Why the White House thinks it will win latest Obamacare legal battle

Even before a federal appeals court in Virginia sided with the White House, the Justice Department said the D.C. Circuit's decision is 'inconsistent with congressional intent.'

Jacquelyn Martin/AP
White House press secretary Josh Earnest speaks during his daily news briefing at the White House in Washington, July 15, 2014.

The White House offered a confident response when an appeals court in Washington struck down a key provision of Obamacare that provides insurance subsidies to 4 million Americans living in states that do not operate their own health insurance marketplaces.

“We are confident in the legal basis that supports our case,” White House Press Secretary Josh Earnest told reporters at a briefing Tuesday. “Our confidence is rooted in the fact that it is pretty obvious what the congressional intent was here.”

He was responding to a 2-to-1 decision by the US Court of Appeals for the District of Columbia that Americans enrolled in Obamacare through the federal health insurance exchange are not entitled to the subsidies that make the health care affordable.

The response from the Justice Department was even more assertive. “We believe that this decision is incorrect, inconsistent with congressional intent … and at odds with the goal of the law: to make health care affordable no matter where people live,” spokeswoman Emily Pierce said in a statement.

Those confident statements were issued hours before the federal appeals court in Richmond, Va., issued a unanimous decision later Tuesday siding with the administration’s position. At issue: whether the Internal Revenue Service had correctly followed the will of Congress when it allowed consumers in all 50 states to purchase subsidized coverage instead of limiting the benefit to those living in the 14 states that have set up their own insurance marketplaces.

The Obama administration’s confidence apparently is tied to a two-pronged strategy. First, Mr. Earnest said the Justice Department “will ask for a ruling by the full D.C. Circuit.” The initial ruling came from a panel of three judges – two of whom were appointed by Republican presidents and one by a Democrat. On the full 11-judge court are seven members appointed by Democrats, including four appointed by Mr. Obama.

“The split in the appeals courts, if it remains after potential [full panel] reviews, would practically guarantee Supreme Court review,” writes Lyle Denniston on the influential SCOTUSblog.

If the full D.C. panel ends up agreeing with the administration’s position, Obamacare could avoid a return to the Supreme Court, notes Walter Dellinger, former US solicitor general. He told Bloomberg News that if the full D.C. court agrees with the one in Virginia, the Supreme Court “could just leave this alone where Congress intended it.”

While the Obama administration says it is confident that its position is based on clear congressional intent and will prevail, a Supreme Court battle on the issue would still have risks.

On the one hand, the Obama administration may feel confident about prevailing given that the Supreme Court in 2012 ruled Obamacare was constitutional, although it limited the funds states would lose if they did not comply with new Medicaid eligibility requirements. Cornell University Professor Michael Dorf told Bloomberg that the same justices who upheld the Affordable Care Act in 2012 may do so again.

But it is far from clear that the administration would prevail. For example, in an unrelated case decided last year, Justice Elena Kagan, an Obama appointee, wrote that, “this court does not revise legislation … just because the text as written creates an apparent anomaly as to some subject it does not address.”

So why not just fix the language in the Affordable Care Act to clear up any confusion about subsidies for residents of states that did not set up insurance marketplaces? 

“The president has said countless times that he’s willing to work with Democrats and Republicans in Congress to make improvements to the law,” spokesman Earnest said Tuesday. “But the prospects for that – considering that Republicans have voted more than 50 times to repeal the entire law – the prospects for the kind of legislative fix that might actually improve the law seem rather unlikely.”

Until the court cases are settled, neither court’s rulings affect the Affordable Care Act or the people covered by it.

Material from the Associated Press was included in this story.

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