Clash: 4th Circuit Upholds Federal Subsidies for Obamacare

Just hours after the U.S. Court of Appeals for the D.C. Circuit struck down Obamacare's subsidies on the federal insurance exchange in a 2-1 ruling, the Fourth Circuit upheld the same subsidies 3-0, setting up a near-certain Supreme Court challenge. Both cases revolve around an interpretation of the literal text of the Affordable Care Act, which provides that subsidies for insurance are available on an "Exchange established by the State."

While the D.C. Circuit's majority held that the plain language of the statute precluded offering the subsidies on the federal exchange, which is the sole Obamacare exchange in 34 state, the Fourth Circuit disagreed. While the court allowed that "there is a certain sense to the plaintiffs’ position," the overall context of the law agreed with the "IRS’s interpretation that credits are available nationwide," and not just the state exchanges, the court held.

Though unanimous, the judges were not confident of their ruling, noting that "the court is of the opinion that the defendants have the stronger position, although only slightly," and that "we are not convinced that either of the purported statutory conflicts render Congress’s intent clear." The uncertainty in the ruling, and the contradiction with the D.C. Circuit, is the kind of ambiguity the Supreme Court usually intervenes to resolve.


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