DOJ Files Brief in Halbig Case; No SCOTUS Action Yet on King Case

On Monday, the Department of Justice filed a brief with the full U.S. District Court of Appeals for the District of Columbia in Halbig v. Burwell, arguing that the federal government can provide subsidies to U.S. residents who purchase coverage through the Affordable Care Act's federal insurance exchanges, AP/U-T San Diego reports (AP/U-T San Diego, 11/3).

Background

Halbig v. Burwell targets a May 2012 Internal Revenue Service rule that allows subsidies to be offered through the federal exchange.

The suit's 12 plaintiffs -- including a hospital chain and a restaurant franchise -- argued that the IRS rule should be invalidated because it contradicts what Congress originally intended in the ACA. Numerous ACA opponents also have argued that IRS exceeded its legal authority by issuing the rule.

Two judges on a three-judge panel for the U.S. District Court of Appeals for the District of Columbia wrote that the ACA "does not authorize the IRS to provide tax credits for insurance purchased on federal exchanges." Instead, the law "plainly makes subsidies available only on exchanges established by states."

DOJ in a petition asked for an en banc -- or full court -- review of the decision, and the court in September agreed to do so (California Healthline, 9/4). Oral arguments are set to begin on Dec. 17.

Details of DOJ Brief

In its brief, DOJ argued the insurance subsidies for the federal exchange are crucial to functioning of the exchanges overall.

DOJ wrote, "Unsurprisingly, the [ACA's] text and structure demonstrate that those federal tax credits are available to Americans in every state." In addition, DOJ noted that the law requires federal exchanges to report data to the Department of Treasury to verify the accuracy of subsidy allocations, adding, "It would make no sense to require federally facilitated exchanges to submit those reports if tax credits were categorically unavailable to their customers" (AP/U-T San Diego, 11/3).

18 State Attorneys General File Halbig Amicus Brief

Meanwhile, 18 state attorneys general on Monday filed an amicus brief in support of the Obama administration's Halbig position that subsidies should be available through federally run exchanges, Modern Healthcare reports. According to Modern Healthcare, the attorneys general are all Democrats, but they represent states with federally operated exchanges and state-run exchanges.

The attorneys general wrote, "If appellants' erroneous construction of the ACA were adopted, it would deprive millions of low- and moderate-income Americans of billions of dollars in federal premium assistance needed to buy health insurance, and it would disrupt state insurance markets throughout the [U.S.]." They added, "Even states that operate their own exchanges are concerned that insurance-market failures in (federal exchange) states would ripple into their own insurance markets, threatening the ability of the ACA to operate as a comprehensive nationwide program" (Schencker, Modern Healthcare, 11/3).

Supreme Court Takes No Action on King v. Burwell

In related news, the Supreme Court on Monday did not announce whether it would hear King v. Burwell, a case that also involves the legality of subsidies in the federal exchanges, although the high court could still decide the issue at a later date, Reuters reports.

The 4th U.S. Circuit Court of Appeals ruled to uphold the subsidies. Plaintiffs in the case then asked the Supreme Court to review the issue (Hurley, Reuters, 11/3).

Monday is the first day the high court might have announced such a decision, according to CQ Roll Call (Ruger, CQ Roll Call, 11/3). However, the high court did schedule another meeting about King for Nov. 7, and announcements about Supreme Court plans typically are released the Monday after such meetings, according to Modern Healthcare (Modern Healthcare, 11/3).