On Tuesday a federal judge denied a request from the Justice Department to dismiss a lawsuit aiming to block health care subsidies in states not running their own healthcare exchange sites. Put another way, if the plaintiffs in Halbig v. Sebelius win this case, low- and middle-income individuals in 34 states won't get subsidized health care. The only good news for people expecting those subsidies is that the judge, U.S. District Judge Paul Friedman, decided not to block the subsidies while the case moves forward.
Friedman heard arguments on Monday from the Justice Department and the plaintiffs, four individuals and three employers from states that declined to run their own exchanges. The Affordable Care Act offers subsidies in the form of tax credits to people who buy insurance through exchanges "established by the state," and the case comes down to what Congress actually meant by that. The Justice Department is arguing that Congress obviously meant all the exchanges, and that the Department of Health and Human Services intended to "stand in the shoes” of the states that allowed the federal government to run their exchanges for them, according to The Washington Times. The challengers are arguing that the Internal Revenue Service ignored the wording in the bill when it publicized that applicants on both kinds of exchanges would get subsidies. They also believe Congress used the subsidies as a way to motivate states to create their own exchanges, meaning the states that didn't create their own exchanges are out of luck.