In a 2-1 decision, a panel of the U.S. Court of Appeals for the D.C. Circuit has struck down an IRS rule providing subsidies for participants in health-care exchanges in states where the exchanges were established by the federal government, not the states. In other words, according to the court, although Congress intended that the federal government would establish health-care exchanges where states do not do so, government subsidies to help individuals buy health care would only be available where the states themselves set up the exchanges (which, as the majority notes, is the case in just 14 states plus D.C.).
From the majority:
Because we conclude that the ACA unambiguously restricts the section 36B subsidy to insurance purchased on Exchanges “established by the State,” we reverse the district court and vacate the IRS’s regulation.
At least until states that wish to can set up Exchanges, our ruling will likely have significant consequences both for the millions of individuals receiving tax credits through federal Exchanges and for health insurance markets more broadly. But, high as those stakes are, the principle of legislative supremacy that guides us is higher still. Within constitutional limits, Congress is supreme in matters of policy, and the consequence of that supremacy is that our duty when interpreting a statute is to ascertain the meaning of the words of the statute duly enacted through the formal legislative process.
From the dissent:
Appellants’ proffered construction of the statute would permit States to exempt many people from the individual
mandate and thereby thwart a central element of the ACA. . . .
It is inconceivable that Congress intended to give States the power to cause the ACA to “crumble.”
Here is the Washington Post's initial report. With either en banc or Supreme Court review (or both) possible, I suspect this isn't the last word on the matter.