Federal Appeals Courts Clash Over Obamacare Subsidies

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The 4th Circuit Court of Appeals upheld Obamacare against a sweeping challenge to its federal subsidies on Tuesday. A 3-judge panel unanimously ruled that the statute permits the federal exchange to provide subsidies.

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Corruption

If you're looking for a silver lining to this morning's ruling dealing a major blow to Obamacare (or rather a major blow to people getting subsidized policies in the states that didn't adopt exchanges), look to the full DC Circuit Court. Given its present make-up (helped along mightily by breaking the filibuster logjam) it seems highly, highly likely that the full DC Circuit will reverse this ruling. The problem is that the question then moves to the Supreme Court, which seems quite likely - given recent decisions - to turn it back again to some version of today's decision. In other words, at some point in the future it seems quite likely that the Supreme Court will gets its opportunity to gut the bill.

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Hold Everything!

This is happening quick. After the DC Circuit invalidated Obamacare's tax credits for the federal exchanges earlier this morning, the 4th Circuit Court of Appeals just issued a similar ruling upholding those same tax credits.

This conflict between two circuit courts increases the chances of the Supreme Court taking that case to resolve this once and for all, though both cases could end up being reviewed en banc by all the judges on each circuit first.

The Mother Of All Drafting Errors?

Today's court ruling gutting the essential tax credits offered under Obamacare relies on a literal reading of one provision of the Affordable Care Act. It seems almost certain that the provision in question suffered from a drafting error.

As we reported earlier this year, those who were in the room as the bill was being written say it was never anyone's intention to limit the tax credits to state-run exchanges. In fact there's no compelling rationale for why Congress would have sought to treat the two exchanges differently for tax purposes. The provision was just drafted poorly.

In ordinary circumstances, Congress would just fix the error. But these are not ordinary times.

Major Defeat For Obamacare

Federal appeals court invalidates tax credit for insurance purchased on federal Obamacare exchanges.

To catch you up, at issue was whether the federal government could provide tax credits to people who purchased insurance on the exchanges set up by the federal government. Remember that as originally conceived Obamacare allowed each state to create its own exchange. This was a concession to conservatives and to states, a way to build consensus for the legislation. But as opposition to Obamacare became a Republican rallying cry and a litmus test for conservative credentials, many red states opted not to create their own exchanges. In fact a majority of states opted to rely on the federal exchanges instead.

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This Should Go Well

AP: "An evangelical Christian group plans to try to convert children as young as 5 at Portland apartment pools, public parks and dozens of other gathering spots this summer — a campaign that's got some residents upset."