Obamacare rulings: Two courts differ on heath insurance subsidies, but the bad decision will soon be reversed.

Don’t Panic. Obamacare Is Safe.

Don’t Panic. Obamacare Is Safe.

The law, lawyers, and the court.
July 22 2014 3:58 PM

Obamacare Is Safe

Don’t worry, the ruling against heath care subsidies is going to be reversed.

Anti-Obamacare protesters demonstrate in front of the U.S. Supreme Court on June 28, 2012, in Washington, D.C. Conservatives should celebrate while they can; legal challenges to the law are going to sputter out.

Photo by Alex Wong/Getty Images

Feh. Two Republican appointees to the U.S. Court of Appeals for the D.C. Circuit just grabbed headlines by striking down a key part of Obamacare. Over a stalwart dissent from Judge Harry Edwards (Carter appointee), Judge Thomas B. Griffith (George W. Bush) and Judge Arthur Randolph (George H.W. Bush) have ruled that the federal government may not subsidize health insurance for Americans in states with federally run health insurance exchanges—only Americans in states with their own exchanges.

Emily Bazelon Emily Bazelon

Emily Bazelon is a staff writer at the New York Times Magazine and the author of Sticks and Stones

Twenty-seven states have federally run exchanges, and another bunch have joint federal-state exchanges —here’s a map. Many of these are the states, you may remember, who refused to set up their own in hopes of damaging Obamacare. If this decision were to go into effect, the officials who made that call would very much get their wish. As many as 4.5 million people so far (and a projected 7.3 million by 2016, according to Politico) could lose their subsidies. The financing of the Affordable Care Act would collapse, because so many fewer people could afford to enroll. Obama’s legacy would be wrecked. The sky would also fall.

Don’t run for cover yet, though. Another appeals court conveniently also ruled Tuesday on the very same issue. (The lawyers challenging this aspect of Obamacare have been busy around the country). Going against the D.C. Circuit, the U.S. Court of Appeals for the 4th Circuit decided, by a vote of 3 to 0, that subsidies via the federal exchanges are perfectly fine. The IRS is the agency that wrote the rule authorizing the subsidies, and the 4th Circuit judges “uphold the rule as a permissible exercise of the agency’s discretion.” After explaining that if millions of people’s subsidies were wiped out, “the economic framework supporting the Act would crumble,” and millions more people, left without affordable insurance, would be forced to pay a penalty, the judges concluded: “The IRS Rule avoids both these unforeseen and undesirable consequences and thereby advances the true purpose and means of the Act.” (Two of the three 4th Circuit judges who ruled unanimously today were appointed by Obama. The third, Roger Gregory, the author of today’s opinion, was chosen for a recess appointment by Bill Clinton and then permanently elevated by George W. Bush.)


The 4th Circuit has the most plausible, commonsense reading of a badly drafted part of a 2,400-page statute. The alternative is that Congress included in Obamacare the seeds of its own destruction, giving naysaying governors the power to kill it—without ever saying so. The history of passing this law was full of devious twists and turns, but that form of willful self-destruction is not among them.

And so, it is the D.C. Circuit’s ruling that is probably going nowhere beyond a victory lap by the strategic conservative lawyers who brought this case, and a round of postmortem hand-wringing among law professors, who are already deriding the decision. That is because the legal reasoning of the majority in D.C. is seriously unconvincing, and as Slate contributor and UC–Irvine law professor Richard Hasen quickly pointed out, the next stop on the legal train is the D.C. Circuit as a whole, where today’s result will likely be reversed. I started by telling you which presidents appointed the judges who have weighed in so far because of the partisan overtones of today’s rulings. The kill-Obamacare judges won in D.C. because they had two out of three votes. But the D.C. Circuit (finally!) has four Obama appointees on it. That means that in the next round before all the active judges of the court, which is called “en banc review,” the split is seven Democrats to four Republicans. Presto: Harry Edwards’ dissent today can be a winner tomorrow.