Supreme Court to hear major healthcare case

Following its pattern of out-of-the-blue orders this term, the U.S. Supreme Court announced Friday it would take a case that strikes at a key stream of government spending in the healthcare reform law.

Rather than questioning the constitutionality of Obamacare itself, King v. Burwell challenges the tax subsidies that help people buy health insurance on exchanges. Those tax subsidies are vital to make the economics of the healthcare law work by increasing the number of people with insurance, but the challengers think the federal government has gone beyond its authorized power in the law.

“Billions of taxpayer dollars are pouring out of the Treasury absent congressional authorization, and millions of Americans are ordering their lives around an impugned regulation,” said the challengers in a brief urging the Supreme Court to take the case.

The question centers on whether the healthcare law allows subsidies for federally run exchanges because the law says the subsidies are for exchanges “established by the state.” The administration has argued that the law should be read in context; Congress’ intent was to give tax subsidies to everyone on the exchanges. Only 16 states have state-run exchanges, and the rest are federally run. The federal government has already been providing the subsidies to millions of people on federal exchanges, shifting much of the economics of the health insurance market.

The 4th U.S. Circuit Court of Appeals agreed with the Obama administration’s interpretation of the law and upheld the subsidies for federal exchanges. But in a parallel case, Halbig v. Burwell, a three-judge panel of the D.C. Circuit struck the subsidies. Then the D.C. Circuit granted en banc review to the full court, which automatically vacated the three-judge panel’s ruling against the subsidies. That en banc hearing was scheduled for December. With the D.C. Circuit panel’s ruling against the subsidies vacated, there was no split between the circuits, normally a condition of Supreme Court review. The Supreme Court grant renders the Halbig hearing moot.

Most of the D.C. Circuit judges are Democratic appointees,—many of them appointed recently by President Barack Obama—meaning that the full court would almost certainly have upheld the subsidies. The Supreme Court may have guessed what the D.C. Circuit would rule in the Halbig case and decided to go ahead and step in. The fact that the court decided to step in when another circuit court was about to uphold the subsidies is likely deeply concerning to the Obama administration.

The plaintiffs had urged the Supreme Court to take the case speedily in order to resolve the issue for the millions of people who would rely on the subsidies and employers who would be making hiring decisions based on healthcare costs.

Consistent with its practice when issuing orders, the Supreme Court gave no explanation for the decision to hear the case. It only said, “The petition for writ of certiorari is granted.” The court only needed four votes to take up the case, which it will hear this term ending in June 2015. The open enrollment period for exchanges begins next week. The White House issued a statement after the Supreme Court’s order saying the tax credits “remain available”—for now.