Second court disagrees, upholds subsidies

The 4th Circuit Court of Appeals ruled Tuesday that ObamaCare subsidies issued through the federal exchanges are legal, contradicting a separate ruling by the D.C. Circuit Court on the same day.


Fourth Circuit Judge Roger Gregory argued that because the statutory language of the Affordable Care Act (ACA) is ambiguous, courts should defer to the interpretation of the Internal Revenue Service and allow the subsides to stand.

"Applying deference to the IRS's determination … we uphold the rule as a permissible exercise of the agency's discretion," Gregory wrote.

The decision came just hours after the D.C. Circuit Court of Appeals came to the opposite conclusion in its ruling.

"Because we conclude that the ACA unambiguously restricts the section 36B subsidy to insurance purchased on Exchanges 'established by the State,' we reverse the district court and vacate the IRS’s regulation," a three-judge panel ruled.

The conflicting rulings sets up a circuit split that could fast track the cases to the Supreme Court.

The fight centers on language in the healthcare law related to the distribution of subsidies intended to help consumers pay for insurance.

Conservatives challenging the law say it does not permit the IRS to provide the subsidy help through the federal ObamaCare exchange, which covers the states that declined to set up their own system for buying coverage.

Critics of the lawsuit reject that argument and say Congress clearly intended to provide subsidies to everyone in ObamaCare.

The outcome of the battle will have huge repercussions for the healthcare law. Experts estimate that the ruling against the law, if upheld, could block roughly $36 billion in subsidies for the roughly 5 million people already enrolled.

Some have speculated that consumers might even have to pay back the subsidies they have received from the government.