The next legal challenge to Obamacare

The dust has yet to settle since the Supreme Court  took apart the contraception mandate of the Affordable Care Act in its Hobby Lobby decision, but already the next and potentially more debilitating wave of lawsuits challenging a different provision of the Act are making their way through the courts.

This time the target is the tax credit available to help people buy health insurance, a provision which challengers argue only helps buyers in states with new healthcare exchanges. As Alec MacGillis at The New Republic explains the issue:

The section decreeing that people will get federal subsidies to help them pay for individual insurance plans says that the subsidies are available for those buying plans on new exchanges established by the states—and makes no explicit provision for subsidies for those buying plans in states where the state governments left the creation of the exchange up to the federal government. The government and other defenders of the law counter that any confusion in the wording was inadvertent and that the rest of the law makes abundantly plain that the subsidies were intended to go to people buying plans in the exchanges regardless of whether they were established by the states or Washington.

The outcomes of these lawsuits are potentially devastating, as MacGillis notes in a later post,

The stakes in the challenge are enormous—36 states have chosen not to set up their own exchanges, which means that if the courts side with the challengers, the millions of people who have bought coverage in those states (the vast majority of whom have receives subsidies to do so) would lose their subsidies and be left unable to afford coverage. This would in turn throw the individual insurance market into disarray as many of these people dropped their coverage—except, presumably, the sickest of people with the most incentive to keep it.

So far, two federal district courts have dismissed the challenges, but both are on appeal, including one argued before the Fourth Circuit in May, King v. Sebelius — in which a ruling is expected any day.

Here’s a recap of that argument from the Constitutional Accountability Center:

The ACA’s challengers had a tough time before the three-judge panel of the Fourth Circuit this morning. The judges showed no sign of questioning Justice Department lawyer Stuart Delery’s contention that the text and structure of the ACA showed Congress’ intent that tax credits and subsidies should be available to all Americans in all states, whether their exchanges are run by the Federal government or the state.

While Judge Thacker remained largely silent, Judges Davis and Gregory asked a series of questions that indicated deep skepticism of the case presented by attorney Michael Carvin, representing the challengers. Judge Davis framed Carvin’s argument in devastating fashion, in paraphrase: “You want us to kick millions of people off health insurance so a few people can save a small amount of money.” The court clearly had serious concerns about the implications of this last-ditch effort to kill the ACA.