Today was, ironically, a victory for Obamacare but a defeat for President Obama, as the D.C. Circuit upheld the text of the law over IRS attempts to rewrite it through regulation. The court came to the unremarkable but nonetheless controversial conclusion that, as Judge Randolph’s concurrence put it, “an Exchange established by the federal government cannot possibly be ‘an Exchange established by the State.’” This commonsense holding is another major defeat for the administration in its attempts to shore up the president’s namesake legislation through the clever use of pens, phones, and politicized regulators.
As Jonathan Keim and I have described (see our amicus brief, three-part series, oral-argument discussion, and post-argument commentary), this case addresses attempts by the IRS to expand the scope of Obamacare’s premium subsidies. The law only provides those credits for plans purchased on exchanges “established by a State under section 1311” of the Affordable Care Act. As it turns out, just 14 states (and the District of Columbia) established their own exchanges, leaving the federal government to establish exchanges for the remaining 36 states.