Update 12:32 pm: The Fourth Circuit Court of Appeals ruled that Obamacare subsidies are legal. Specifically, it upheld the IRS' interpretation of the health care law — that subsidies can be disbursed in states using the federal exchange — "as a permissible exercise of the agency’s discretion," according to the decision.
Original post: A federal appeals court ruled Tuesday in favor of challengers who argue that Obamacare subsidies aren't actually legal in most states in a decision that could threaten the entire health care law. The Obama administration's next move it to appeal the decision to the full circuit court which, according to The National Journal, some allies think is more likely to rule in the government's favor.
According to the Associated Press, a D.C. Circuit Court of Appeals ruled 2-to-1 the Affordable Care Act, as written, only allows premium subsidies in states that built their own exchanges. As we've explained in the past, the law reads that premiums shall be provided through exchanges built by the "State," with the assumption being that most states would create their own exchanges. The government argues that, when several states didn't create their exchanges, they created one for them (the federal exchange). The group suing the government argues that subsidies were meant to be a reward for creating an exchange, while the feds say it was always the intention of lawmakers that every state have subsidies.