Supreme Court Will Hear Lawsuit Aimed At Crippling Obamacare

The Supreme Court announced on Friday it will hear a lawsuit that seeks to cripple Obamacare by invalidating federal subsidies for millions of Americans.

In a surprising move, the justices agreed to have the final word on a challenge to the legality of Obamacare premium tax credits in 36 states which declined to build their own state-run exchanges and handed some or all of the task over to the federal government.

The decision is troubling news for the White House, which wanted to resolve the case in the lower courts so the Supreme Court wouldn’t have to weigh in.

The Supreme Court agreed to hear the case King v. Burwell after the challengers lost before a trial court judge and the 4th Circuit Court of Appeals, which upheld the subsidies. After the 4th Circuit ruling, the plaintiffs recognized they could only win the case at the Supreme Court, and so they appealed directly to the justices.

The plaintiffs allege that the plain text of the Affordable Care Act confines the subsidies to “an Exchange established by the State” but not the federal exchange which serves residents of states that didn’t build one.

The Obama administration counters that the statute as a whole makes clear the subsidies were intended for Americans in every state.

A three-judge panel on the D.C. Circuit ruled against the subsidies, but the full court vacated that ruling and plans to re-hear the case next month. The justices’ decision on Friday means the outcome in the D.C. Circuit may have little impact. Some expected the Supreme Court to wait until the D.C. Circuit had decided the case in order to determine whether there was a circuit court disagreement they needed to resolve.

The challenge was thought up by Cato health policy researcher Michael Cannon and Case Western Reserve University law professor Jonathan Adler.

King is the most dangerous legal attack on Obamacare since the lawsuit against the individual mandate. That case reached the Supreme Court in 2012 and Obamacare emerged largely in tact, surviving by a fragile 5-4 margin after Chief Justice John Roberts sided with the liberal wing to uphold most of the law.

Four justices were required to grant review of the King case. There were no recorded dissents.

Nicholas Bagley, a professor at the University of Michigan Law School, wrote that the Supreme Court’s move “substantially increases the odds that the government will lose this case.”

“No, what’s troubling is that four justices apparently think—or at least are inclined to think—that King was wrongly decided. As I’ve said before, there’s no other reason to take King,” Bagley wrote. “And there are at least four such justices. If those four adhere to their views—and their views are tentative at this stage, but by no means ill-informed—the challengers just need one more vote to win. In all likelihood, that means that either Chief Justice Roberts or Justice Kennedy will again hold the key vote.”

This is the outcome that conservative legal advocates have been lobbying for. Once the Obama administration asked the full D.C. Circuit to take up the case, they recognized that their odds of victory could diminish, in part because the court that would decide it featured an 8-5 majority of Democratic-appointed judges. In the pages of the Washington Post and the Wall Street Journal, conservative lawyers preemptively sought to discredit a D.C. Circuit move to uphold the Obamacare subsidies, suggesting it would be politically-motivated.

Dear Reader,

When we asked recently what makes TPM different from other outlets, readers cited factors like honesty, curiosity, transparency, and our vibrant community. They also pointed to our ability to report on important stories and trends long before they are picked up by mainstream outlets; our ability to contextualize information within the arc of history; and our focus on the real-world consequences of the news.

Our unique approach to reporting and presenting the news, however, wouldn’t be possible without our readers’ support. That’s not just marketing speak, it’s true: our work would literally not be possible without readers deciding to become members. Not only does member support account for more than 80% of TPM’s revenue, our members have helped us build an engaged and informed community. Many of our best stories were born from reader tips and valuable member feedback.

We do what other news outlets can’t or won’t do because our members’ support gives us real independence.

If you enjoy reading TPM and value what we do, become a member today.

Latest Dc
Masthead Masthead
Founder & Editor-in-Chief:
Executive Editor:
Managing Editor:
Associate Editor:
Investigations Desk:
Editor at Large:
General Counsel:
Head of Product:
Director of Technology:
Associate Publisher:
Front End Developer:
Senior Designer: