the challengers.

The document spelled out what it said the impact would be on each of the players involved in the implementation of the new health care law and especially its marketplace exchanges — individuals, employers, insurance companies, states, and the federal Treasury.

The government has estimated that, among those individuals who have already obtained health coverage on the federally operated exchanges, some 4.7 million have done so with the help of the tax credit subsidies.   The challengers noted that, if the subsidies have been paid out illegally to those shopping on the federal exchanges, the new health care law provides for the government to demand return of those funds.

Although the issue before the D.C. Circuit at this point is only whether to grant or deny the government’s en banc review request, the challengers’ opposition brief briefly sought to counter the arguments that the government had made on the merits of the dispute over the IRS rule at issue.

The government will not be allowed to file a reply to the challengers’ brief, under the terms of an order by the D.C. Circuit on August 1 calling for the opposition brief.  Thus, the court could act at any time on the government petition.


Recommended Citation: Lyle Denniston, A plea to leave fate of health care subsidies to the Court (UPDATED), SCOTUSblog (Aug. 18, 2014, 4:28 PM),