Court Monitor

Cert. Granted against Obamacare!

For liberals, it was a double dose of bad news in the same week. First they lost big in the midterm elections, and then a few days later the U.S. Supreme Court issued a surprise grant of certiorari to consider the legality of how Obamacare is being implemented. King v. Burwell, 2014 U.S. LEXIS 7428 (Nov. 7, 2014). Because the lower appellate court had upheld the implementation of Obamacare, the decision by the Supreme Court to consider that ruling suggests that it might hold against a key part of Obamacare.

The Supreme Court rarely grants cert., such that it dismisses and refuses to hear 99% of the appeals brought before it. And like the movement of chess pieces, the maneuvering by the Obama Administration among different U.S. Courts of Appeals initially seemed on track for avoiding review by the Supreme Court.

At issue this time is whether the federal government may lawfully provide subsidies to millions of Americans to induce them to purchase health insurance on the federal exchanges which have been set up around the Nation. Most states declined to set up health insurance exchanges, despite incentives in Obamacare to subsidize citizens in states that set up their own exchanges.

A little problem arose when people checked the fine print of the law: the federal government is authorized to provide subsidies only as an incentive for people to purchase health insurance on the state exchanges. When a state declines to set up an insurance exchange, which is the case now in most states, then the wording in Obamacare does not allow the federal government to subsidize the cost of insurance on the federally run exchanges in those states. Without these subsidies, there would be a big decline in the numbers of people who sign up for Obamacare.

Lawsuits began seeking to stop these subsidies. On the same day earlier this year, a 2-1 panel of the D.C. Circuit invalidated the subsidies under Obamacare, while a 3-0 panel on the more liberal 4th Circuit upheld the subsidies. This created a stark "Circuit split," rendering it likely the U.S. Supreme Court would grant cert. and decide whether the subsidies are lawful or not.

But wait. The Obama Administration then attempted to remove the Circuit split -- and avoid review by the Supreme Court -- by petitioning the D.C. Circuit for a rehearing en banc (by all the active judges on the Circuit). This year Obama has packed that Circuit with multiple new liberal judges, giving him a big majority on the Court. Predictably, the D.C. Circuit judges voted to rehear the conservative panel decision, which had the effect of nullifying the decision immediately. This removed the Circuit split and appeared to end any likelihood of the Supreme Court taking up this issue.

But to the surprise of many, the Obama Administration's maneuvering to avoid Supreme Court review went for naught. On the petition for certiorari in the 4th Circuit case, which had held 3-0 in favor of the Obama Administration, the Supreme Court granted review on the issue of the legality of the subsidies. If the Court finds the subsidies to be unlawful, then Obamacare will lose any remaining viability that it has.