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Policy: Law

Appeals court agrees to rehear Obamacare subsidies case

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The D.C. Circuit Court of Appeals agreed on Thursday to rehear a case over subsidies in President Obama's healthcare law, making it potentially less likely that the case will wind up at the U.S. Supreme Court.

At issue in the case, Halbig v. Burwell, are the subsidies that the federal government provides for individuals purchasing insurance through Obamacare. Though the text of the law says the subsidies were to go to individuals obtaining insurance through an “exchange established by the state,” a rule released by the Internal Revenue Service subsequently instructed that subsidies would also apply to exchanges set up on behalf of states by the federal government.

In a 2-1 decision issued this July, a panel of the U.S. Court of Appeals for the D.C. Circuit concluded that Obamacare "unambiguously restricts" subsidies to state-based exchanges, which would make them illegal in 36 states that chose to forgo setting their own exchanges and defaulted to the federal exchange.

But in a decision issued Thursday, the full D.C. Circuit agreed to rehear the case in what's known as an en banc hearing. Earlier this year, Sen. Harry Reid, D-Nev., employed the "nuclear option" to tilt the ideological balance of the court by confirming three Obama appointees.

The decision could theoretically make it less likely that the Supreme Court will take up this issue. Generally, the Supreme Court is more likely to take up a case if there is a split among various appellate circuits on a given issue. That had been the case here, because challengers to the IRS ruling lost a similar case in the 4th Circuit Court of Appeals, known as King v. Burwell. But now that the full D.C. Circuit is hearing the case, the Supreme Court may decide to hold off.

That said, oral arguments for the D.C. Circuit have been set for Dec. 17. The challengers in King v. Burwell have already petitioned the Supreme Court to take up the case. So it's possible that the nation's high court could decide to take up the case before that point. It takes the votes of four justices to decide to hear a case before the Supreme Court.

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