This post has been updated to include a 4th Circuit Court of Appeals on Tuesday decision in favor of the government.
Dealing a potentially disastrous blow to Obamacare, a federal appeals court in the Halbig v. Sebelius case on Tuesday ruled the IRS has no power to rewrite laws any way it sees fit.
Hours later, however, the 4th Circuit Court of Appeals came to the exactly opposite conclusion, ruling that courts should defer to the IRS’s interpretation of the law.
The different rulings make it a virtual certainty that the Supreme Court will hear the case.
In its 2-1 decision, the D.C. Circuit Court of Appeals found the Affordable Care Act was clearly written to make federal subsidies available to insurance buyers only in states that set up insurance exchanges instead of relying on the federal government.
Because more than half the states have declined to set up exchanges, that wording makes the whole financing scheme of Obamacare untenable. So the IRS took it upon itself to decide that when Congress said “the states” it meant “the federal government.”
Not so fast, the D.C. court ruled, overturning an earlier ruling that had agreed with the administration.
“Because we conclude that the ACA unambiguously restricts the section 36B subsidy to insurance purchased on Exchanges ‘established by the State,’ we reverse the district court and vacate the IRS’s regulation,” the ruling stated, according to The Hill.
However,the 4th Circuit judges thought it wasn’t clear after all.
“… [W]e find that the applicable statutory language is ambiguous and subject to multiple interpretations. Applying deference to the IRS’s determination, however, we uphold the rule as a permissible exercise of the agency’s discretion.”
So which is it going to be? The subsidies issue is the most serious challenge to Obamacare since the Supreme Court ruled in the law’s favor in 2012 – with a good deal of help from Chief Justice John Roberts. Tuesday’s near-simultaneous contradictory rulings will have to be resolved.
In a statement released shortly after the D.C. court’s ruling, Sen. Ted Cruz, the Texas Republican who led the 2013 government shutdown in an effort to halt the disastrous law from taking effect, made it clear his position hasn’t changed. He called the decision a “repudiation of Obamacare and all the lawlessness that has come with it.”
“The Obama Administration, through the Internal Revenue Service, has attempted to dispense revenues to the states without proper congressional authorization, robbing Congress of its constitutionally-provided power of the purse,” the statement said.
“This is a significant victory for the American people and the rule of law, but we must not rest. Americans will continue to lose jobs, pay higher premiums, and receive fewer health care choices because of this disastrous law.”
Conservatives — also known as people who think laws are supposed to mean what they say, as opposed to whatever the White House would like them to mean on any given day — can only hope the Supreme Court agrees.
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