Today the D.C. Circuit Court of Appeals dealt a blow to the Obama administration, ruling that the language of the Obamacare law only established federal subsidies for individuals enrolling in state-run health care exchanges, not for individuals enrolling in federal-run state-level health care exchanges.
Since 36 states (the administration might deem it 27 states based on nine states’ cooperation with federal exchanges) have opted not to run their own exchanges, this ruling has significant implications for the practical implementation of Obamacare.
Section 36B of the Internal Revenue Code (enacted as part of Obamacare) allows the IRS to make subsidies available to residents who buy health insurance through a state-run exchange. While lawmakers assumed every state would open an exchange, 36 states chose not to do so. In those states, the federal government established exchanges, and the IRS claimed it could extend the subsidies to individuals purchasing insurance through the federally-run exchanges.
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