Health overhaul subsidies may go to U.S. Supreme Court

WASHINGTON -- Supreme Court justices have their first chance this week to decide whether they have the appetite for another major fight over President Barack Obama's health care law.

Some of the same players who mounted the first failed effort to kill the law altogether now want the justices to rule that subsidies that help millions of low- and middle-income people afford their premiums under the law are illegal.

The challengers are appealing a unanimous ruling of a three-judge panel of the federal appeals court in Richmond, Virginia, that upheld Internal Revenue Service regulations that allow health-insurance tax credits under the Affordable Care Act for consumers in all 50 states. The appeal is on the agenda for the justices' private conference Friday, and word of their action could come as early as Monday.

The fight over subsidies is part of a long-running political and legal campaign to overturn Obama's signature domestic legislation by Republicans and other opponents of the law. Republican candidates have relentlessly attacked Democrats who voted for it, and the partisanship has continued on the federal bench. Every judge who has voted to strike down the subsidies was appointed by a Republican president.

The appeal has arrived at the Supreme Court at a curious time; there is no conflicting appeals court ruling the justices often say is a virtual requirement for them to take on an issue. Justice Ruth Bader Ginsburg cited that practice, for example, as a reason she and her colleagues decided not to take on the same-sex marriage issue. And in the gay marriage cases, both sides were urging the court to step in.

That's not the case with the health-care subsidies. The Obama administration argues there is no "reason for this court to depart from its usual course" and hear the dispute over subsidies now.

There was a brief split between appellate courts. On July 22, just a couple of hours before the Richmond-based court issued its decision, a three-judge panel of the federal appeals court in Washington, D.C., voted 2-1 to strike down the IRS regulations. The D.C. court held that under the law, financial aid can be provided only in states that have set up their own insurance markets, or exchanges.

The ruling created a big problem for the administration, which noted in its high-court filing that the federal government is running the markets, or exchanges, in 34 states and that nearly 5 million people receive subsidies that allow them to purchase health insurance through those exchanges.

For those federal exchange consumers, the subsidies cover 76 percent of their premiums, on average. Customers now pay an average of $82 on total monthly premiums averaging $346. The federal subsidy of $264 a month makes up the difference.

But last month, the entire Washington appeals court voted to rehear the case and threw out the panel's ruling, eliminating the so-called circuit split. The appeals argument has been scheduled for mid-December, meaning a decision almost certainly would come too late to be considered by the Supreme Court this term.

Michael Carvin, the lawyer for four Virginians who object to the subsidies, said the court must act now because "billions of taxpayer dollars are flowing out of the Treasury" in subsidies. Similar lawsuits are pending elsewhere and a federal judge in Oklahoma recently struck down the regulations. The appeals courts probably will be divided over the issue at some point, Carvin said.

"We think it would be a mistake to wait. It doesn't mean the justices might not wait," said Carvin, who argued before the court in the momentous health care case in 2012. Chief Justice John Roberts provided the margin of victory for the administration in the 5-4 ruling that upheld the law.

But it doesn't take a majority to hear a case; the votes of four justices will do. The four dissenters in the 2012 case could, then, opt to have the court hear the case now.

"I would not be shocked, but I would be surprised," said Irv Gornstein, executive director of Georgetown University's Supreme Court Institute.