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Obamacare lawsuit losers say D.C. Circuit needs to hear their appeal now

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Plaintiffs on the losing side of a judge’s decision this week to let subsidies flow to all eligible Obamacare enrollees — no matter where they live — say they want an appeals court to hear them out by March.

Several employers and individuals sued the Obama administration over an IRS rule that says enrollees in both the state-operated and federally run health insurance markets would be eligible for premium tax credits under the Affordable Care Act. The law, they argued, clearly states the credits are limited to health exchanges established by states.

U.S. District Court Judge Paul L. Friedman, presiding in Washington, disagreed with them on Wednesday, ruling Congress never intended to treat residents of some states differently than others. The decision was a big win for the Obama administration, because cutting off subsidies to nearly three dozen states could have gutted the reforms.

On Thursday, the plaintiffs’ attorneys asked the D.C. Circuit Court for an expedited appeal. They said the regulation took effect this year, so time is of the essence.

“Starting this month, the federal government has begun to send to insurers literally billions of subsidy dollars each month, to help pay premiums for coverage purchased on federal Exchanges,” attorney Michael A. Carvin said in his filing. “Those payments are illegal.”

“If the IRS Rule is invalidated, the ACA requires the government to claw back some of those funds from low- and middle-income Americans who right now are purchasing coverage on the premise of heavy subsidies,” he added. “That is profoundly unfair—and, as the months pass and the sums mount, the unfairness will grow.”

Plaintiffs in the case, Halbig v. Sebelius, and in similar lawsuits say the issuance of subsidies to federally run exchanges has exposed their states to Obamacare’s “employer mandate,” which will take effect next year. 

That’s because large employers who do not provide health coverage to their full-time workers are penalized once someone takes advantage of a premium tax credit on the exchange.

One of the D.C. plaintiffs, David Klemencic, is attacking the IRS rule from a different angle. He said he would have qualified for a financial hardship exemption from the Obamacare’s individual mandate, which requires almost all Americans to obtain health coverage. 

But when subsidies flowed to his home state of West Virginia, which is using the federal exchange in a state-federal partnership, the coverage became “affordable” under the law and subjected him to the mandate.

 

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