A surprising ruling from the notoriously liberal DC Circuit Court. By a 2-1 vote, judges ruled that the subsidies received by purchasing insurance through healthcare.gov website are invalid.

CNBC:

In a potentially crippling blow to Obamacare, a federal appeals court panel declared Tuesday that government subsidies worth billions of dollars that helped 4.7 million people buy insurance on HealthCare.gov are illegal.

A judicial panel in a 2-1 ruling said such subsidies can be granted only to those people who bought insurance in an Obamacare exchange run by an individual state or the District of Columbia — not on the federally run exchange HealthCare.gov.

"Section 36B plainly makes subsidies available in the Exchanges established by states," wrote Senior Circuit Judge Raymond Randolph in his majority opinion, where he was joined by Judge Thomas Griffith. "We reach this conclusion, frankly, with reluctance. At least until states that wish to can set up their own Exchanges, our ruling will likely have significant consequences both for millions of individuals receiving tax credits through federal Exchanges and for health insurance markets more broadly."

In his dissent, Judge Harry Edwards, who called the case a "not-so-veiled attempt to gut" Obamacare, wrote that the judgment of the majority "portends disastrous consequences."

Indeed, the decision threatens to unleash a cascade of effects that could seriously compromise Obamacare's goals of compelling people to get health insurance, and helping them afford it.

The Obama administration is certain to ask the full U.S. Court of Appeals for the District of Columbia Circuit to reverse the panel's decision, which for now does not have the rule of law.

The reluctance of the majority makes a similar decision by the full appeals court iffy. They may concur with the guts of the ruling but vote to reverse the decision because of the havoc in would create both for consumers and the insurance market. At least, they would use that as an excuse to overturn it.

Ed Lasky adds:

It’s a big blow.

A federal appeals court panel in the District of Columbia struck down a major part of the 2010 health-care law Tuesday, ruling that the tax subsidies that are central to the program may not be provided in at least half of the states

One of the many illegal steps that the White House has taken to make Barack Obama’s signature “achievement” viable they Department of Health and Human Services determined that the Affordable Care Act allowed the federal government to extend subsidies to participants who live in states that decided to set up their own exchanges instead of relying on the federal government’s exchange.Actually, the language in the legislation only allowed those subsidies to be extended to states that set up their own exchanges. The court decided that the law barred the government from giving subsidies to people in states that decided to not to set up their own exchanges and decided to rely on the federal government.
 
The ruling affects 27 states, most with Republican leaders who oppose the law, and another nine states that partially opted out.
 
The lesson: the GOP had it right by standing up for the law and not caving into Barack Obama and the IRS twisting of the law and the facts.

And federal judges have once again dealt the White House a blow (there have been a long series of Supreme Court decisions that have done so on a wide variety of issues involving Obama overreach).

The Washington Post:

The ruling, if upheld, could potentially be more damaging to the law than last month’s Supreme Court decision on contraceptives. The three-judge panel of the D.C. Circuit Court of Appeals sided with plaintiffs who argued that the language of the law barred the government from giving subsidies to people in states that chose not to set up their own insurance marketplaces. Twenty-seven states, most with Republican leaders who oppose the law, decided against setting up marketplaces, and another nine states partially opted out.

The government could request an “en banc” hearing, putting the case before the entire appeals court, and the question ultimately may end up at the Supreme Court. But if subsidies for half the states are barred, it represents a potentially crippling blow to the health-care law, which relies on the subsidies to make insurance affordable for millions of low- and middle-income Americans.

The subsidies are in many cases sizeable, sharply reducing the cost of coverage. In Wyoming, for example, the average consumer who bought a mid-grade plan on the federal marketplace is receiving a subsidy of around $444 per month, cutting the monthly payments to $99, according to federal figures.

About 5.4 million people signed up for health insurance on the federal marketplace through the spring, the government says. Of them, about 87 percent received subsidies.

The plaintiffs in the lawsuit — three private employers and four individual taxpayers — argued that Congress intended for the subsidies to go to people in states that set up their own insurance exchanges. They cited language in the law that said the subsidies would be available to those “enrolled through an Exchange established by the State.”

The plain language of the law -- as well as truth -- as well as the truth was on the side of the plaintiffs.

Recall that no Republicans voted for this law, and thay the Demcorats' rush to get it passed before Sen. Brown took office has caused manifold problems for millions of Americans.

The next Republican president of the United States should give these plaintiffs the Presidential Medal of Freedom instead of the terror supports and celebrities Barack Obama has handed them out to over the years. 

Update from Ed Lasky:

The U.S. Court of Appeals for the District of Columbia Circuit is the court that Obama and the Democrats have wanted to stack the most-besides the Supreme Court of course. This is the key court that could serve as a roadblock to delay or derail the liberal agenda. I wrote about Harry Reid’s abolition of the filibuster and the liberals’ goal of seizing control of this particular court in Dems Plot to Control America.

Some language from Jennifer Rubin:

The court held:

We conclude that appellants have the better of the argument: a federal Exchange is not an “Exchange established by the State,” and section 36B does not authorize the IRS to provide tax credits for insurance purchased on federal Exchanges. We reach this conclusion by the following path: First, we examine section 36B in light of sections 1311 and 1321, which authorize the establishment of state and federal Exchanges, respectively, and conclude that section 36B plainly distinguishes Exchanges established by states from those established by the federal government. . . .

The government urges us, in effect, to strike from section 36B the phrase “established by the State,” on the ground that giving force to its plain meaning renders other provisions of the Act absurd. But we find that the government has failed to make the extraordinary showing required for such judicial rewriting of an act of Congress. Nothing about the imperative to read section 36B in harmony with the rest of the ACA requires interpreting “established by the State” to mean anything other than what it plainly says.

In point of fact, congressional intent in this case is sort of a fiction, since few read the bill and really understood it. That said, the plain language of their own handiwork has come back to bite the Democrats.

Todd Gaziano of the conservative-libertarian Pacific Legal Foundation explains:

The decision striking down the administration’s “creative” interpretation equating state exchanges with those run by federal bureaucrats is not the least bit surprising. The administration essentially argued that when Congress used the word “state” it also meant the national government. The administration constantly tries to undermine the Constitution’s dual sovereignty-federalism structure, but the courts know it is a fundamental background principle. Thus, the courts are not likely to believe Congress means the federal government when it uses the word “state.” Moreover, the administration’s attempted jujitsu of the Obamacare statute in many other instances is simply losing all credibility with honest and intelligent people. (snip)

There are a number of immediate ramifications:

Democrats will be hard-pressed to come up with their alternative to Obamacare — or do they really think Congress will “fix” a law this unpopular?

The GOP better get on the ball and come up with its alternative. Now is certainly the time.

The midterms, and more so the 2016 elections, become an even stronger referendum on Obamacare — Democrats will want to “fix” it and Republicans will want to replace it.

This is a nightmare for red-state Democrats who will have to say whether they’d vote to reinstate the subsidies or not.