The Obama administration and supporters of the president's health-care law are probably breathing a little easier this morning after some pretty big news from the U.S. Court of Appeals for the District of Columbia.
A few months after a three-member panel of the court ruled the federal government can't provide insurance subsidies through federal-run exchanges in 36 states, the court on Thursday granted the Obama administration's request for the entire panel to re-hear the case. The en banc hearing, as it's known, wasn't entirely unexpected — and with a heavy makeup of Democratic-appointed judges on the panel, it seems likely the administration will get a more favorable ruling when the entire court reconsiders the case later this year.
In July, the D.C. appellate court decided 2-1 that Congress only intended to provide subsidies in states that set up their own health insurance marketplaces under the Affordable Care Act. If the ruling survived, it would be a major setback for the law since it would invalidate federal help to about 5 million people who purchased insurance through federal-run exchanges in 2014.
However, a federal appellate court in Virginia in a similar case sided with the administration, ruling that although the text of the Affordable Care Act is unclear, the IRS acted appropriately to provide subsidies in all exchanges.
The challengers in the Virginia case have asked the Supreme Court to take their challenge as soon as possible, but the Supreme Court may want to delay consideration until after the appeals court in D.C. finishes reviewing its subsidies case, Halbig v. Burwell. Oral arguments for the entire D.C. circuit court are scheduled for Dec. 17, a month after the next Obamacare open enrollment period starts.
The entire D.C. circuit is expected to uphold subsidies through the federal-run exchanges, which would eliminate conflicting decisions in the appellate courts. That makes it less likely that the Supreme Court will eventually take the subsidy challenges, though the justices can still decide to do so.
"We continue to believe that it is the only court that can resolve this issue in the quick and final manner that the country deserves," said Sam Kazman, general counsel for the Competitive Enterprise Institute, which is funding the Halbig lawsuit.
Subsidies reduced the cost of health insurance premiums in federal exchanges by an average of 76 percent in the ACAs first enrollment period, according to figures from the Department of Health and Human Services. Of the 5.4 million people who signed up through federal-run exchanges in 2014, 87 percent of them received subsidies, the figures show.
Given the new timing of the hearing schedule in the D.C. court, it's unlikely that the Supreme Court — if it ultimately takes the cases — would hear the challenge before the term starting in October 2015.