Appeals court to reconsider Obamacare subsidy system

A federal appeals court in Washington on Thursday agreed to reconsider an earlier ruling that called into question Obamacare subsidies.

The U.S. Circuit Court of Appeals for the District of Columbia granted an Obama administration request to have its full complement of judges re-hear a challenge to regulations that allow health insurance tax credits under the Affordable Care Act for consumers in all 50 states.

In July, a three-judge panel of the appeals court ruled that only consumers shopping in state-run Obamacare marketplaces are eligible for subsidies. More than half of the states rely on federally-run marketplaces, and were subsidies not available in those states, Obamacare could be too costly for many customers.

However, that same day in July, a panel of appellate judges in Richmond, Virginia, unanimously ruled that the administration could give subsidies to consumers in all 50 states. Following the conflicting appeals court rulings, Obamacare opponents asked the Supreme Court to take up the case.

Now that the full D.C. Circuit Court of Appeals is slated to re-hear the case (called Halbig v. Burwell) on Dec. 17, the chances of the case going all the way to the Supreme Court are diminished.

If the full court comes out in favor of the administration, the prospect of Supreme Court involvement would be greatly reduced. On the other hand, if the full Washington court essentially reinstates the original decision, then the Supreme Court would almost certainly weigh in. Under that scenario, the justices probably would not render a decision until the spring of 2016.

In the first appellate ruling on July 22, two Republican-appointed judges ruled against the administration, with a Democratic appointee dissenting. They said that under the law, financial aid can be provided only in states that have set up their own insurance markets, or exchanges. The unanimous Richmond panel that upheld the law's financing was made up of three Democrats.

The Washington court that will hear the case has seven judges appointed by Democratic presidents, including four by Obama, and four by Republican presidents. Two senior judges on the initial panel, one Democrat and one Republican, also may choose to weigh in, under appeals court rules.

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.

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