D.C. Circuit Grants En Banc Review In Obamacare Funding Case


Back in July, a three judge panel of the D.C. Circuit Court of Appeals ruled that the tax subsidies provided by the Affordable Care Act could only be applied to policies purchased under exchanges established by an individual state, not to policies purchased via the exchange set up by the Federal Government for the 30-odd states that had declined to establish an exchange. As I had noted in the run up to the Court’s ruling in that case, such a decision has the potential to undermine the entire financial structure of the PPACA into chaos since many people who have been relying on subsidized premiums to afford health insurance would likely drop polices rather than pay full price, thus upending the risk pool. On the same day as the D.C. Circuit ruling, a panel of the 4th Circuit Court of Appeals ruled that the subsidies apply both to policies purchased on the state exchanges and policies purchased on the Federal exchange, thus setting up the kind of Circuit split that usually results in the Supreme Court granting an appeal. Today, though, the full D.C. Circuit upended that situation by granting the en banc appeal requested by the Federal Government:

A federal appeals court on Thursday set aside an earlier ruling invalidating subsidies tied the 2010 federal health care law in many states, pending a review by the full court, in a blow to opponents of the Affordable Care Act.

The U.S. Court of Appeals for the District of Columbia Circuit issued a brief order that granted the Obama administration’s request that the court reconsider the case with a full roster of judges participating. As part of that move, the court vacated its July opinion, issued by a three-judge panel, that struck down an Internal Revenue Service regulation that made subsidies for insurance purchases available nationwide to qualifying middle- and low-income consumers.

A key piece of the health law allowed subsidies to consumers who bought insurance on an exchange “established by the state.” The IRS rule, which implemented that portion of the law, said subsidies were available no matter whether a consumer bought coverage on a state or federally run exchange. The regulation has become important to the functioning of the law because most states didn’t set up their own exchanges.

An estimated 4.7 million Americans have received subsidies through exchanges run by the federal government.

The D.C. Circuit’s first ruling, from July, said the language of the health law didn’t allow for insurance subsidies on a federal exchange. The three judges that considered the case split 2-to-1 in ruling against the Obama administration. A different federal appeals court in Richmond, Va., issued a conflicting ruling the same day that upheld the IRS regulation.

A split in the appeals courts often prompts the Supreme Court to take up an issue, and the challengers in the Richmond case already have filed an appeal with the justices.

By reconsidering its case, the D.C. Circuit for now removes the conflicting rulings in the lower courts, clouding the prospect that the Supreme Court will eventually get involved.

The Plaintiffs in the Fourth Circuit case have already applied to the Supreme Court for a Writ of Certiorari, however the fact that the D.C. Circuit has taken this step likely means that, at the very least, the Justices will hold off ruling on that petition until the D.C. Circuit has ruled. At that point, if the D.C. Circuit ends up ruling for the government, as many suspect given the fact that the full court now has a majority of Judges appointed by President Obama, then there would be a distinct possibility that the Court may not accept the appeal at all, although the fact that there are other cases raising this issue pending in the Federal Court system may lead the Court to accept the appeal. In any case, at this point it seems unlikely that the Supreme Court will get to this issue in the October 2014 term. The D.C. Circuit has scheduled the hearing on this matter for December 17th, which means a decision in the case before late January or February unlikely. At that pace, it would essentially too late for either of the cases to get on the Court’s docket before the end of the term next June.

If nothing else, the Administration’s decision to seek en banc review in this case was a smart tactical move.

FILED UNDER: Bureaucracy, Congress, Health, Law and the Courts, US Politics, , , ,
Doug Mataconis
About Doug Mataconis
Doug Mataconis held a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010 and contributed a staggering 16,483 posts before his retirement in January 2020. He passed far too young in July 2021.


  1. stonetools says:

    Score one against the plaintiff sociopaths, who are holding a position they know to be untrue in order to deny health insurance to millions of Americans. In a just world,the plaintiffs would get cancer and lost their health insurance based on a techinality, but I’lll have to satisfied with the full circuit reversing Griffith’s reality-denying decision.

  2. Tyrell says:

    @stonetools: I have called the AHA three times, and various insurance agents four times with same question: can we qualify if I have insurance that is “available” to my wife through my employers group plan, yet at over $500 a month is unaffordable. Every time I have been given a different answer. One even said they could not give an answer, it was complicated. So we’re stuck. I know another person who is in the same situation. They are going cash pay as you go, and credit cards. This is one glitch in the system. Maybe some one can relate to this.
    Another issue. I recently went to the doctor for a sore throat. He spent just about the entire 10 minutes entering information on a laptop, even asking me questions about my parents, who have been deceased for a few years. He said that they can only see half the patients that they used to because they have to do all of this information gathering on a computer. He said that the old written method was faster, and now they have to ask a lot more questions. Why is all of this necessary? Who reads or uses all of that stuff?
    There are some glitches that need to be fixed. I am not and have not been against government health programs. I always thought that expanding medicare to anyone who needs it. That would have been a lot easier and simpler than what we have now. And they would not had to spend a billion dollars on a computer system that was full of spyware and viruses.

  3. C. Clavin says:

    This is bad news for ODS sufferers like Doug.

  4. Ha Nguyen says:

    If you read Richard Mayhew’s Healthcare posts at Balloon Juice or contact him there, he has in the past answered people’s questions about their specific health insurance plans. As for the change in information gathering, that’s was also explained in one of Mayhew’s posts that this was a little noticed provision in the ACA and is required because as of today, there are too many different databases with incompatiable interfaces. This provision requires databases being set to certain standards so that if you move or change doctors, you don’t lose your medical information.

  5. humanoid.panda says:

    @Tyrell: If I get you right, your wife is getting employer provided insurance, but the cost for you to buy it is 500%, right? Unfortunately, there is a real glitch in the law: the determination of affordability is for the costs of insurance for the employee, not their dependents. In other words, if your wife has to pay 500$ a month, 12,000$ a year, for insurance, and makes, say, 50K, she is eligible for subsidies on exchange, but if her share of empoloyer provided insurance is below 10% of her income, but the costs of yours add 12,000$ to that, you are not eligible for subsidies. This kind of glitch would have been fixed if not for GOP jihad against the law…
    As for records, they are not shared with anyone you are not signing release forms to share information with. HIPAA was not cancelled by the ACA and this paranoid BS is stupid. As for the records issue: they might annoy doctors, but they also reduce errors, minimize repetitive procedures, and make it easy for doctors to share access to records. Doctors will get used to it- God knows that this they are paid enough.

  6. Barry says:

    And I predict that we’ll see Jonathan Adler suddenly change his mind about the importance of the rulling, and appeal it to the Supreme Court.

    Doug, are there sanctions for a lawyer who publicly lies?

  7. Barry says:

    @Tyrell: “He said that they can only see half the patients that they used to because they have to do all of this information gathering on a computer. He said that the old written method was faster, and now they have to ask a lot more questions. Why is all of this necessary? Who reads or uses all of that stuff?”

    I can tell you exactly what happened there – their practice/health system switched over to a new computerized medical records system, and the old written data was not entered. This means that the doctor can’t just look at your old record, but has to enter everything from scratch. BTW, the stuff about your parents is called ‘family medical history’, and is extremely important, especially as you get older. Also, taking only ten minutes is pretty good.

  8. OzarkHillbilly says:

    @Tyrell: Count yourself lucky, the last Doc I saw spent the entire 15 minutes with his nose buried in his PC and we only had about 2 minutes worth of conversation, none of which was “history”. Yeah, I fired his ass. Sometimes I wish I wasn’t so slow to anger because afterward I was wishing I had reached across and closed the dam PC in his face. I have no idea what he was doing on it, but I am about 97% certain it had nothing to do with me.

  9. bill says:

    so the law that was passed needs to be interpreted differently because it didn’t mean what it said it means? sure, i understand that now…. maybe they could have read it before passing it? there had to be some lawyers involved in the writing of this law, so what’s so hard about reading what it says, it’s pretty specific!?
    just because it doesn’t do what some of you expected it to do doesn’t mean much- it was passed and now it’s “settled law”.

  10. J-Dub says:

    your wife has to pay 500$ a month, 12,000$ a year, for insurance

    uh, math…

  11. sam says:


    so the law that was passed needs to be interpreted differently because it didn’t mean what it said it means?

    Let me ask you a question, how would you understand this language? The bolded part —

    c) Failure to establish Exchange or implement requirements
    (1) In general
    (A) a State is not an electing State under subsection (b); or
    (B) the Secretary determines, on or before January 1, 2013, that an electing State—
    (i) will not have any required Exchange operational by January 1, 2014; or
    (ii) has not taken the actions the Secretary determines necessary to implement—
    (I) the other requirements set forth in the standards under subsection (a); or
    (II) the requirements set forth in subtitles A and C and the amendments made by such subtitles;

    the Secretary shall (directly or through agreement with a not-for-profit entity) establish and operate such Exchange within the State and the Secretary shall take such actions as are necessary to implement such other requirements. [42 U.S. Code § 18041 – State flexibility in operation and enforcement of Exchanges and related requirements]

    Isn’t a fair (plausible) reading of that language this: if the State doesn’t set up the state exchange, then the federal government will set up the state exchange (“such Exchange”) for the state?

  12. bill says:

    @sam: semantics, the first appeal saw it as it reads-this looks like some pressuring from above.
    here’s another one, albeit as lame;
    “but your honor, i thought the 60mph speed limit meant i could drive 70mph and be ok as no one was harmed bay my speed….”

  13. pylon says:

    The dissent in Halbig had an excellent analogy.

    If I ask for pizza from Pizza Hut for lunch but clarify that I would be fine with a pizza from Domino’s, and I then specify that I want ham and pepperoni on my pizza from Pizza Hut, my friend who returns from Domino’s with a ham and pepperoni pizza has still complied with a literal construction of my lunch order. That is this case: Congress specified that Exchanges should be established and run by the states, but the contingency provision permits federal officials to act in place of the state when it fails to establish an Exchange. The premium tax credit calculation subprovision later specifies certain conditions regarding state-run Exchanges, but that does not mean that a literal reading of that provision somehow precludes its applicability to substitute federally-run Exchanges or erases the contingency provision out of the statute.

  14. Barry says:

    @bill: “so the law that was passed needs to be interpreted differently because it didn’t mean what it said it means? sure, i understand that now…. ”

    Wiki Chevron.