The second big Obamacare case of the day, Halbig v. Sebelius, was argued before the D.C. Circuit. As Scott has explained, the issue there is the legality of a crucial IRS rule authorizing tax credits and subsidies for the purchase of health insurance on federally run health care exchanges.
The Obamacare statute only authorizes tax credits and subsidies for the purchase of insurance in an exchange “established by a state” under Section 1311 of the law. But most states didn’t establish exchanged, and federal exchanges are neither “established by a state” nor authorized by Section 1311.
Accordingly, if one adheres to the plain meaning of the statute, the IRS rule authorizing tax credits and subsidies for the purchase of health insurance on federally run health care exchanges is unlawful. Take away the subsidies and even low income people (above the threshold for receiving Medicaid) will turn against Obamacare.
The plaintiffs drew a good panel before which to present their challenge. It consisted of two conservative jurists — Ray Randolph and Thomas Griffith — and one old-line liberal — Harry Edwards.
Jonathan Keim at Bench Memos provides an account of the proceedings. According to his report:
Judges Griffith and Randolph, both Republican appointees, seemed genuinely puzzled by the basis for the government’s interpretation of the phrase [“established by a state”], and spent most of the government’s argument trying to divine a coherent interpretive methodology underlying the IRS’s position. Judge Griffith was most pointed in his skepticism, at one point asking the DOJ attorney to parse the phrase “established by the State under [Section] 1311,” which he more or less couldn’t accomplish without compromising his litigation position.
DOJ counsel also conceded that the exchange in West Virginia (where one of the appellants lives) was “established by” the Secretary of Health and Human Services, not the State of West Virginia, but refused to concede defeat on those grounds.
Judge Edwards was reduced to making such arguments as: because the statute was entitled the “Affordable” Care Act, the court should construe it so care would be affordable. Fortunately, the other two judges seem think that Obamacare should be construed to mean what its provisions plainly say.
Thus, a 2-1 defeat for the government seems fairly likely. But in that event, the case will probably be reheard by the full D.C. Circuit which President Obama recently packed after Harry Reid and his fellow Democrats did away with filibusters of judicial nominees so that Obama could pack that crucial court.
As Keim concludes, the case is likely to reach the Supreme Court, an even more crucial tribunal.