The U.S. Department of Justice on Friday asked the full U.S. Court of Appeals for the D.C. Circuit to review a divided panel’s “blinkered view” that subsidies are not available to individuals who buy health insurance on federally created exchanges under the Affordable Care Act.
The department’s request in Halbig v. Burwell came less than 24 hours after the challengers in King v. Burwell filed a petition in the U.S. Supreme Court asking the justices to review the opposite ruling by a unanimous Fourth Circuit three-judge panel.
Both Halbig and King contend that a provision in the ACA authorizes subsidies, in the form of tax credits, only for purchases on exchanges “established by the state.” An Internal Revenue Service rule that interprets that provision to authorize subsidies on federal exchanges as well, they argue, violates the plain language of the law.
The two cases are being coordinated and funded by the Competitive Enterprise Institute. Jones Day’s Michael Carvin represents the plaintiffs in both suits.
In seeking review by the full D.C. Circuit, the government argues that the panel majority, led by Judge Thomas Griffith, failed to find an interpretation of the challenged provision that would treat the law as a symmetrical and coherent scheme.
“The majority presumed that its blinkered view of the plain meaning of a single phrase in Section 36B was correct and asked only whether that interpretation would ‘render … other provisions of the ACA absurd,’ ” the government’s brief said. “ Each step of that analysis was wrong.”
Under the panel majority’s interpretation, the government said, “The ‘millions of individuals’ currently receiving tax credits through federally facilitated exchanges would lose their eligibility for subsidies, and the statutory guarantee of affordable insurance would be rendered illusory. In turn, the individual coverage provision would cease to apply to millions of people who would then fall within its unaffordability exemption.”
The resulting loss of participants “would ‘bode ill for individual insurance markets,’ which would be threatened with the death spiral the ACA was crafted to avoid,” the government added.
The government argues that the statute’s text, when considered in light of its context, structure, history and purpose, “makes clear that Congress intended an exchange to operate effectively in each state; intended each state to have a real choice between alternative ways to establish the same exchange; and intended tax credits to serve their necessary and intended function throughout the country.”
The IRS rule, it concludes, is a reasonable interpretation and is entitled to deference.
Only the 11 active judges vote on whether to hear a case en banc. If they agree to hear the case, the panel’s ruling is automatically vacated. A decision to rehear Halbig also could cause the Supreme Court to wait for the circuit’s decision before deciding whether to hear the King petition.
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