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Obamacare legal decision is a setback, but not yet fatal

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Politics,Congress,Obamacare,Supreme Court,Appeals Courts,Health Care,PennAve,Sean Lengell,Law,Health Care Exchanges

In the legal chess match over health care, the Obama administration's next move is promising.

An appeals court dealt the law a potentially devastating blow Tuesday when it agreed with critics who charged that subsidies should not be provided to millions of people who live in states that do not run their own insurance exchanges.

The most obvious next step is for the White House to appeal to the entire U.S. Court of Appeals for the D.C. Circuit, where it will face a friendly audience. Seven of the circuit's 11 active judges were picked by Democratic presidents, including four Obama himself appointed.

In Tuesday's much anticipated decision in Halbig v. Burwell, a three-judge panel ruled 2-1 that the federal government cannot provide subsidies to individuals who bought coverage through the federal insurance exchange.

The decision could mean premium increases for more than half of the eight million Americans who have purchased taxpayer-subsidized coverage under the law. The ruling affects consumers who bought coverage in the 36 states served by the federal insurance marketplace.

The judges on Tuesday's decision were Thomas Griffith, an appointee of President George W. Bush; A. Raymond Randolph, an appointee of Bush's father; and Harry Edwards, an appointee of President Jimmy Carter, who dissented.

Obamacare opponents claimed the decision a huge victory.

"The president may not unilaterally rewrite the laws Congress has adopted. President Obama has been trying to do so for too long," said Josh Hawley, a University of Missouri law professor. "The D.C. Circuit rebuked this executive abuse today."

Still there's no guarantee the full D.C. Circuit appeals court would take up an “en banc” review of the case. And some legal experts say such a move by the court is somewhat of a long shot.

Thomas Miller, a health care economist with the American Enterprise Institute, a conservative-leaning Washington think tank, said the D.C. Circuit court accepts less than 1 percent of all appeals for en banc reviews.

“It’s not just a matter of [Democratic-appointed judges on the court] saying we have more numbers with the full panel than the [Republican judges], so let’s just reverse things so they come out our way,” Miller said. “It’s a bit of an uphill climb."

But the court was reluctant in the past to take up en banc reviews in part because the bench lacked several members. And with a full accompaniment of 11 judges, “anything’s possible,” Miller said.

Elizabeth Taylor, executive director of the National Health Law Program, expects the court will take up the case due to its “exceptional importance.”

Taylor added the full court may be inclined to revisit the case because the two judges on the appeals court panel who struck down the Obamacare provision based their decision on a legal interpretation that was “starkly out of line” with case law.

Henry Aaron, a health care expert with the Brookings Institution, also said it's highly possible the court will take up a full review.

"If I was a judge and sympathetic to [Obamacare], I certainly would vote to want to have the en banc hearing," he said.

And if several other Obamacare lawsuits pending at lower courts conflict with Tuesday’s ruling, the D.C. Circuit may be more motivated to review the case.

But whether or not the D.C. Circuit court takes up the case, and regardless of the outcome if it does, the final arbiter in the matter could be the Supreme Court.

“I do not think that the D.C. Circuit panel ruling will be the final word,” Taylor said.

Muddying the legal waters further was a Tuesday decision that conflicts with the D.C. Circuit court ruling, with a federal appeals court in Virginia upholding tax subsidies for low- and middle-income people who buy insurance under Obamacare.

A three-judge panel of the 4th U.S. Circuit Court of Appeals unanimously rejected a claim that the law provides the subsidies only to people who buy policies through state-run exchanges.

That court backed an Internal Revenue Service regulation that makes the subsidies available regardless of whether policies are purchased through state exchanges or one established by the federal government.

The Associated Press contributed to this report.

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Sean Lengell

Congressional Correspondent
The Washington Examiner

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