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Supreme Court Agrees to Take up Challenge to Health Law Subsidies

By Todd Ruger, CQ Roll Call

November 7, 2014 -- President Barack Obama's health care law is once again at risk before the Supreme Court, which has agreed to hear a challenge to a key provision in the overhaul.

Oral arguments in the politically charged case could be scheduled as early as January, at the same time that a Republican-controlled Congress likely will be proceeding with legislative attacks on the law.

The case—King v. Burwell—questions whether the law should provide subsidies to low- and middle-income residents who buy health insurance in the 37 states that did not establish a state-run marketplace.

The central debate is about what Congress intended when crafting the health care overhaul law ( PL 111-148 , PL 111-152). A decision against the health care law would take away subsidies and make insurance unaffordable for millions of Americans.

The result would throw the health care system and the law's implementation into chaos, insurance experts and Democrats say.

"To say this was a catastrophe in terms of the insurance markets does not understate it," insurance consultant Bob Laszewski of Health Policy and Strategy Associates said at a recent panel discussion on the case. "The debate would then quickly move on to who broke it. And, folks, it would be broken in spades."

Supporters of the law immediately reacted with dismay.

Ron Pollack, executive director of the health advocacy group Families USA, called the Supreme Court's acceptance of the case "an unusual political act."

In a statement, Pollack said there is no serious constitutional issue presented in this case, no current conflicting decisions by a federal appeals court and that two appeals courts—the D.C. Circuit and the 10th Circuit—have arguments set on similar challenges.

"Clearly, therefore, at least four justices of the Supreme Court have decided to put aside the normal guidelines for accepting a case, and they have decided to jump the usual process about which cases they should hear," Pollack said.

"This is a clear indication that at least some of the justices are determined to enter the political fray about the Affordable Care Act," Pollack said.

The case marks the third time the justices have considered the legality of the health care law. The justices upheld the heart of the law in a 5-4 decision in June 2012. The high court struck down the law's contraception mandate as it applies to family-owned businesses in a 5-4 ruling in June.

The decision to accept the King case out of the U.S. Court of Appeals for the 4th Circuit comes as similar challenges are still moving through the lower courts. Those cases would likely be put on hold now, since the high court has agreed to hear the issue.

"We're very gratified," said Michael A. Carvin, a partner at Jones Day law firm who represents the challengers in several cases. "We made it very clear that wherever you come out on this case, it should be settled sooner rather than later."

Carvin said he thinks the justices also took the case because they recognize an Internal Revenue Service rule on the health care law runs contrary to the plain language of the statute.

The case comes out of Virginia. In it, four Virginia residents argue that only the Supreme Court could decide on the subsidies, and that it was imperative for the justices to do so as soon as possible.

The case challenges an IRS rule that authorizes the subsidies for those who enroll in the federally-run insurance marketplace,

Challengers say in their petition to the court that Congress precluded the IRS from providing tax subsidies to residents of states that rely on federally-facilitated marketplaces.

The government argues in its brief that such a reading would be contrary to the law's text and structure, and would render the law "unrecognizable to the Congress that passed it."

The 4th Circuit correctly ruled that Congress determined the subsidies at issue are essential to the law's goals of making affordable health coverage available to all Americans, the government brief states.

White House spokesman Josh Earnest in a recent statement said the lawsuits "won't stand in the way of the Affordable Care Act and the millions of Americans who can now afford health insurance because of it."

"This lawsuit reflects just another partisan attempt to undermine the Affordable Care Act and to strip millions of American families of tax credits that Congress intended for them to have," Earnest said. "We are confident that the Supreme Court will recognize both the clear reading of the entire law, and the certain intent of Congress in crafting it."

Tennessee Republican Rep. Diane Black, a member of the House Ways and Means Committee, supported the justices' decision to take the case in a statement.

"If the President has been overstepping his authority as the text of the ACA suggests, this means that his administration has been misrepresenting the true costs of Obamacare to millions of Americans across the country," Black said.

"This administration has repeatedly ignored Congress and the legislative process in order to fit their agenda and it is long past time for this president to uphold his oath to enforce the laws as written," Black said.

Rep. Sander M. Levin of Michigan, the top Democrat on the Ways and Means Committee, said in a statement that the lawsuit misconstrues the intent of the law's authors.

"As the ranking member of one of the committees that shaped and debated the healthcare law, I am confident that the Supreme Court will recognize both the letter and intent of the law to ensure that financial assistance remains available in every state," Levin said.

The Supreme Court did not issue any comment with its order to hear the case.

Earlier this year, a three-judge panel of the D.C. Circuit ruled in favor of the challengers in a similar case. But the D.C. Circuit vacated that panel's decision in September and agreed to decide the case with all 11 judges. Oral arguments are scheduled for Dec. 17, which would set up a decision early next year.

Michael Cannon of the libertarian Cato Institute, who has long advocated this legal strategy, wrote in a recent blog post that the case could now "bring an end to the greatest domestic-policy scandal of this administration."

"The Supreme Court's decision is a rebuke to the Obama administration and its defenders, who dismissed as frivolous the plaintiffs' efforts to defend their right not to be taxed without congressional authorization," Cannon wrote.

Sen. John Cornyn of Texas and other Republican lawmakers filed an amicus brief in the case urging the Supreme Court to hear the case. The IRS regulation at issue rewrites the law and improperly encroaches upon Congress's lawmaking function and is costly, the brief states.

"The executive should not be able to accomplish through grasping agency rulemaking, and friendly judicial review, what it could not accomplish in legislative negotiations," the brief states.
Republican lawmakers who joined the brief were Sen. Ted Cruz of Texas; Sen. Orrin G. Hatch of Utah; Sen. Rob Portman of Ohio; Sen. Marco Rubio of Florida; Rep. Dave Camp of Michigan; and Rep. Darrell Issa of California.

Oregon Democrat Sen. Ron Wyden, chairman of the Senate Finance Committee, said in a statement that the lawsuits are contrary to Congress' intent and the best interest of millions of Americans who now have insurance.

"If successful, these lawsuits would return our nation to the days when health care was reserved primarily for the healthy and wealthy," Wyden said. "An honest reading of the law and Congress' intent will prevent that from happening."

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