BREAKING: ObamaCare in big trouble as federal court nixes subsidies

In a ruling that poses a much bigger threat to ObamaCare than the Hobby Lobby ruling - and we're talking about a potentially existential threat here - a panel of the U.S. Court of Appeals in Washington D.C. has ruled that the federal government cannot provide direct insurance subsidies to people who sign up for ObamaCare in the 36 states that opted not to set up their own exchanges.

The whole premise of the "affordable" part of the so-called Affordable Care Act was that, if you couldn't afford your premiums, the government would subsidize them. That is now out the window in all but 14 states. The Wall Street Journal reports:

The court sided with challengers, four individuals and three employers, who argued the health law allowed subsidies only for insurance purchases made through state exchanges. The issue became an important one after the law was enacted because more than two-thirds of the states chose not to set up their own exchanges, relying on federally-run exchanges instead. The appeals court's opinion, by Judge Thomas Griffith, a George W. Bush appointee, acknowledged that the decision has "major consequences," but the court said the IRS rule wasn't a permissible interpretation of the health law. Both judges in the majority were appointed by Republican presidents.

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Judge Harry Edwards, a Jimmy Carter appointee, said in dissent that the ruling "portends disastrous consequences." The law requires most Americans to carry health insurance or pay a tax penalty. The subsidies were designed to work in tandem with the insurance mandate to make coverage more affordable for lower-income individuals. More than 5 million Americans have selected a private plan through federal health exchanges and the majority received financial assistance, according to a June report by the Department of Health and Human Services. They pay an average of $82 a month in premiums, 76% less than the full premium.

The basis for the ruling is important. The law is expressly written to require subsidy-eligible plans to be purchased through state exchanges. There is no provision authorizing premium subsidies for plans bought in any other way. It represents one of the most egregious of the many errors made in the boneheaded writing of this law. If subsidies are only possible through plans bought on state exchanges, and states can opt out of establishing exchanges, what do you think is going to happen? The Obama Administration, as is its wont, just decided to ignore that provision in the law and go ahead and pay the subsidies anyway. The courts put a stop to that, which is exactly what they are supposed to do. Now this is not over. The three-judge panel is only a portion of the full D.C. Court of Appeals. The Obama Administration has the option of either appealing to the full Appeals Court panel or appealing straight to the U.S. Supreme Court. Given the far more liberal makeup of the Court of Appeals, they will surely try their luck there, and don't be surprised if this ruling is overturned. But even if that happens, it is likely to end up before the Supreme Court anyway. And if they rule against the administration, I honestly don't see how ObamaCare can survive. Second chance for Chief Justice Roberts to get it right?