Obamacare Is Headed For Another Supreme Court Showdown, And It Puts The Law In 'Dangerous Territory'

Barack ObamaREUTERS/Jonathan ErnstU.S. President Barack Obama campaigns for U.S. Representative Gary Peters, candidate for Senate in Michigan.

The Supreme Court on Friday agreed to take up a new challenge to the Affordable Care Act, a move that will again thrust the law into a high-profile battle before the high court.

The Supreme Court’s move is somewhat surprising, considering there is still no split in the lower, circuit courts. But the high court agreed to King v. Burwell, a case in which the Fourth Circuit court upheld an IRS rule that extends the distribution of health insurance subsidies to states served by the federal insurance marketplace.

The challenge to the law is viewed as having the potential to cripple Obamacare in the 36 states where the federal government provides subsidies for low-income people to buy health insurance.

It has the potential to affect more than 5 million low-income Americans who currently receive subsides. One analysis projected that if challengers’ efforts were successful, it would spike premiums by 76% for the people who currently receive subsidies.

The plaintiffs in the case argue the way the law was written does not allow for subsidies to be provided by the federal government, pointing to a statute that says subsidies should be issued to plans purchased “through an Exchange established by the State under Section 1311” of the Affordable Care Act. Section 1311 establishes the state-run exchanges. But plaintiffs say the law does not permit subsidies in federal exchanges, according to Section 1321 of the law.

In early September, the U.S. Circuit Court of Appeals for the District of Columbia agreed to rehear the case, taking away a split between the circuits. A three-judge panel had thrown out the subsidies as invalid, but now the full, 13-judge panel will rehear the case. The maths on the full panel is much better for the administration, as it consists of eight Democratic-appointed justices and just five who are Republican-appointed.

Timothy Jost, a professor at the Washington and Lee University School of Law and supporter of the law, told Business Insider the law is now in “very dangerous territory.”

“This is highly unusual. The Supreme Court doesn’t usually just take away cases from circuit courts where there’s no circuit split, which I think sends a signal that politics might be driving this — not legal analysis,” Jost said. “So I think that’s bad. It doesn’t look good that this could be a politically driven decision.”

The other interpretation one could read from the Supreme Court’s move, he said, is that it wants to get past the case now rather than have it linger for another year — or more.

“We’re going to have to decide this case sometime, and we might as well get it done now, rather than leave it open for perhaps another year,” he said of the justices’ possible thinking. “If that’s the case, then it’s possible that certainly five and maybe more of the judges could vote to uphold the law.”

Supporters of the challengers, meanwhile, took it as a good sign for their case.

“The Supreme Court has the opportunity to reaffirm the principle that the law is what Congress enacts, not what the Administration or others wish Congress had enacted with the benefit of hindsight,” Jonathan Adler, a law professor at Case Western Reserve University in Ohio and a conservative legal scholar behind the Halbig challenge, told Business Insider.

The White House and Justice Department didn’t immediately respond to a request for comment.

More to come…

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