It's not a matter of mandates versus taxes. Nor is it a religious challenge. This time, it's about Obamacare/Affordable Care Act subsidies, the ones that make healthcare affordable to low-income individuals.
We've noted the general premise of these lawsuits repeatedly: the text of the statute appears to support the notion that unless a state forms its own healthcare exchange, no subsidies were supposed to be available. The IRS took a different view and reinterpreted the statute, making subsidies available to everyone, regardless of whether the person used a federal or state exchange.
The stakes are high: no subsidy, no insurance purchases. No purchases, no mandates, per the terms of the statute. No mandates and no demand, no Obamacare.
The Statute Says
As we noted in the parallel D.C. Circuit case, Halbig v. Sibelius, a decision in which is expected any day now, the language of the statue states that subsidies are available to those who purchase insurance "through an Exchange established by the State under 1311." And "State" is defined as the 50 states, plus Washington, D.C.
In the Fourth Circuit case, the plaintiffs argue that they were injured by the illegally imposed mandate (illegal because Virginia did not operate its own exchange, which meant no subsidies and no mandate per the statutory text).
Circuit Split and SCOTUS Case in the Making?
With the obvious caveat about reading the tea leaves of oral arguments, the majority of the D.C. Circuit panel seemed a lot more sympathetic to Obamacare challengers than the Fourth Circuit does. The two Republican appointees made observations like, "If the legislation is just stupid, I don't think it's up to the court to save it," and "the key language is 'established by the State.'"
Meanwhile, in the Fourth Circuit, which held oral arguments earlier this month (the audio record is available online), the three judge panel (all Democratic appointees) seemed far more skeptical. Michael Cannon, who along with Jonathan Adler is credited with pioneering the illegal subsidies arguments, noted in his recap that the questions by Judges Andre Davis and Roger Gregory reflected skepticism of the plaintiffs' arguments. At one point, Davis observed:
"You want us to adopt an interpretation of this reticulated statute and kick millions of people in five states ... off the insurance rolls, so that the four people you represent here don't have to pay a few dollars extra for insurance. That's what this case comes down to."
Judge Stephanie Thacker, according to Cannon, did not ask any questions. Even if she sides with the plaintiffs, however, the other two judges appear to be leaning towards upholding the subsidies.
Though this is just the beginning of both battles (en banc and Supreme Court petitions are likely to follow, regardless of outcomes), the twin battles appear to be on a collision course for a circuit split, making a SCOTUS grant more likely.
- For Reporters, Law Professors, Citizens: A Reference Guide To President Obama's Illegal ObamaCare Taxes (Michael Cannon via Forbes)
- Obamacare Tax Credit Lawsuit Struck Down by D.C. District Court (FindLaw's D.C. Circuit Blog)
- 5 Notes From the Oral Arguments in Virginia's Gay Marriage Appeal (FindLaw's Fourth Circuit Blog)