Skip to main content

Appeals courts differ on Obamacare; Supreme Court case likely

By Joe Johns, Bill Mears and Tom Cohen, CNN
July 23, 2014 -- Updated 1406 GMT (2206 HKT)
STORY HIGHLIGHTS
  • NEW: One ruling goes against the government, another supports its position
  • The rulings reignite the fierce political debate over Obamacare
  • For now, nothing changes until the cases completes the legal process
  • The issue would impact those who signed up for Obamacare on the federal exchange

Washington (CNN) -- It was a tale of two rulings -- the best of times and the worst of times for Obamacare in the federal appeals courts.

First, a three-judge panel of the D.C. Circuit court of appeals ruled Tuesday against a key component of the law -- the federal subsidies for millions of people who signed up for health coverage.

The 2-1 decision created a legal path for a possible Supreme Court case that could essentially gut the 2010 Affordable Care Act, which passed with zero GOP votes.

A few hours later, all three judges on a 4th Circuit panel in Virginia decided the opposite by declaring the subsidies legal and proper.

What the court decisions mean for you

Opposing rulings

The opposing rulings increased the chances for the issue to reach the nation's highest court, and demonstrated the deep political divisions over the law despised by conservatives intent on undermining it.

Both judges in the majority of the 2-1 D.C. Circuit ruling were appointed by Republican presidents, while all three in the unanimous 4th Circuit panel were appointed by Democratic presidents.

Republicans immediately hailed the D.C. panel's ruling against the subsidies as evidence of what they called fatal flaws in the health care law.

"This is yet more evidence that Obamacare is not working -- and cannot work -- for the American people," said GOP Sen. Lamar Alexander of Tennessee, who faces a conservative primary challenger questioning his right-wing credentials.

At the White House, spokesman Josh Earnest expressed confidence in the administration's legal position, saying Congress clearly intended for all Americans to have access to tax credits if needed so they could afford health insurance.

CNN Poll: Obama's numbers not great but holding steady

The issue: subsidies

The legal argument involves a provision in the health care law that says people who obtained coverage through state-run exchanges can get federal subsidies such as tax credits. It doesn't specifically say that those signing up on the federal exchange also are eligible.

Opponents of the law contend that lack of specificity renders illegal the subsidies for anyone who enrolled through the federal exchange.

Only 14 states and the District of Columbia set up their own exchanges, meaning that the 4.7 million who signed up for subsidized health coverage through HealthCare.gov could be affected.

"It will kill Obamacare," Republican Sen. Orrin Hatch of Utah said of an eventual Supreme Court ruling against the subsidies. "It would make it very difficult for Obamacare to continue because the cost of health care is going to go sky high for those who are not in the state exchange."

For now, the law remains unchanged and the subsidized policies are unaffected until the legal case plays out, Earnest told reporters. The Justice Department said the government would appeal the D.C. panel's decision.

Partisan divide

The easiest fix -- changing the law to specify that it allows subsidies for coverage purchased through the federal government as well as state exchanges -- would mean reopening the debate in Congress.

Unlike last time, when Democrats held majorities in both the House and Senate, Republicans now control the House and are expected to make gains in the November election, perhaps taking over the Senate too.

That means Obama and Democrats have no chance of getting Congress to approve any remedial change in the law.

Sen. Ted Cruz, R-Texas, one of the leading crusaders against the health care act, argued Tuesday that the federal subsidies amounted to assuming funding powers the Constitution granted Congress.

Earnest, however, said Congress intended "to ensure that every eligible American who applied for tax credits to make their health insurance more affordable would have access to those tax credits, whether or not the marketplace was operated by federal officials or state officials."

White House revises contraception opt out

Ambiguity

The opposing rulings Tuesday pivoted over the meaning of the word "ambiguous."

In Richmond, the 4th Circuit judges labeled the Affordable Care Act ambiguous on whether subsidies should be allowed for consumers getting insurance on federal exchanges.

When a law is ambiguous, courts give deference to a federal agency's interpretation of the law, which in this case is the Internal Revenue Service rule allowing the subsidies.

The D.C. Circuit decision concluded that Obamacare was unambiguous in restricting subsidies to insurance purchased on exchanges "established by the state," rather than the federal exchange.

In his dissent, though, appellate Judge Harry Edwards -- a Democratic appointee -- argued that labeling the phrase "established by the state" as unambiguous "strains fruitlessly to show plain meaning when there is none to be found."

Republicans to sue Obama over health law

Obamacare: Your guide to health insurance terms

CNNMoney's Tami Luhby and CNN's Joe Johns and Bill Mears contributed to this report,which was written by Tom Cohen.

Part of complete coverage on
November 21, 2014 -- Updated 1835 GMT (0235 HKT)
House Speaker John Boehner said he has sued the Obama Administration in federal court over its decisions to make changes to the President's health care law.
November 11, 2014 -- Updated 2000 GMT (0400 HKT)
Two potential 2016 Republican presidential candidates -- Rep. Paul Ryan and Sen. Marco Rubio -- are teaming up on a proposal to replace Obamacare.
October 13, 2014 -- Updated 0124 GMT (0924 HKT)
Tthe Department of Health and Human Services has released a report highlighting the impact of the law on hospital costs.
July 23, 2014 -- Updated 1505 GMT (2305 HKT)
Two U.S. appeals courts issued conflicting rulings on a subject that's important to millions of people: the availability of subsidies to help purchase coverage.
July 23, 2014 -- Updated 1406 GMT (2206 HKT)
It was a tale of two rulings -- the best of times and the worst of times for Obamacare in the federal appeals courts.
July 23, 2014 -- Updated 1000 GMT (1800 HKT)
More than half the public says Obamacare has helped, but less than one in five say they've personally benefited from the health care law.
July 11, 2014 -- Updated 1201 GMT (2001 HKT)
House Republicans are going forward with plans to sue President Barack Obama and will base their legal case on the sweeping health care law he championed and they despise.
October 29, 2013 -- Updated 2241 GMT (0641 HKT)
Nationally, consumers are learning a number of well-known hospitals won't accept insurance under Obamacare.
December 23, 2013 -- Updated 1816 GMT (0216 HKT)
Open enrollment started October 1. Here's a step-by-step guide to navigating the insurance marketplaces, also known as exchanges.
October 19, 2013 -- Updated 0837 GMT (1637 HKT)
Obamacare has survived a Supreme Court appeal, a government shutdown and ongoing challenges by opposing politicians.
September 26, 2013 -- Updated 1444 GMT (2244 HKT)
If you don't know what all those health insurance buzz-words like "co-pay" and "premium" mean, you're not alone.
It's a popular assertion, but is it true? The CNN Politics team hunts down the facts.
Some may offer help navigating the new health insurance marketplace for a fee. Others will warn that you will need a new Medicare card.
September 30, 2013 -- Updated 1657 GMT (0057 HKT)
Who's in, who's out... and what about the costs? CNN Chief Medical Correspondent Dr. Sanjay Gupta breaks down Obamacare.
Consumers can avoid the exchanges by buying plans directly from insurers or through brokers. But should they?
Here's the first look at insurance premiums on 36 exchanges run by the federal government.
Check out our page with all things you need to know about Obamacare and how it will affect you.
ADVERTISEMENT