Stuart M. GersonIn something of a surprise, the Supreme Court today granted certiorari in the Fourth Circuit case of King v. Burwell, in which the court of appeals had upheld the government’s view that the Affordable Care Act makes federal premium tax credits available to taxpayers in all states, even where the federal government, not the state, has set up an exchange. In doing so, the Supreme Court rebuffed the Solicitor General’s request that the Court decline cert. as various cases worked their way through the Courts of Appeals.

It was only a few days ago that the government had filed a brief in anticipation of the December 17 en banc oral argument in Halbig v. Burwell.  As you will recall, a DC Circuit panel held that the Affordable Care Act makes federal premium tax credits available to taxpayers only in states where the state has established an exchange – which is what the ACA literally provides.  On the same day, the Fourth Circuit issued a contrary decision in King v. Burwell, accepting the government’s argument that where HHS sets up an exchange in a state, that is a state exchange. The same argument is being made by the appellant (the government lost in District Court) in Oklahoma ex rel. Scott Pruitt v. Burwell, which is pending before the 10th Circuit.  Immediately following the contradictory decisions of DC Circuit and Fourth Circuit panels, the DC Circuit vacated the panel decision and set the case down for rehearing en banc.

It would now seem likely that all pending cases on the subject of the ACA tax credits will be stayed pending the decision of the Supreme Court, before which the King case will not be argued until early next year.

At issue is whether the program of tax credits applies only in exchanges set up by 16 states, and not at federally-run sites in 34 states. The Obama administration’s economic model for the ACA depends upon the tax subsidies being generally available and therein lies the significance of the case which puts a keystone element of the Affordable Care Act at risk.