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 The appeals court rulings, handed down by three-judge panels in
Washington, D.C., and Richmond, Virginia, augured a possible rematch
before the U.S. Supreme Court, which in June 2012 narrowly upheld
the Democratic president's 2010 healthcare overhaul.
The twin rulings fell in line with partisan disagreements over
healthcare reform, with two judges appointed by Republican
presidents deciding against the administration in the District of
Columbia and three judges appointed by Democrats ruling in favor in
Virginia.
The rulings also reignited the debate over Obamacare on Capitol Hill
and on the campaign trail to November congressional elections.
Republican opponents of the law welcomed the D.C. decision as a
further step toward dismantling Obama's signature domestic policy.
The cases deal with the government's ability to offer premium tax
credits to people who purchase private coverage through the federal
insurance marketplace that serves the majority of the 8 million
consumers who signed up for 2014.
The U.S. Court of Appeals for the District of Columbia Circuit ruled
in a 2-1 decision that the language in the Affordable Care Act
dealing with subsidies shows they should only be provided to
consumers who purchase benefits on exchanges run by individual
states.
Most states including Florida and Texas, which have some of the
largest uninsured populations, opted to leave the task of operating
a marketplace to the federal government.
But plaintiffs in the D.C. Circuit case, known as Halbig v. Burwell,
claimed that Congress did not intend to provide subsidies through
federally operated marketplaces. The plaintiffs were identified as a
group of individuals and employers from states that did not
establish their own marketplaces.
NO IMMEDIATE IMPACT
The D.C. Circuit judges suspended their ruling pending an appeal by
the administration. Administration officials said they would appeal
to the full circuit court, a process that could take up to six
months, and stressed the ruling would have no impact on consumers
receiving monthly subsidies now.
Hours later, a three-judge panel of the 4th U.S. Circuit Court of
Appeals in Virginia ruled unanimously to uphold the same provision
in the case of King v. Burwell, saying the wording of the law was
too ambiguous to restrict the availability of federal funds.
The appearance of a split between separate circuit courts over the
question of Obamacare subsidies could increase the chance of Supreme
Court intervention. But legal experts and some Republicans on
Capitol Hill said the full D.C. Circuit court, dominated by
appointees of Democratic presidents, was likely to overturn its
panel's ruling or at least revisit it.
The Supreme Court upheld the Obamacare law on constitutional grounds
in 2012 but allowed states to opt out of a major provision involving
Medicaid coverage. Last month, the high court's conservative
majority ruled again on the law, saying closely held for-profit
corporations could object to Obamacare's contraception provision on
religious grounds.
“Today’s ruling is also further proof that President Obama’s
healthcare law is completely unworkable. It cannot be fixed," House
Speaker John Boehner said in a statement.
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Obamacare advocates welcomed the Virginia ruling, which House
Democratic leader Nancy Pelosi said "affirms the intent of the
Affordable Care Act: to make quality, affordable health insurance
available to every American in every state." Outside the political
sphere, stock market reaction to the rulings was muted for health
insurers like WellPoint Inc and Aetna Inc, which sell plans on many
Obamacare exchanges. Industry officials predicted that a final
decision would take "months or longer" to sort out, with no
immediate impact expected on their business.
"In the meantime, health plans remain focused on ensuring stability,
affordability and accessibility for consumers," said Brendan Buck,
spokesman for America's Health Insurance Plans, a main lobbying and
trade group.
FIVE MILLION
Analysts estimate that as many as five million people could be
affected if subsidies disappear from the federal marketplace, which
serves 36 states through the website HealthCare.gov. Subsidies are
available to people with annual incomes of up to 400 percent of the
federal poverty level, or $94,200 for a family of four.
"This has got probably more rounds of appeals and so forth, so
nothing is going to really happen right now," said John Holahan of
the nonpartisan Urban Institute.
"Some states may jump into action to set up their own exchanges to
qualify as state-based exchanges," Holahan added. "Others won't, in
which case there will be a large number of uninsured that will
remain and possibly grow."
The two-judge majority in the D.C. Circuit case, judges Thomas
Griffith and Arthur Randolph, wrote: "The fact is that the
legislative record provides little indication one way or the other
of congressional intent, but the statutory text does. (It) plainly
makes subsidies available only on exchanges established by states.
And in the absence of any contrary indications, that text is
conclusive evidence of Congress’s intent."
The D.C. panel's dissenting judge Harry Edwards, appointed by
Democratic president Jimmy Carter, wrote the majority's judgment
defied the will of Congress and ignored the authority Congress
vested in agencies to interpret and enforce the healthcare law.
 The Virginia appeals court, while siding with the administration,
was lukewarm in its support, saying: "The court is of the opinion
that the defendants have the stronger position, although only
slightly."
(Additional reporting by Lawrence Hurley, Susan Cornwell, Susan
Heavey, Julia Edwards and Emily Stephenson in Washington; and by
Caroline Humer and David Ingram in New York)
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