The D.C. Circuit Court of Appeals just gutted Obamacare in a big way: Judges smack down another administration power grab

The U.S. District Court of Appeals delivered a huge blow to the Obama administration this morning, ruling that it’s illegal for the Internal Revenue Service to dole out tax subsidies for enrollees in the nearly three-dozen states on the federal Obamacare Exchange.

At issue in Halbig v. Burwell is whether the IRS has the authority to provide tax subsidies to enrollees in states that opted not to comply with Obamacare. A reading of the Affordable Care Act statutes in question (§1311 and §1321) confirms that the subsidies were meant to apply only to states with established Exchanges.

But the IRS, apparently unconcerned with the actual text of the law as passed by Congress, wrote rules to apply the subsidies to the federal Exchange, which didn’t exist until states refused to establish their own.

In a 2 to 1 decision this morning, a panel of judges from the U.S. District Court of Appeals agreed that the IRS overstepped its statutory authority, even though the majority acknowledged that the opinion will have major ramifications for healthcare policy.

“We reach this conclusion, frankly, with reluctance,” wrote Judge Thomas B. Griffith in the 42-page opinion. “At least until states that wish to can set up 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.”

“Within constitutional limits, Congress is supreme in matters of policy, and the consequence of that supremacy is that our duty when interpreting a statute is to ascertain the meaning of the words of the statute duly enacted through the formal legislative process,” he said. “This limited role serves democratic interests by ensuring that policy is made by elected, politically accountable representatives, not by appointed, life-tenured judges.”

Basically, the court is ruling based on a clear reading of the statutes in question and if the Obama administration and certain members of Congress don’t like it, they need to come up with a legislative remedy.

Griffith, who was thought to be on the fence in this case, was joined by Judge A. Raymond Randolph. Judge Harry T. Edwards dissented.

The implications this ruling are huge. The states on the federal Exchange accounted for 5.4 million of the purported 8 million sign-ups into Obamacare plans and 86 percent of those consumers are eligible for subsidies. Based on this ruling, they just lost access to Obamacare subsidies, which will send their premiums through the roof.

This, of course, won’t end the legal proceedings in Halbig. The administration can seek a review before the full D.C. Circuit Court of Appeals or take the case before the Supreme Court. In the meantime, however, another power grab has been smacked down.

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