BY MAGGIE FOX, NBC News(NBC News) - In a potentially lethal blow to Obamacare, a federal appeals court has ruled that the federal government may not subsidize health insurance plans bought by people in states that decided not to set up their own marketplaces under Obamacare.
The law clearly says that states are to set up the exchanges. But 34 states opted not to, and the federal government took over in those states. The court ruled that federal government may not pay subsidies for insurance plans in those states.
"We reach this conclusion, frankly, with reluctance," District of Columbia Appeals Court judge Thomas Griffith writes in the 2-1 ruling, which the federal government is almost certain to appeal to the Supreme Court.
The subsidies are at the heart of the 2010 Affordable Care Act. The federal government pays up to 100 percent of the premiums for certain insurance plans for people with low incomes.
"At least until states that wish to can set up Exchanges, our ruling will likely have significant consequences both for the millions of individuals receiving tax credits through federal Exchanges and for health insurance markets more broadly," Griffiths wrote.
One judge on the three judge panel, Harry Edwards, dissented. "This case is about Appellants’ not-so-veiled attempt to gut the Patient Protection and Affordable Care Act," he wrote.