Judge rules against White House on Affordable Care Act
A federal judge in Oklahoma has ruled that Obamacare subsidies cannot go to residents of states that are not running their own insurance exchanges, a second blow to the Obama administration on a issue that threatens a key element of the health law’s coverage expansion.
Judge Ronald A. White said that the administration’s decision to allow subsidies to go through either a state-run health insurance exchange or the federal exchange is an improper and invalid reading of the Affordable Care Act and must be struck.
White’s ruling marks the second judgment against the government on the subsidy question and comes as the Supreme Court could decide whether to weigh in.
“The court holds that the IRS rule is arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law,” White wrote in his ruling. The IRS had allowed people to get subsidies in all states.
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Oklahoma Attorney General Scott Pruitt, who brought the lawsuit, welcomed the decision.
“Today’s ruling is a consequential victory for the rule of law,” he said in a statement. “The administration and its bureaucrats in the IRS handed out billions in illegal tax credits and subsidies and vastly expanded the reach of the health care law because they didn’t like the way Congress wrote the Affordable Care Act. That’s not how our system of government works.”
Split decisions in U.S. appeals courts came earlier this year. The 4th Circuit Court of Appeals in Richmond, Va., ruled with the Obama administration, saying the IRS had the right to allow the subsidies to go to residents of any state. The D.C. Court of Appeals ruled against that regulation but it recently vacated that decision when it decided to have the full court, not just a three judge panel, rehear the case.
The losing party in the 4th Circuit has already asked the Supreme Court to take the case. The Obama administration has until Friday to reply.
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White wrote that he knows the case will be closely scrutinized. And he dismissed criticism that court rulings against the subsidies are politically motivated.
“Such a case (even if affirmed on the inevitable appeal), does not ‘gut’ or ‘destroy’ anything,” White wrote. “On the contrary, the court is upholding the act as written. Congress is free to amend the ACA to provide for tax credits in both state and federal exchanges, if that is the legislative will.”
Opponents of the subsidies already say that White’s ruling should nudge the court to review the issue. The Obama administration is expected to appeal this ruling to the 10th Circuit Court of Appeals.
The decision improve the “odds for SCOTUS taking appeal this fall despite [the] D.C. Circuit’s pending en banc hearing in December,” said Tom Miller, a health care policy expert at the American Enterprise Institute who has been following the legal fight.
But others downplayed the significance of the ruling.
“This is only a district court decision and the court stayed its effect until the government has a chance to appeal to the 10th Circuit,” said Timothy Jost, a Washington and Lee law professor. “I would expect the Supreme Court to await a circuit split, and currently there is none with the Halbig judgment vacated” pending the en banc hearing.
The challengers say that the law only allows subsidies to go to residents of states with state-run exchanges but the White House and congressional Democrats say the law was written to allow anyone to get subsidies — and that any language in the law that contradicts that was written in error.