The D.C. Circuit will hear arguments today in Halbig v. Sebelius. If successful, the challenge would deal an existential blow to the Affordable Care Act. Most observers view it as a relative longshot but you never know. It’s like the summer of 2012 all over again! 

This is the case pushed by the Cato Institute’s Michael Cannon, among the most dogged anti-Obamacare advocates in the country (and occasional visitor to the Arkansas legislature, courtesy of Americans for Prosperity). Here’s our report from late 2012 on Cannon’s legal argument, which has had some sway among Arkansas lawmakers.

Obamacare created new health insurance marketplaces to be established in each state. Cannon’s challenge deals with the 34 states which declined to set up their own marketplace, forcing the feds to step in and establish federally facilitated marketplaces (that’s what healthcare.gov was for). That includes Arkansas, which elected for a hybrid state-federal partnership. Pointing to one particular line in the ACA, Cannon argues that the law only allows subsidies available to lower-income people in state-run marketplaces, not in federally run marketplaces. That would mean people now eligible for subsidies (folks who make between 100-400 percent of the federal poverty level) in those 34 states would suddenly be out of luck. It would also mean that marketplaces in those states would be in danger of collapse, suddenly left without the tools to operate as intended. 

If you want to read some of the counters to Cannon’s contentions, see Abbe Gluck at Balknization. The legal issues here basically boil down to  textual interpretation but the real-life stakes are high, including in Arkansas. This wouldn’t have any direct impact on the private option, but it would threaten subsidies for people shopping on the Arkansas Health Insurance Marketplace who make too much to qualify for private option coverage (folks between 138 and 400 percent of FPL — for an individual that’s around $16,000 to $46,000).  

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