Lawyers Challenging Health Subsidies Seek Quick Supreme Court Ruling

Lawyers challenging President Obama's healthcare law filed a quick appeal with the Supreme Court on Thursday, urging justices to take up the issue this fall and throw out insurance subsidies for nearly 5 million Americans.

"The monumental significance of this legal issue requires the court's immediate, urgent attention," they said in a filing. "The longer the lawless IRS rule is in effect, the greater the upheaval when it is ultimately vacated."

Last week, two federal appeals courts handed down conflicting rulings on whether the Obama administration may pay subsidies to low-and middle-income Americans who buy insurance on the federal "exchange" created under the Affordable Care Act.

In one ruling from the District of Columbia, an appeals court panel said these subsidies are illegal in the 36 states that rely on an exchange established by federal authorities. The judges pointed to a part of the law that says tax subsidies may be paid for insurance purchased on an exchange "established by the state."

But in a second ruling, an appeals court in Virginia rejected this challenge and decided Congress intended to offer subsidies nationwide regardless of whether consumers use a state or federal exchange.

Under the court's rules, lawyers who lose in an appeals court have 90 days to seek a review in the Supreme Court. And normally, lawyers take the full time. But in this instance, the opponents of the Affordable Care Act want the court's conservative justices to have a chance to take up the new healthcare case in a few months so they can rule by next spring. 

The Obama administration has the opposite strategy on timing. The Justice Department said it planned to ask the full appeals court in the District of Columbia to reconsider last week's ruling by a three-judge panel. If so, that could delay a final ruling from the appeals court until next year and push off a Supreme Court decision to 2016.

By then, millions of Americans will have relied for several years on having health insurance they could afford thanks to the subsidies. A single adult with an income up to $45,960 and a family of four with an income up $94,200 may obtain insurance on an exchange at a reduced cost.

The appeal filed Thursday is funded by the libertarian Competitive Enterprise Institute. Late last week, the group publicized a video from 2012 in which a leading academic advocate of the healthcare law says states must establish insurance exchanges or lose subsidies for its citizens. 

Jonathan Gruber, an MIT economist who advised Democrats on the healthcare law, was asked at a conference whether the federal government could run an exchange if the states refused. Yes, Gruber said. "If the states don't provide them, the federal backstop will. The federal government has been sort of slow in putting out its backstop, I think partly because they want to sort of squeeze the states to do it. I think what's important to remember politically about this is, if you are a state and you don't set up an exchange, that means your citizens don't get their tax credits."

In appealing to the Supreme Court, the lawyers quote Gruber's statement as evidence that the sponsors of the law intended to limit subsidies to those states which established an exchange.

Defenders of the law have insisted that view is absurd. They say the Democrats who wrote the law intended that subsidies would be offered to everyone who qualified and that the federal exchanges were intended to play the same role as the state exchanges.