Eighteen states filed a legal brief Monday in support of the Obama administration in the fight against whether Obamacare restricted premium subsidies to states that established their own exchanges.
The federal appeals court for D.C. will rehear Halbig v. Burwell en banc in December, after the standard three-judge panel originally ruled Obamacare subsidies for federally-run exchanges illegal in July. Now the full court — with a majority of Democratic-appointed judges — will hear the case over again. (RELATED: DC Circuit Court Will Rehear Obamacare Subsidies Case)
The question is whether Congress meant to restrict Obamacare subsidies to states that built their own exchanges, as an incentive for states not to leave the hefty job to the federal government.
Unsurprisingly, a large group of states — the vast majority of which chose not to build their own exchanges — is siding with the Obama administration in the fight to keep subsidies flowing.
“There is no plausible reason to believe that Congress intended such a draconian result,” the 18 states’ attorneys general wrote in a brief to the D.C. Circuit Court, which is rehearing the case in December.
The plaintiffs in the case argue the reason Congress restricted the subsidies was to incentivize states to build their own exchanges, instead of leaving the responsibility to the federal government.
If the courts decide that subsidies to HealthCare.gov-run exchanges are illegal, most of the 18 states that signed the legal brief Monday would be required to build their own exchanges or watch their customers lose access to lucrative Obamacare subsidies.
California, Maryland and Washington were the only three of the 18 states which signed the brief which did build their own exchanges. The remaining 15 states are at risk for losing their customers’ subsidies if the courts don’t decide in the Obama administration’s favor.
The states with federally-run exchanges have a lot to lose in that case. In Virginia, which led the amicus brief, 82 percent of the 216,000 people who bought Obamacare coverage through HealthCare.gov received subsidies. Thousands would no longer be able to afford their coverage without taxpayer help.
The plaintiffs have updated their case to include comments from one of the White House’s chief Obamacare architects, Jonathan Gruber. At several points after Obamacare was passed, Gruber explained to audiences that the law was supposed to restrict subsidies to state exchanges to push states into taking on the projects themselves. Today, however, Gruber has said his comments were a mistake and supports the Obama administration’s position. (RELATED: Obamacare Architect Says Again That Subsidies Were Only Meant For State Exchanges)
The Supreme Court may decide next Monday to hear a similar case from the Fourth Circuit Court, King v. Burwell.