WASHINGTON - President Barack Obama's health care law could be dealt a severe blow this week if a U.S. appeals court rules that some low- and middle-income residents no longer qualify for promised government subsidies to pay for their health insurance.
The case revolves around the wording of the Affordable Care Act, which says that such subsidies may be paid only if the insurance is purchased through an "exchange established by the state." That would seem to omit the 36 states where exchanges are operated by the federal government.
A ruling could come as early as today.
The administration has argued that Congress intended to offer the subsidies nationwide, without making a distinction. Lawyers and congressional staffers who worked on the 2010 law have described the problem as a classic wording glitch in a long and complicated piece of legislation.
In one part of the law, it says that states could create exchanges to help consumers and small businesses shop for coverage. The law also said if a state failed to establish an exchange, the federal government could run one in its place. A second part of the law said the subsidies - or tax credits - offered to low- and middle-income people would be for insurance bought on an exchange "established by the state."
Apparently, no one noticed the problem until the law was passed. Then, because of fierce political opposition and the 2010 Republican takeover of the House, supporters could not fix the wording through an amendment. Moreover, the administration did not anticipate that most Republican-led states would refuse even to create an insurance exchange for their residents.
The IRS adopted a regulation in 2012 that said individuals who qualify for subsidized insurance that is purchased on a government-run exchange may receive a tax credit "regardless of whether the exchange is established and operated by a state." But the libertarian Competitive Enterprise Institute filed a suit, Halbig vs. Burwell, on behalf of several plaintiffs, contending this regulation is illegal. They lost in January before a federal judge who decided Congress intended to offer the insurance subsidies to everyone who qualified.
If a panel of the U.S. Circuit Court of Appeals for the District of Columbia rules against Obama, the administration could ask the full 11-member appeals court to weigh the issue.