Justices to Hear Challenge to Health Law Subsidies

Justices to Hear Challenge to Health Law Subsidies

The court will review a ruling that upheld IRS regulations that allow tax credits under the Affordable Care Act for consumers.

Published November 7, 2014

WASHINGTON (AP) — The Supreme Court agreed Friday to hear a new challenge to President Barack Obama's health care law that threatens subsidies that help millions of low- and middle-income people afford their health insurance premiums.

The justices said they will review a unanimous federal appeals court ruling that upheld Internal Revenue Service regulations that allow health-insurance tax credits under the Affordable Care Act for consumers in all 50 states. Opponents argue that most of the subsidies are illegal.

White House press secretary Josh Earnest said the congressional intent behind the law is for eligible customers regardless of where they live to receive assistance from the government to subsidize the purchase of health care. He promised a vigorous defense before the high court.

"We continue to have high confidence in the legal argument, both from a legal perspective and a common-sense perspective. This is a law that is working, that's why you'll see a vigorous defense here," Earnest said.

The long-running political and legal campaign to overturn or limit the 2010 health overhaul will be making its second appearance at the Supreme Court. The justices upheld the heart of the law in a 5-4 decision in 2012 in which Chief Justice John Roberts provided the decisive vote.

In the appeal accepted Friday, opponents of the subsidies argued that the court should resolve the issue now because it involves billions of dollars in public money.

The court rarely steps into a case when there is no disagreement among federal appellate courts, unless a law or regulation has been ruled invalid.

But at least four justices, needed to grant review, apparently agreed with the challengers that the issue is important enough to decide now.

Supporters of the health care law were flabbergasted and accused the court of verging into politics. The news came a week ahead of the second open enrollment season for subsidized private health insurance under the law.

"All of the general guidelines that the court traditionally uses in determining whether it should schedule an appeal are totally absent in this case," said Ron Pollack, executive director of Families USA, an advocacy group that supported Obama's health overhaul from its inception. Pollack called the court's action "an unusual political act."

The legal challenge to the subsidies is "the most serious existential threat" facing the Affordable Care Act, added Pollack.

The health care law provides taxpayer-subsidized private health insurance for people who don't have access to coverage on the job. More than 4 out of 5 of the roughly 7 million people currently enrolled are getting help, which is keyed to household income and the cost of a benchmark plan.

When the court upheld the law in 2012, it still made a major change to Obama's signature legislation by ruling that its Medicaid expansion for low-income people was optional for states. So far 27 states and the District of Columbia have accepted it. This week's Republican election success makes it unlikely that the remaining 23 states will move any time soon.

The subsidies issue is being fought in several courts. In July, the Richmond, Virginia-based appeals court upheld Internal Revenue Service regulations that allow health-insurance tax credits under the law for consumers in all 50 states.

On that same July day, a panel of appellate judges in the District of Columbia, sided with the challengers in striking down the IRS regulations. The Washington court held that under the law, financial aid can be provided only in states that have set up their own insurance markets, known as exchanges.

For those federal exchange consumers, the subsidies cover 76 percent of their premiums, on average. Customers now pay an average of $82 on total monthly premiums averaging $346. The federal subsidy of $264 a month makes up the difference.

But in October, the entire Washington appeals court voted to rehear the case and threw out the panel's ruling, eliminating the so-called circuit split. The appeals argument has been scheduled for December 17, but that case now recedes in importance with the Supreme Court's action to step in.

The case, King v. Burwell, 14-114, probably will be argued the first week in March, with a decision expected by late June.

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Associated Press writers Ricardo Alonso-Zaldivar and Darlene Superville contributed to this report.

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 (Photo: AP Photo/Charles Dharapak, File)

Written by Mark Sherman, Associated Press

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