WASHINGTON — A federal judge in Washington rejected a lawsuit today that would have gutted President Barack Obama’s health-care law by preventing the government from giving out subsidies to people buying health insurance in dozens of states.
The federal subsidies are critical to the law because they reduce monthly premiums, in some cases drastically, for the vast majority of people buying coverage on new online insurance marketplaces. Starting this year, most Americans must have health insurance or face a fine.
The plaintiffs, three private employers and four individual taxpayers, had argued that people were only entitled to the subsidies if they lived in states that opted to set up their own insurance exchanges. Thirty-four states did not, leaving the task to the federal government.
They cited language in the law that said the subsidies would be available to those “enrolled through an Exchange established by the State.”
But U.S. District Judge Paul Friedman sided with the federal government, saying that the phrase was out of context. “One cannot look at just a few isolated words . . . but also must at least look at the other statutory provisions to which it refers,” Friedman wrote in his 39-page opinion.
Sam Kazman, general counsel for the Competitive Enterprise Institute, which is funding the plaintiffs’ case, said the plaintiffs have filed an appeal.
It is the furthest along of four cases moving through the courts using the same rationale.
Kazman said the ruling “delivers a major blow to the states that chose not to participate in the Obamacare insurance exchange program. It is also a blow to the small businesses, employees and individuals who live in those states as well.”
But it provided a measure of relief to the law’s advocates, who had expected a favorable outcome but kept close tabs on the case because it could have disastrous consequences for the law.
Among the lawsuits challenging the Affordable Care Act, this one represented the “greatest existential threat,” said Ronald Pollack, executive director of Families USA, an advocacy group. “The fact that the judge has ruled so clearly and emphatically . . . protects the long term stability of the Affordable Care Act.”