The Affordable Care Act survived another legal battle on Wednesday. A federal judge in Washington, D.C., rejected a lawsuit against the tax credit provision brought forward in Halbig v. Sebelius.
In the case, the plaintiffs alleged that by providing tax credits to people in the federal marketplace, the Internal Revenue Service had overstepped its legal boundaries. The tax credits, they argued, were intended to be used in states with state-based exchanges only.
Judge Paul Friedman wrote in his opinion: “[T]here is no evidence that either the House or the Senate considered making tax credits dependent upon whether a state participated in the Exchanges. To the contrary, Congress assumed that tax credits would be available nationwide.”
Friedman also wrote that the plaintiffs’ argument was largely contingent on the idea that the subsidies were intended to bolster state participation. However, he concludes there is “no evidence in the legislative record” suggesting this to be Congress’ intention when creating the subsidies.
Instead, he said it was the intent of Congress that the subsidies be available nationally, and the IRS must act accordingly. By providing subsidies for federal and state exchanges, the agency is within Congressional guidelines.
Families USA, an organization that favors the health care law and filed a friend of the court brief in the case, reacted positively to the outcome. Ron Pollack, Families USA’s executive director, said that the decision is a key victory for supporters of the law.
“Now that the last-ditch legal claim by Affordable Care Act opponents has failed, millions of moderate-income Americans in every state will be eligible for robust financial assistance when they buy a private health plan of their choice,” Pollack said in a statement.
Sam Kazman, general counsel for the Competitive Enterprise Institute — one of the groups coordinating the lawsuit — responded to the ruling in a blog post. Kazman said it delivered “a major blow” to states that chose not to create an exchange.
“In upholding this IRS regulation that is contrary to the law enacted by Congress, this decision guts the choice made by a majority of the states to stay out of the exchange program,” Kazman wrote. “ Worst of all, it gives a stamp of approval to the Administration’s attempt to substitute its version of Obamacare for the law that Congress enacted.”
Kazman also contends that by treating states and the federal government identically, ”erasing the distinction between functions carried out” by the entities, “ the ruling undercuts some basic aspects of federalism.” Kazman says the decision has been appealed.
In addition to the appeal, cases are pending in the federal courts of Virginia, Oklahoma, and Indiana.