D.C. Appeals Court Overturns Subsidies For Fed Exchange; Fourth Circuit Takes Different View

A three-judge panel for the U.S. Court of Appeals in Washington ruled Tuesday that subsidies may not be offered in the federal health exchange. The decision overturned a lower court ruling. Hours later the Fourth Circuit Court of Appeals offered its own decision, which upholds the Obama administration's arguments that subsidies can be applied in the federal exchange.

You can read the U.S. Appeals Court for the District of Columbia's decision here, and the decision from the U.S. Court of Appeals for the Fourth Circuit here.

Check back as we continue to update our summary of the day's coverage.

The Wall Street Journal: Appeals Courts Issue Conflicting Rulings on Health-Law Subsidies
Two U.S. appeals courts issued conflicting rulings on the availability of consumer subsidies for health coverage purchased on insurance exchanges established by the federal government, clouding implementation of a major component of the Obama administration's signature health care law. In a substantial blow to the administration, the U.S. Court of Appeals for the District of Columbia Circuit, on a 2-1 vote, invalidated an Internal Revenue Service regulation that implemented a key piece of the 2010 Affordable Care Act. The regulation said subsidies for health insurance were available to qualifying middle- and low-income consumers whether they bought coverage on a state exchange or one run by the federal government. Two hours later, a Richmond, Va.-based appeals court reached the opposite conclusion, unanimously upholding the IRS rule (Kendall and Armour, 7/22).

Kaiser Health News: Appeals Court Strikes Down Subsidies In Federal Health Exchange
A three-judge panel at the U.S. Appeals Court for the D.C. Circuit threw the fate of an important part of the Affordable Care Act into doubt Tuesday. In a 2-1 decision in Halbig v. Burwell, the judges ruled that the Internal Revenue Service lacked the authority to allow subsidies to be provided in exchanges not run by the states. ... Meanwhile, just an hour later, another three-judge panel on the 4th Circuit Court of Appeals in Richmond, Va., came to the opposite conclusion – upholding the federal subsidies. “It is therefore clear that widely available tax credits are essential to fulfilling the Act’s primary goals and that Congress was aware of their importance when drafting the bill,” said the decision written by Judge Roger Gregory (Rovner, 7/22).

USA Today: Appeals Court Panel Deals Blow To Obamacare
"If there is a split in the circuits, then I think the Supreme Court would have to step in," said Elizabeth Wydra, chief counsel at the liberal Constitutional Accountability Center. The legal case, filed by a coalition of states, employers and individuals, had been considered a long shot effort to derail the Affordable Care Act, also known as Obamacare. Federal district judges in the District of Columbia and Virginia previously had ruled for the government. Two similar cases remain pending in Indiana and Oklahoma (Wolf, 7/22).

The Washington Post: Federal Appeals Court Panel Deals Major Blow To Health Law
The D.C. Circuit Court of Appeals ruled that the tax credits available under the 2010 health-care law may be provided only to residents of states that set up their own marketplaces. Less than two hours later, the Richmond-based 4th Circuit Court of Appeals ruled in a separate case that the law’s language was ambiguous so that the Obama administration was free to allow the subsidies nationwide (Somashekhar, 7/22).

The New York Times: Courts Issue Conflicting Rulings On Health Care Law
The decisions are the latest in a series of legal challenges to central components of President Obama’s health care law. The United States Court of Appeals for the Fourth Circuit, in Richmond, upheld the subsidies, saying that a rule issued by the Internal Revenue Service was “a permissible exercise of the agency’s discretion.” The ruling came within hours of a 2-to-1 ruling by a panel of the United States Court of Appeals for the District of Columbia Circuit, which said that the government could not subsidize insurance for people in states that use the federal exchange (Pear, 7/22).

The Hill: Second Court Disagrees, Upholds Subsidies
The conflicting rulings sets up a circuit split that could fast track the cases to the Supreme Court. The fight centers on language in the healthcare law related to the distribution of subsidies intended to help consumers pay for insurance. Conservatives challenging the law say it does not permit the IRS to provide the subsidy help through the federal ObamaCare exchange, which covers the states that declined to set up their own system for buying coverage. Critics of the lawsuit reject that argument and say Congress clearly intended to provide subsidies to everyone in ObamaCare. The outcome of the battle will have huge repercussions for the healthcare law. Experts estimate that the ruling against the law, if upheld, could block roughly $36 billion in subsidies for the roughly 5 million people already enrolled (Viebeck, 7/22) .

Here's coverage of the day's first decision, issued by the Court of Appeals In District of Columbia -

Los Angeles Times: D.C. Court Ruling Deals New Blow To Obama's Affordable Care Act
In a 2-1 vote, a panel of judges on the U.S. Circuit Court of Appeals for the District of Columbia judges rejected the Obama administration's argument that the problem was triggered by imprecise language in the complex law and that Congress had always intended to offer the subsidies nationwide to low-and middle-income people who bought insurance through one of the state or federal health exchanges created under the law (Savage, 7/22).

Politico: D.C. Appeals Court Strikes Obamacare Subsidies
The case Halbig v. Burwell is one of several lawsuits in which individuals or state officials are challenging the Obama administration’s authority to grant subsidies in the form of tax credits to low- and middle-income Americans buying health coverage through the federal-run exchanges serving 36 states (Winfield Cunningham, 7/22).

Politico: DOJ To Appeal 'Incorrect' Halbig Ruling
The Department of Justice said Tuesday that it will challenge an appeals court ruling that strikes Obamacare subsidies for millions of Americans using HealthCare.gov, the federal exchange. “We believe that this decision is incorrect, inconsistent with congressional intent, different from previous rulings, and at odds with the goal of the law: to make health care affordable no matter where people live,” a DoJ spokeswoman said (7/22).

Bloomberg: Obamacare Aid For Plan Buyers On U.S. Exchange Overturned
The decision, if it withstands appeals, may deprive more than half the people who signed up for Obamacare the tax credits they need to buy a health plan. The way the Patient Protection and Affordable Care Act is written makes clear that the subsidy is available only to people who bought plans on state-run exchanges, a three-judge panel in Washington ruled today (Zajac, 7/22).

Reuters: Appeals Court Throws Out IRS Rule On Obamacare Subsidies
A three-judge panel returned the case to a lower court with instructions to rule in favor of appellants who had sued to overturn the rule. The ruling has the potential to cripple the implementation of the law by making health insurance unaffordable for many people (Morgan, Hurley and Viswanatha, 7/22).