Supreme Court Likely To Settle Obamacare Dispute | Eastern North Carolina Now

    Publisher's note: The author of this post is Dan Way, who is an associate editor for the Carolina Journal, John Hood Publisher.

Two appellate courts issue conflicting opinions that affect N.C.

    RALEIGH — The U.S. Court of Appeals for the D.C. Circuit on Tuesday ruled 2-1 that the federal government cannot tax employers in order to provide health insurance subsidies in North Carolina and 35 other states that refused to establish Obamacare exchanges, potentially threatening the national health reform.

    That same day, the U.S. 4th Circuit Court of Appeals in Richmond unanimously upheld the subsidies, rejecting similar arguments by plaintiffs in another case. Both lawsuits charged the IRS with rewriting the law in 2012 illegally.

    Because of the split in the circuit court decisions, legal observers believe the U.S. Supreme Court ultimately will decide the issue, which affects more than 50 million people who bought taxpayer-subsidized insurance policies on the federal exchange.

    "One's right and one's wrong, that's really the gist of it," said Sam Kazman, general counsel of the Washington, D.C.-based Competitive Enterprise Institute, of the decisions. Kazman coordinated the plaintiffs' arguments in the Halbig v. Burwell case before the D.C. Circuit, and also worked on the King v. Burwell case before the 4th Circuit.

    Kazman said he was pleased with the Halbig decision. It reversed an IRS ruling that subsidies could be paid on federal exchanges, even though the wording of the Patient Protection and Affordable Care Act — the formal title of Obamacare — limited the payment of subsidies to insurance policies sold on the 14 exchanges set up and operated by individual states.

    "It's a victory not just with respect to Obamacare but really, more importantly, with respect to the whole notion of the rule of law, because you had IRS here pretty much rewriting some provisions of the Obamacare statute," Kazman said of the ruling by the D.C. Circuit.

    "That's bad enough in the normal course of things," he said.

    "But when you have an administration that is as set on expanding its regulatory power as this one is, then the danger of an agency rewriting the law instead of just implementing it really gets much, much larger," Kazman said. "For that reason it was at least as important as for whatever impact it has on Obamacare."

    He expects the D.C. Circuit to issue a stay, though at press time there was still no word of that action. But, he noted, the White House already announced "the subsidies would remain in effect until there's a definitive, final ruling."

    In King v. Burwell, the 4th Circuit unanimously upheld the IRS Obamacare rewrite in an opinion announced a few hours after the Halbig decision. Two other pending federal lawsuits challenge the IRS ruling that subsidies can be issued on the federal exchange.

    Kazman said he was not surprised by the 4th Circuit outcome. During oral arguments, the judges asked tough questions of the plaintiffs, indicating they were leaning toward the government's position.

    If upheld, Halbig "has the potential to jeopardize subsidies for hundreds of thousands of North Carolinians. Without access to affordable coverage, these families and individuals may go without the health care they need," said North Carolina Insurance Commissioner Wayne Goodwin.

    "I am frustrated by the lack of state control in this matter, but my staff and I will monitor this issue closely as it plays out in the courts, and we will continue to support and advise the people of North Carolina the best that we can under the law," Goodwin said.

    "Nothing is changing for Blue Cross Blue Shield of North Carolina customers right now," said company spokesman Lew Borman. The insurance giant is one of two insurers providing coverage plans on North Carolina's federal exchange.

    "We will be following the issue very closely, and it will likely be many months before the issue is settled," Borman said. "In the meantime, we will continue to support our customers, and will keep them informed of any future developments."

    Oklahoma in 20111 filed the first federal lawsuit challenging an IRS rule allowing tax penalties to be assessed against large employers to generate the exchange subsidies. A ruling is thought to be imminent in the Eastern District of Oklahoma.

    "Other states and private plaintiffs like Halbig followed our lead in challenging the law, and today's ruling by the D.C. Circuit Court of Appeals is a victory for Oklahoma's lawsuit and others challenging the law," said Oklahoma Attorney General Scott Pruitt. The Halbig ruling "gives us great confidence that Oklahoma's lawsuit will ultimately prevail."
In the King ruling, the judges took a more expansive view of the IRS rule than the Halbig majority. "Having examined the plain language and context of the most relevant statutory sections, the context and structure of related provisions, and the legislative history of the act, we are unable to say definitively that Congress limited the premium tax credits to individuals living in states with state-run Exchanges," said the opinion, written by Judge Roger Gregory.

    "With only 16 state-run exchanges currently in place, the economic framework supporting the act would crumble if the credits were unavailable on federal exchanges," the ruling said.

    In Halbig, the majority opinion written by Judge Thomas Griffith relied more heavily on the judicial philosophy regarding plain meaning of text. In this case, they said, the "conclusive evidence" is that the law clearly made subsidies available only on state exchanges.

    "Our ruling will likely have significant consequences both for the millions of individuals receiving tax credits through federal exchanges and for health insurance markets more broadly," the opinion stated.

    "But, high as those stakes are, the principle of legislative supremacy that guides us is higher still. Within constitutional limits, Congress is supreme in matters of policy," the decision said. A limited judicial role in that arena "serves democratic interests by ensuring that policy is made by elected, politically accountable representatives, not by appointed, life-tenured judges," the decision said.

    The Halbig ruling "was a tough decision by some principled judges to make because all the pressures" are to not undermine a law that's in effect, and to just say, "Who are we as judges to stand in the way of a president who was re-elected?' " said Thomas Miller, a senior fellow at the American Enterprise Institute who offered legal advice for the Oklahoma lawsuit.

    The Halbig judges listened to arguments, looked at the way the law was written, and decided "we're not supposed to be another legislature which fixes the problems that other people created," Miller said.

    "That's back to Congress and the larger government to get this right in a way which works," and upholds broader principles and traditions of government regarding the rule of law by a majority through elected representation, he said.

    Asked how two circuit courts could reach such differing opinions, Miller, former senior health economist on the congressional Joint Economic Committee, said a judge's background may shape judicial philosophies.

    "Some jurists will think more of an open-ended view as to trying to have the law better fit as to what seems to be the right policy result regardless of what the actual text of a law says. And there are different views as to how you go about constructing and interpreting a statute," Miller said.

    Miller believes federal attorneys will file motions for a rehearing, and seek a review of the panel's decision by all 11 members of the D.C. Court of Appeals. But such a review may be unlikely; between 2000 and 2010, only two of every 1,000 cases were reviewed.