In a startling ruling this morning, the U.S. Court of Appeals for the Washington, D.C. Circuit said that the insurance subsides given by the federal government to federal ObamaCare exchange are in fact illegal.

This decision in the Jacqueline Halbig v. Sylvia Mathews Burwell case essentially rules that all subsidies that have been given to enrollees in the 36 states that did not start their own exchange are hereby and always have been illegal, meaning that the millions of people who received this money to help pay their ObamaCare bills may have to send that money back to Uncle Sam.

From Peter Suderman at Reason:

Today’s ruling vacates the Internal Revenue Service (IRS) regulation allowing the federal exchanges to give subsidies. The large majority of individuals, about 86 percent, in the federal exchange system received subsidies, and in those cases the subsidies covered about 76 percent of the premium on average.

The essence of the court’s ruling is that, according to the law, those subsidies are illegal. They were always illegal, and the administration never had the authority to offer them.

This may be a crippling blow to ObamaCare and vindication for all the states that opted not to create their own exchange.

“Obamacare is a disaster. The Obama Administration recognized as much by trying to rewrite parts of the law, so today’s decision is a victory for everyone who believes that the President can’t just unilaterally rewrite a law because it turned out to be an inconvenient one. In the competition between executive discretion and the rule of law, this case marks a victory for the rule of law. Although this decision is a clear defeat for the Obama Administration, the Supreme Court is likely to have the last word. Conservatives and libertarians should be thinking hard about whether the next President will appoint justices who will carry out their responsibility to apply the law against an aggressively lawless Administration.” – Carrie Severino of the Judicial Crisis Network

This decision could also spell the death of the employer mandate in states that do not have their own exchange.

An appeal is likely, but if the ruling were to survive, the impact would be tremendous as it wouldn’t just hurt ObamaCare itself but it could also save taxpayers billions of dollars.

From Phil Klein:

It would mean that businesses in states that have a federal exchange would no longer be subject to the employer mandate, because the requirement to provide insurance is tied to the fact that uninsured workers could obtain government subsidies. It would also mean that millions of Americans who signed up for insurance through Obamacare in those 36 states would no longer qualify for subsidies.

The Obama Administration has responded that they would like the entire D.C. Circuit Court to hear the case (this was just a three judge panel).  In the end though this will be decided by the nine most powerful black-robed thinkers in the world: The Supreme Court of the United States.

As state exchanges continue to collapse, governors who chose not to meddle in this bureaucratic mess are looking even more wise today. What does this mean for the 4.7 million Americans who received a subsidy to pay for mandated insurance they couldn’t afford on their own? That remains to be seen, but one thing remains true: state based solutions to our health care crisis are needed now more than ever.

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  1. […] Dealing Huge Legal Blow to Health Law D.C. Appeals Court Overturns Subsidies For Federal Exchange DC Circuit Court Deals Huge Blow to ObamaCare Andrew Kloster at the Heritage […]

  2. […] Dealing Huge Legal Blow to Health LawD.C. Appeals Court Overturns Subsidies For Federal ExchangeDC Circuit Court Deals Huge Blow to ObamaCareAndrew Kloster at the Heritage […]

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