The Affordable Care Act—at least the version that passed in 2010—instructed the states to establish insurance exchanges, and if they didn't the Health and Human Services Department was authorized to build federal exchanges. The law says that subsidies will be available only to people who enroll "through an Exchange established by the State." The question in Halbig is whether these taxpayer subsidies can be distributed through the federal exchanges, as the Administration insists.
Democrats actually thought that all the states would embrace ObamaCare but 34 states opted out, and two others didn't meet all the HHS mandates by deadline.
So in 2012, HHS and the IRS took it upon themselves to rewrite the law and published a regulation decreeing that subsidies would be available through the federal exchanges too.
The three judge panel "includes Judges Thomas Griffith (a George W. Bush nominee), A. Raymond Randolph ( George H.W. Bush ) and Harry Edwards ( Jimmy Carter )."
The fear of an adverse panel ruling is one reason that Senate Democrats broke the filibuster rule to pack the D.C. Circuit with three more liberals this year. If the Administration loses at the panel level, it will ask for an en banc ruling that it thinks it will win and thus delay any Supreme Court judgment by many months Fear of legal defeat also explains why the Administration is suddenly claiming that the appeals court lacks the jurisdiction to invalidate its interpretation of ObamaCare.
Last week the Justice Department submitted a so-called 28(J) letter, declaring that because Halbig is not a class action, any adverse ruling only applies to the named plaintiffs. In other words, even if the court finds that the Administration is acting illegally, it cannot strike down the IRS-HHS rule and the executive branch will continue to ignore both Congress's law and the law of the courts. There are few if any precedents for such a remarkable argument.
It will be just one more of Obama's many remarkable feats to add to his complete list of historic firsts.