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Justice Department seeks appeal in health overhaul case

Subsidies at risk under ruling

WASHINGTON — The Justice Department asked a full federal appeals court Friday to take up a case that has endangered subsidies helping millions of low- and middle-income people to afford their premiums under the federal health care law.

Last week, a divided three-judge panel of the US Court of Appeals for the District of Columbia Circuit said financial aid can be provided only in states that have set up their own insurance markets, or exchanges.

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To date, 16 states have set up their own exchanges. Thirty-four states have opted to have the federal government establish exchanges on their behalf.

Two judges nominated by Republican presidents formed the majority over a dissent from a Democratic appointee.

In an appeals court filing Friday, the Justice Department said that if last week’s ruling is ultimately sustained, the decision will impose a severe hardship on millions of people who are receiving tax credits through federally facilitated exchanges.

The Justice Department said the disruption threatened by the panel majority’s ‘‘erroneous interpretation’’ presents a question of exceptional importance warranting consideration by the full court. A majority would have to agree to the Justice Department’s request.

The department also noted that a three-judge panel of the Fourth US Circuit Court of Appeals in Richmond unanimously came to the opposite conclusion last week, ruling that the Internal Revenue Service correctly interpreted the will of Congress when it issued regulations allowing health insurance tax credits for consumers in all 50 states.

The Justice Department said the disruption threatened by the panel majority’s ‘erroneous interpretation’ presents a question warranting consideration by the full court.

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In the case in Washington, the judges’ decision precluded the IRS from providing tax credits to people in the 34 states that allowed the federal government to establish exchanges.

In challenging the reasoning of the opinion from last week, the Justice Department said a provision of the Affordable Care Act requires the state and federally facilitated exchanges to report information to the IRS for use in administering tax credits.

The department pointed out that there would be no reason to apply the reporting requirement to federal exchanges if the tax credits were available only on state-operated exchanges.

If the full court decides to take the case, the balance would shift — with eight Democratic nominees and five Republican nominees hearing the case.

There are 11 judges on the appeals court.

Two judges on the case last week are judges with senior status and would sit with the full court. One was nominated by a Republican president and the other by a Democratic president.

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