'Obamacare' finds a new Supreme Court challenge

WASHINGTON -- The Supreme Court agreed Friday to hear a new challenge to President Barack Obama's health care law -- a case that threatens subsidies that help millions of low- and middle-income people afford their health insurance premiums.

The justices said they will review a federal appeals court ruling that upheld IRS regulations that allow health-insurance tax credits under the Affordable Care Act for consumers in all 50 states. Opponents argue that most of the subsidies are illegal.

The long-running political and legal campaign to overturn or limit the 2010 health overhaul will be making its second appearance at the Supreme Court. The justices upheld the heart of the law in a 5-4 decision in 2012 in which Chief Justice John Roberts provided the decisive vote.

The case probably will be argued the first week in March, with a decision expected by late June.

White House press secretary Josh Earnest promised a vigorous defense before the high court.

"This lawsuit reflects just another partisan attempt to undermine the Affordable Care Act and to strip millions of American families of tax credits that Congress intended for them to have," Earnest said.

In the appeal accepted Friday, opponents of the subsidies argue that the court should resolve the issue soon because it involves billions of dollars in public money.

"The need for a quick and final resolution of this question is undeniable. This 'subsidies-for-everyone' rule affects nearly every person across the country, health insurance policyholders, workers and employers, taxpayers, and state and local governments," said Sam Kazman, general counsel of the Competitive Enterprise Institute, which is paying for the legal challenges to the health care law.

The health care law provides taxpayer-subsidized private health insurance for people who don't have access to coverage on the job. More than 7 million people are currently enrolled and most are getting help, which is keyed to household income and the cost of a benchmark plan.

The issue at the Supreme Court is whether the wording of the law limits insurance tax credits only to consumers who live in states that have set up their own insurance markets, known as exchanges.

Only 16 states have set up their own exchanges, the Obama administration said in court papers. In the other 34 states, more than 4.5 million people are receiving subsidies to pay their insurance premiums. And the aid is considerable, covering an average of 76 percent of the premiums.

Customers now pay an average of $82 on total monthly premiums averaging $346. The federal subsidy of $264 a month makes up the difference.

What made the court's intervention on Friday surprising was the lack of disagreement among federal appeals courts that typically is a requirement for Supreme Court review. Justice Ruth Bader Ginsburg cited the absence of conflicting rulings when the justices rejected gay marriage appeals last month.

But at least four justices, needed to grant review, apparently agreed with the challengers that the issue is important enough to decide now.

Supporters of the health care law were flabbergasted and accused the court of veering into politics. The news came a week ahead of the second open enrollment season for subsidized private health insurance under the law.

"All of the general guidelines that the court traditionally uses in determining whether it should schedule an appeal are totally absent in this case," said Ron Pollack, executive director of Families USA, an advocacy group that supported Obama's health overhaul from its inception. Pollack called the court's action "an unusual political act."

The legal challenge to the subsidies is "the most serious existential threat" facing the Affordable Care Act, said Pollack.

When the court upheld the law in 2012, it still made a major change by ruling that the law's Medicaid expansion for low-income people was optional for states. So far 27 states and the District of Columbia have accepted it. This week's Republican election success makes it unlikely that the remaining 23 states will move any time soon.

The subsidies issue is being fought in several courts. In July, the Richmond, Virginia-based appeals court upheld Internal Revenue Service regulations that allow health-insurance tax credits under the law for consumers in all 50 states.

On that same July day, a panel of appellate judges in the District of Columbia, sided with the challengers in striking down the IRS regulations. The Washington court held that under the law, financial aid can be provided only in states that have set up their own exchanges.

In October, 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 Dec. 17, but that case now recedes in importance with the Supreme Court's decision to step in.

The case is King v. Burwell, 14-114.

Associated Press writers Ricardo Alonso-Zaldivar and Darlene Superville contributed to this report.

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