The Treasury Department, they contend, 'has reasonably interpreted the Act to provide for eligibility for the premium tax credits for individuals in every state, regardless of which entity operates the exchange.'
But that amounts to the federal government ignoring the letter of the law, lawyer Sam Kazman says. And 'without those subsidies, the employer mandate isn't triggered,' he told MailOnline.
And that could make the entire Obamacare system unsustainable.
Kazman is general counsel for the Competitive Enterprise Institute, a free-market think tank that is coordinating the case.
'The IRS cannot rewrite the law that Congress passed,' said Tom Miller, resident fellow at another think, the tank American Enterprise Institute.
'Its regulation expressly flouts the statutory text of the Affordable Care Act, the intent of Congress and the reasoned choices of  states.'
'The fiscal impact' of denying the Obamacare system millions of dollars in lost fines, 'while sizable, wouldn't be large enough to bring down the house,' Kazman added. The poltical one, however, is.'
'You'd have 34 "refusenik" states exempting their employers and many of their citizens from the employer mandate and portions of the individual mandate,' he explained.
'You'd have companies in participating states considering whether to move their operations' to states where they don't have to obey the Affordable Care Act. 'And you might even have some of those states seeking to undo their choice to participate.'