The issue being reviewed is whether the federal government may lawfully offer subsidies to millions of Americans to coerce them into buying health insurance on the exchanges. Most states declined to set up state health insurance exchanges, despite large money incentives in Obamacare. There is one big problem in the fine print: the federal government is authorized to provide subsidies only to people who buy health insurance on the state exchanges. If a state declines to set up an exchange (which is the case now in most states), then the federal government is not allowed to subsidize the cost of insurance in those states. Without these subsidies, there is a big decline in the number of people who sign up for Obamacare.
Lawsuits immediately began seeking to stop these subsidies by getting a court to rewrite the wording of the Obamacare law. On the same day earlier this year, a 2-1 panel of the D.C. Circuit invalidated the subsidies under Obamacare, while a 3-0 panel on the more liberal 4th Circuit upheld the subsidies. This created a “Circuit split,” rendering it likely that the U.S. Supreme Court would take the case and decide whether the subsidies are lawful or not. If the Court finds the subsidies are not lawful, then Obamacare will lose any remaining validity.
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