Insurance companies operating in New York State's marketplace are expected to ask for double-digit premium hikes next year, according to new filings from the companies. 

Capital New York reports the average requested increase was 13%. The New York Post reports that number at about 12%. But the bigger insurers are seeking a bigger premium hike — according to Capital, the six most popular plans in New York are requesting an average increase of almost 15%. 

The Post reports that Excellus Health Plan, which has about 24,000 customers, is requesting a 19.7% hike. MVP Health Plan, which has nearly 33,000 customers, is seeking a 19% increase. New York's largest insurer on the exchange — Health Republic Insurance of New York, which has 68,000 customers — is requesting a 15% increase.

The requests from states are being closely watched, after the end of the first open-enrollment period of the Affordable Care Act. According to the reports, insurers cited a number of reasons for the proposed premium hikes in their filings, including rising medical costs, having a sicker and/or older pool of customers, and new regulations and taxes levied by Obamacare.

"Our goal in pricing is to match expected medical spending — including medical costs, utilization and mandated coverage — with premiums. Other factors include plan design and new taxes and fees," Maria Gordon Shydlo, a spokeswoman at UnitedHealthCare, told the Post.

Health insurance premiums rise every year. But insurers' proposed increase is markedly higher than average — though there is little data with which it can directly be compared. According to a study released by the Commonwealth Fund, which supports the Affordable Care Act, individual health insurance premiums rose by more than 10% on average in the three years before President Barack Obama signed the Affordable Care Act into law.

In 2008, according to the study premiums grew by an average of 9.9%, by 10.8% the following year, and by 11.7% in 2011. According to the study, there was also considerable variation across states. For example, in 2008, premiums increased by about 3% in Iowa, compared with about 20% in Connecticut. 

Insurers within individual states have requested varying increases — and even decreases — so far next year. In Connecticut, two insurers are proposing to raise premiums by more than 10%, while one insurer, HealthyCT, is proposing almost a 9% decrease. 

Another example: In Arizona, Cigna requested an average rate hike of 14.4%. Humana, though, is looking for a startling 25.5% increase, according to The Arizona Republic.

This post was updated at 8:25 p.m. ET.

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"[T]hrough an Exchange established by the State under Section 1311."

Last week, the Supreme Court weakened Obamacare's contraception mandate, but that was only a very minor setback for the law.

Alive and well, however, is a fresh and potentially far more damaging lawsuit — one that rivals 2012's challenge to the law's individual mandate in terms of its potential effect on Obamacare.

The case is aimed at federal insurance subsidies, a key mechanism of the President Obama's signature law that have helped millions of lower-income Americans sign up for private insurance plans through the federal exchange. The challenge aims to block subsidies in states where insurance exchanges are handled by the federal government.

And any day now — perhaps as soon as Tuesday — the U.S. Court of Appeals for the D.C. Circuit is expected to hand down a ruling in Halbig v. Burwell, setting in motion a chain of events that could again lead to the Supreme Court.

The plaintiffs in the case argue the way the law was written does not allow for subsidies to be provided by the federal government, pointing to a statute that says subsidies should be issued to plans purchased "through an Exchange established by the State under Section 1311" of the Affordable Care Act. Section 1311 establishes the state-run exchanges. But plaintiffs say the law does not permit subsidies in federal exchanges, according to Section 1321 of the law.

Even as the challenge isn't viewed as a completely serious one yet, given the lack of success of the subsidies argument in federal court so fur, one turn could make the stakes extraordinarily high.

Handing out subsidies to lower-income people is one of the most basic functions of the law, and helps provide otherwise unaffordable health insurance. If federal subsidies are ruled illegal, it could torpedo the law — not to mention wreak havoc on the subsidies already dished out.

"If the courts took the argument seriously, it could seriously damage the implementation of the Affordable Care Act," Timothy Jost, a law professor at Washington and Lee University and a supporter of the law, told Business Insider. 

"It has the potential to destroy the individual insurance market in two-thirds of the states," he said.

The Email

The challenge all began with a simple email that set the wheels in motion. Jonathan Adler, a law professor at Case Western Reserve University in Ohio, had been asked to present a paper at the University of Kansas. While doing research for the paper, he came across the language in the statute that he says authorizes tax credits through the state exchanges but not through the federal exchanges. 

No one thought much of those 10 words at the time, but it was also when the broad assumption was that each state would choose to run its own exchange. Instead, most states — 36 — opted against running their own exchanges, leaving it to the federal government.

Months later, Adler fired off an email to Michael Cannon, the libertarian Cato Institute's director of health policy studies, in which Adler argued the language presented serious potential implications for the law with the right challenge. 

The pair wrote an op-ed in The Wall Street Journal in November 2011, seven months before the Supreme Court would save the heart of the law by ruling its mandate for people to purchase health insurance was a tax. For his part, Cannon was confident about the challenge. 

"This is literally the simplest case I've ever had in 30 years of practicing law," Carvin said at a Cato Institute panel one year ago. "No one but a lawyer could seriously stand up here and tell you that north means south, black means white and state means federal."

The eventual challenge argued the Obama administration — specifically, the Internal Revenue Service — is breaking the law by allowing subsidies to be issued in all 50 states. The IRS finalized a rule in 2012 that allowed subsidies to flow in every state.

"I think we have a very strong case," Adler told Business Insider on Monday. "I think the statute is very clear. I think you have a situation where if it were any other statute in any other political context, I don't think our claims would be that controversial."

Supporters of the law say their claims are ridiculous — and thus far, the challengers have had a tough time convincing the courts of their argument. Most significantly, a federal judge from the U.S. District Court for the District of Columbia threw out the challenge in January. 

Judge Paul Friedman seemed befuddled by the suit, which he called "unpersuasive" and wrote did not "make intuitive sense."

"The Court finds that the plain text of the statute, the statutory structure, and the statutory purpose make clear that Congress intended to make premium tax credits available on both state-run and federally-facilitated Exchanges," Friedman wrote in his opinion.

A Glimmer of Hope

But during oral arguments in March, two of the three judges on the D.C. Circuit Court of Appeals panel signaled they were at least somewhat sympathetic to the challengers' argument. 

Judge Harry T. Edwards, a Jimmy Carter appointee, scoffed at the lawsuit, while George H.W. Bush appointee Judge A. Raymond Randolph came down firmly on the side of the challengers.

Depending on who you ask, swing vote Judge Thomas B. Griffith, a George W. Bush appointee, leaned toward the government's or the challengers' position. Jost said he "asked tough questions of both sides." And both sides agree they have no idea how he will vote.

In the event the appeals court sides with the challengers, the Obama administration likely will request an en banc ruling, which would leave it up to an overall vote of the court. Here, the prospects for an administration victory are better — the appeals court is stacked with seven Democratic and four Republican appointees, four of which were appointed by Obama himself.

"Given the overall composition of the circuit right now, I think they would stand a very good chance of winning that. I think they almost certainly would," Jost said.

Either way, the challenge has a chance to either pick up major steam or virtually die in the coming days. In addition to the D.C. appeals court's decision, the Fourth U.S. Circuit Court of Appeals in Virginia is expected to rule soon on a similar challenge. The court seemed skeptical of the challengers during oral arguments. 

If the two cases both go the way of the government, it could be the death knell for the subsidies argument.

"Once the D.C. Circuit and the 4th Circuit get this sorted out, I think the other circuits will fall in line. I don't see this ever getting to the Supreme Court," Jost said.

But supporters of the challenge are quick to call to mind the initial perception of the challenge to the individual mandate as a fool's errand. It ended up becoming arguably the most closely watched Supreme Court decision of the last few years, and it took conservative Chief Justice John Roberts to unexpectedly save the law. 

Adler viewed the individual mandate challenge — NFIB v. Sebelius — as a "Hail Mary." This case, he argued, is more like the lawsuit against the contraception mandate, in that it challenges the implementation of a specific statute of the law. It's an easier legal argument to make, he said. 

Whether or not the challengers are successful this time, Adler expects much more similar litigation in Obamacare's future.

"Litigation over the implementation of the statute is something we're going to be seeing for a long time," he said, "given the nature of the statute, given some of the controversial aspects of the statute, and given some of the decisions agencies have to make in implementing the statute. 

"Certainly on top of that, the administration has in numerous circumstances taken liberties with the text of the statute so as to try and make it work better than it's written," he added. "This is an example of that."

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SEE ALSO: Federal Judge Tells Supreme Court To 'STFU'

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Democrats are plotting a direct challenge to the Supreme Court's Affordable Care Act-related decision last week, planning to introduce legislation Wednesday that would usurp the ruling.

Led by the conservative justices, the high court ruled last week that closely held for-profit corporations like Hobby Lobby, could be exempt from covering emergency contraceptives under the Affordable Care Act based on religious exemptions. In the wake of the decision, a furious Senate Majority Leader Harry Reid vowed Democrats would act soon.

On Wednesday, Sens. Patty Murray (D-Washington) and Mark Udall (D-Colorado) will introduce the bill, which would bar for-profit companies from declining coverage on any federally guaranteed health services for religious reasons. That includes the 20 forms of contraception detailed in the Affordable Care Act, according to a summary of the bill provided to Business Insider.

The bill would also specify that the Religious Freedom Restoration Act, which served as the basis for the Supreme Court's decision against Obamacare's contraceptive mandate, and all other federal laws do not permit businesses from refusing to comply with the law's requirements.

"The U.S. Supreme Court's Hobby Lobby decision opened the door to unprecedented corporate intrusion into our private lives," Udall said in a statement. "My common-sense proposal will keep women's private health decisions out of corporate board rooms, because your boss shouldn't be able to dictate what is best for you and your family."

A Senate Democratic aide told Business Insider the legislation could be voted on as soon as next week.

Murray and Udall, along with Democratic Sens. Barbara Boxer (D-California) and Mark Begich (D-Alaska) will introduce the bill at a press conference Wednesday morning. Both Udall and Begich are facing tough re-election battles this fall.

Reps. Louise Slaughter (D-N.Y.), Diana Degette (D-Colorado), and Jerry Nadler (D-N.Y.) will also appear at the press conference and plan to introduce the companion to the Senate's bill in the House.

The bill faces tough odds even in the Democratic-controlled Senate, and it's unlikely the Republican-controlled House will bring it to a vote. But a recorded vote in the Senate would give Democrats a talking point ahead of the midterm elections.

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Still buying cigarettes but told your doctor you quit? That old ruse might not work for long.

Some hospitals and health insurers have started buying consumers' personal data in order to identify "high-risk" patients and curtail bad health habits.

Consumers may know that their online activities are tracked. But most don't realize the mountain of personal information that is being collected, analyzed and sold by companies called data brokers.

While your actual medical records are protected by HIPAA, lots of personal health information can be inferred from your credit or debit card purchase history, as well as other sources, which may reveal whether you buy fast food or have a gym membership or go to the drug store regularly.

You may not mind that Amazon makes recommendations based on your previous purchases. But how would you feel if your doctor and insurer did the same?

Why They Want Your Data

Don't worry, your doctor probably isn't looking at your individual credit card purchases just yet. But health systems are using data to try and predict the health of their members.

For example, Carolinas HealthCare, which operates the largest group of medical centers in North and South Carolina, started building predictive models around 8 years ago.

"The first data projects looked at the need for primary care access at the community level," Michael Dulin, chief clinical officer for analytics and outcomes research at Carolinas HealthCare told Business Insider in an email. The model used information like socioeconomic status, population density, and emergency department use to assess whether a community had access to primary care services.

For a new modeling project, Carolinas HealthCare recently bought data on 2 million consumers, Bloomberg Businessweek reported. The goal is to create an algorithim that will generate a patient's "risk score," which identifies risk factors. For example, the risk score could identify whether the neighborhood the patient lives in has a high pollen count, which would be a risk for an asthmatic. The score is then passed on to the nurses and doctors who interact with the patient.

Dulin says Carolinas' primary goal in purchasing consumer data is improving the hospital's ability to identify who is at risk for what — something that can be hard to piece together from patients' voluntary disclosures alone.

"Adding new sources of data to the models helps them to become more accurate, and the consumer data complements our existing information," Dulin said. But he stresses that they "are not currently looking at health habits based on the consumer data," meaning that they are not combing through information about individual patients, like their credit card purchases.

While healthcare companies are defending the trend as a means to improve patient health, the financial motivations cannot be overlooked. From the health insurer or hospital perspective, healthier patients mean less money spent on patient care.

Here's The Kind Of Personal Data They Have About You

Using purchased data, especially when it's information the patient hasn't knowingly shared, is murky as far as privacy is concerned. And the amount of information that data brokers have on American consumers is terrifying.

"The extent of consumer profiling today means that data brokers often know as much – or even more – about us than our family and friends, including our online and in-store purchases, our political and religious affiliations, our income and socioeconomic status, and more," said Federal Trade Commission (FTC) Chairwoman Edith Ramirez in a statement.

According to an FTC report of nine data brokers released in May, credit card companies aren't sharing your purchase data — it's the retailers.

The report found that data brokers bought information about the "purchase history of 190 million individual consumers from more than 2600 merchants."

"If you are using any kind of credit card or debit card for a transaction, that has the potential of being sold," Pam Dixon, the founder and executive director of the World Privacy Forum, told Business Insider.

And retailers aren't the only ones selling your personal information. Magazines sell your subscription information. The Department of Motor Vehicles sells your personal information. Experian, a credit reporting agency, sells lists of parents who are expecting newborns, according to ProPublica.

Then there's also all of the publicly available data, like real estate records, voting data, and birth records.

The billions of data elements on American consumers that are being stored and sold is of national concern. The White House released a statement in May of this year that raised concerns about "digital redlining," meaning that all of the stored information could lead to discriminatory outcomes.

As far as your health is concerned, the Affordable Care Act prevents insurers from denying coverage based on preexisting conditions. However, they could potentially track your purchases to find people lying about their health habits or buying copious junk food in spite of a diabetes diagnosis.

The only true opt-out at this point: pay in cash.

SEE ALSO: Hospital To Pay Millions After Embarrassing Data Breach Put Patient Info On Google

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The Affordable Care Act has been successful at achieving some major goals in the first year of its full implementation, according to a new study from The Commonwealth Fund.

There are three important findings from the study: The uninsured rate is dropping, most people like their new insurance plans (even Republicans!), and most people are finding it easy to visit a doctor.

The study found the uninsured rate in the U.S. declined by one-quarter over the last nine months, which included the law's first, six-month open-enrollment period in which individuals could sign up for private insurance plans through exchanges established by the law.

From the July-to-September 2013 period to the April-to-June 2014 period, the uninsured rate of people between the ages of 19-64 dropped from 20% to 15%, according to the study. The research found 9.5 million people gained insurance, either through the exchanges or through the law's expansion of the federal Medicaid program.

The decline in uninsured was seen across different age groups and races, though the drop was disproportionately high among the young (-10%) and Latinos (-13%). It was disproportionately low among African-Americans — the decline was only 1%.

The findings show the law has been successful at reducing the uninsured rate among the poor — which was, of course, one of its main goals:

Expectedly, there is a significant difference in the reduction of uninsured between states that have expanded Medicaid and those that have not. According to the study, the uninsured rate among residents who make up to 100% of the federal poverty level fell from 28% to 17% in the 25 states that have expanded Medicaid (plus the District of Columbia). In the 25 states that haven't, the rate only fell from 38% to 36%. 

Among those who have become newly insured, the vast majority say they are "better off" and like their plans. In total, 58% of respondents with new plans said they are "better off" than before — including 61% who were previously uninsured. Seventy-nine percent of those who were previously uninsured said they were either "somewhat" or "very satisfied" with their new plans.

Even 74% of Republicans say they're at least somewhat satisfied with their new plans.

Significantly, most people who gained coverage under the Affordable Care Act said they couldn't have accessed care they have received since obtaining insurance:

Finally: About one-fifth of people who have signed up for a new plan have attempted to find a new primary care or general doctor, and most — 75% — have said the process is at least "somewhat easy." Two-thirds of those who found a primary-care doctor got an appointment within two weeks. Thirty-seven percent of people said their new plans included "most" of the doctors they wanted (about 39% don't yet know).

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The uninsured rate in the U.S. has plunged to 13.4% in the second quarter of 2014, the lowest-ever rate recorded by Gallup in more than six years of polling.

The previous low point was 14.4% in the third quarter of 2008. Overall, the uninsured rate has plunged 3.7 percentage points since the fourth quarter of last year, when it averaged 17.1%. 

The drop in the uninsured rate is due to a couple of factors: A slightly improving economy and, more importantly, the rush of sign-ups for new plans at the end of the Affordable Care Act's first open-enrollment period.

The Obama administration said more than 8 million people signed up for private plans through exchanges established by the law. And recent studies put the combined total of people who have gained coverage through private plans and through the law's expansion of Medicaid around 9.5 million.

Here's a chart from Gallup showing the sharp plunge in the uninsured rate, which coincides with the most significant expansion in health insurance coverage since the advent of Medicare and Medicaid in 1965:

At this point, the evidence is overwhelming that the Affordable Care Act has succeeded at one of its main goals. As Larry Levitt, the senior vice president of the Kaiser Family Foundation, pointed out on Thursday, at least four different studies have displayed similar findings.

"The uninsured rate has decreased sharply since the Affordable Care Act's requirement for most Americans to have health insurance went into effect at the beginning of 2014," Gallup's Jenna Levy wrote.

"The decline in the uninsured rate last quarter took place at the start of the quarter. The drop reflected a surge of health plan enrollees in early April, prior to the April 15 extended enrollment deadline for people who had previously experienced technical difficulties with the federal healthcare exchange website."

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House Speaker John Boehner's lawsuit against President Barack Obama will focus on Obama's 2013 decision to unilaterally delay implementation of the so-called employer mandate of the Affordable Care Act.

Boehner's office released a draft document on Thursday of the resolution set to be filed in the House of Representatives, which would authorize the chamber to take legal action against the president. 

"Today we’re releasing a draft resolution that will authorize the House to file suit over the way President Obama unilaterally changed the employer mandate," Boehner said in a statement.

"In 2013, the president changed the health care law without a vote of Congress, effectively creating his own law by literally waiving the employer mandate and the penalties for failing to comply with it. That’s not the way our system of government was designed to work. No president should have the power to make laws on his or her own."

The House Rules Committee will consider the draft resolution next Wednesday.

Boehner has hinted at the lawsuit for weeks, arguing Obama has continually overstepped his constitutional authority. Boehner sent a memo to the House Republican conference late last month, informing them of his plans to file legislation in July that would allow the House of Representatives to file suit to compel Obama to "faithfully execute the laws of our country."

He wrote in a CNN.com op-ed on Sunday that the House could target a number of specific executive actions as fodder for its lawsuit, including Obama's actions with regard to the Affordable Care Act, energy regulations, foreign policy, and education.

The White House and the president himself have jokingly dismissed the lawsuit. On Thursday, White House press secretary Josh Earnest called the plans for a suit a "political stunt."

"It is disappointing that Speaker Boehner and Congressional Republicans have decided to waste time and taxpayer dollars on a political stunt," Earnest said.

"At a time when Washington should be working to expand economic opportunities for the middle class, Republican leaders in Congress are playing Washington politics rather than working with the President on behalf of hardworking Americans. As the President said today, he is doing his job – lawsuit or not – and it’s time Republicans in Congress did theirs."

Drew Hammill, a spokesman for House Minority Leader Nancy Pelosi, also blasted Boehner's plan in a statement.

"Time and again, House Republicans’ total abdication of responsibility has forced the President to act," Hammill said. "They’ve wasted billions of taxpayer dollars forcing a downgrade of the U.S. economy and a shutdown of the federal government, and now, after wasting millions defending discrimination in the federal courts, the resolution unveiled tonight would authorize hiring more partisan lawyers for yet another legal boondoggle doomed to fail."

The Obama administration first delayed a year ago the employer mandate of the Affordable Care Act, which requires most businesses with 50 or more full-time employees to provide health insurance meeting certain minimum criteria — or pay a penalty of $2,000 per worker.

In February, the administration announced it will delay the mandate's penalty another year for small businesses with 50-99 workers. It said it would also adjust some of the requirements for larger employers. 

Under the new Treasury Department rules, businesses with 100 employees or more must offer coverage to at least 70% of full-time workers in 2015 and 95% in 2016, or face a penalty. 

This post has been updated.

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The millions of dollars spent on negative advertisements on the Affordable Care Act may have actually led to increased overall enrollment, according to a new study from the Brookings Institute.

According to May research from Kantar Media, anti-Obamacare groups have outspent their opponents by a 15-to-1 margin on the airwaves since the law was passed four years ago — out of almost $450 million in total spent on ads.

But Brookings fellow Niam Yaraghi looked at the trend and found "positive association between the anti-ACA spending and ACA enrollment." This was especially true in blue states, some of which feature the most competitive Senate races in the midterm elections. Yaraghi found that in states where Democrats are running for re-election, ad spending against the law correlated with higher enrollment.

"Although the volume of spending on anti-ACA ads is driven by the competitiveness of the Senate midterm elections and may be effective in reducing the votes for the targeted political figure, they may not necessarily reduce the popularity of the ACA," Yaraghi wrote.

The study doesn't take into account other potential factors for increased enrollment. In Kentucky, for example, the "Obamacare" exchange was marketed as "Kynect," and the state has been praised for how it ran its state exchange. 

Another potential factor Yaraghi observed: In states where more anti-Obamacare ads aired, more people believed Congress was likely to repeal the Affordable Care Act in the near future. This may have encouraged more people to take advantage of what they consider a limited-time opportunity. 

"People who believe that subsidized health insurance may soon disappear could have a greater willingness to take advantage of this one time opportunity," Yaraghi wrote.

Here's a scatter plot of Yaraghi's findings:

This post has been updated.

SEE ALSO: Major New Study Says Obamacare Is Working — Even For Republicans

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If you want to buy a plan from HealthCare.gov that will get you covered in 2014, the deadline is March 31 (with some exceptions). But what exactly will the insurance bought on the exchanges get you?

Included within the essential benefits — preventative care, mental health services, etc. — the plans cover some surprising things.

Here are 11 covered benefits that might surprise you.

1. Free aspirin (to prevent heart disease in older men and women)

2. Screening for depression

3. Flu shots

4. STD counseling (for people at high risk)

5. Help quitting smoking, such as tobacco use screenings

6. Folic acid supplements (for pregnant women)

7. Breastfeeding support and supplies, like breast pumps

8. Domestic violence screening and counseling (for women)

9. Substance abuse counseling

10. Services to help overcome long-term disabilities and chronic conditions

11. Screening to determine if your drinking is unhealthy

All of these benefits fall under the 10 essential benefits that the Affordable Care Act provides:

1. Outpatient care—the kind you get without being admitted to a hospital

2. Trips to the emergency room

3. Treatment in the hospital for inpatient care

4. Care before and after your baby is born

5. Mental health and substance use disorder services: This includes behavioral health treatment, counseling, and psychotherapy

6. Your prescription drugs

7. Services and devices to help you recover if you are injured, or have a disability or chronic condition. This includes physical and occupational therapy, speech-language pathology, psychiatric rehabilitation, and more.

8. Your lab tests

9. Preventive services including counseling, screenings, and vaccines to keep you healthy and care for managing a chronic disease.

10. Pediatric services: This includes dental care and vision care for kids

So-called "grandfathered" plans, which have existed since before March 23, 2010, may not provide all of these benefits.

READY TO BUY? Find Out How Much You'd Actually Pay For An Obamacare Plan In 10 Seconds

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A lawsuit challenging Obamacare subsidies has the potential to skyrocket the health insurance costs of 5.4 million Americans.

The decision lies on the shoulders of three federal judges, who will decide the legality of subsidies served through the federal health insurance marketplaces, a decision that impacts residents of 36 states. The decision could come as early as July 15.

The Affordable Care Act, colloquially called Obamacare, established what are known as health insurance marketplaces or exchanges, where consumers can buy health insurance plans. So far around 8 million people have signed up. Sixteen states operate their own marketplaces, and the remaining two-thirds of states use the federal marketplace, Healthcare.gov.

Under the ACA, Individuals who make less than $46,075 are eligible to receive subsidies, or tax credits, towards their premiums, which means they do not pay the full monthly cost of their health insurance. Without these subsidies their costs would quadruple.

On average, premiums in the federal exchanges are $82 per month for individuals who are receiving subsidies. The average cost without subsidies is almost four times that at $346 per month, according to a report from HHS.

The U.S. Court of Appeals for the D.C. Circuit is expected to rule on Halbig v. Burwell, which challenges these subsidies. As Business Insider's Brett LoGiurato reported, the Affordable Care Act was designed with the expectation that each state would run its own exchange, and part of the law notes that subsidies may be provided "through an Exchange established by the State." The challengers to the law argue that this means that, technically, the subsidies should only be available to the state-run marketplaces.

That means more than 5 million people in 36 states who are currently receiving health insurance subsidies through the federal marketplaces could potentially be shut out, as the graphic below shows.

The case will be decided by three federal judges. One supports the challengers and one doesn't. So it seems the decision will come down to the swing vote of Judge Thomas B. Griffith, a George W. Bush appointee. From the oral arguments heard in March, it's not entirely clear whose side he is on.

This is one of four pending federal cases that challenges the subsidies, according to The Washington Post.

SEE ALSO: Conservatives Are Hoping These 10 Words Will Finally Destroy Obamacare

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A federal appeals court has thrown out an IRS regulation that implements key subsidies for health insurance under the Affordable Care Act, dealing a potentially significant blow to the law. 

In a 2-1 decision, the U.S. Court of Appeals for the District of Columbia Circuit sided with plaintiffs who argued the law, as written, only allows for subsidies to be provided through state exchanges. The lawsuit, Halbig v. Burwell, has the potential to cripple Obamacare in the 36 states where the federal government provides subsidies for low-income people to buy health insurance.

The plaintiffs in the case argue the way the law was written does not allow for subsidies to be provided by the federal government, pointing to a statute that says subsidies should be issued to plans purchased "through an Exchange established by the State under Section 1311" of the Affordable Care Act. Section 1311 establishes the state-run exchanges. But plaintiffs say the law does not permit subsidies in federal exchanges, according to Section 1321 of the law.

In the end, the court said the plaintiffs presented a more compelling argument than the federal government. It determined the law "unambiguously restricts the ... subsidy to insurance purchased on Exchanges 'established by the State.'"

"We conclude that appellants have the better of the argument: a federal Exchange is not an 'Exchange established by the State,' and section 36B does not authorize the IRS to provide tax credits for insurance purchased on federal Exchanges," the judges wrote in their decision.

The Internal Revenue Service handed down a regulation in 2012 that said individuals may receive a tax credit "regardless of whether the exchange is established and operated by a state."

The lawsuit is viewed as the most potentially damaging challenge to the law since the 2012 lawsuit targeting Obamacare's individual mandate to purchase health insurance. Handing out subsidies to lower-income people is one of the most basic functions of the law, and helps provide otherwise unaffordable health insurance. If federal subsidies are ruled illegal, it could torpedo the law — not to mention wreak havoc on the subsidies already dished out.

But supporters of the law had been unconvinced the courts would grant much credence to the plaintiffs' argument.

"If the courts took the argument seriously, it could seriously damage the implementation of the Affordable Care Act," Timothy Jost, a law professor at Washington and Lee University and a supporter of the law, told Business Insider earlier this month.

"It has the potential to destroy the individual insurance market in two-thirds of the states."

The appeals court's decision is likely to set up another high-profile confrontation over the law at the U.S. Supreme Court. The Obama administration said, however, that the ruling does not affect existing premiums.

"We believe that this decision is incorrect, inconsistent with Congressional intent, different from previous rulings, and at odds with the goal of the law: to make health care affordable no matter where people live," Department of Justice spokesperson Emily Pierce said in a statement. "The government will therefore immediately seek further review of the court’s decision. In the meantime, to be clear, people getting premium tax credits should know that nothing has changed, tax credits remain available."

A senior administration official told Business Insider it will appeal the ruling to the full D.C. Circuit court, in which the full court would hear and decide on the case. The math for the administration is better in this situation. The appeals court is stacked with seven Democratic and four Republican appointees, four of whom were appointed by Obama himself.

But even if the Obama administration prevails before the full D.C. Circuit, the case appears destined for the Supreme Court.

You can read the full decision here.

MORE BACKGROUND: Conservatives Are Hoping These 10 Words Will Finally Destroy Obamacare

WHICH STATES ARE IMPACTED?  A Federal Appeals Court Just Invalidated Obamacare In These 36 States [MAP]

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The D.C. Circuit Court of Appeals ruled in a 2-1 decision that health insurance subsidies provided by the Affordable Care Act are invalid in the 36 states with federal health insurance marketplaces.

The Affordable Care Act, colloquially called Obamacare, established what are known as health insurance marketplaces or exchanges, where consumers can buy health insurance plans. Sixteen states operate their own marketplaces, and the remaining two-thirds of states use the federal marketplace, Healthcare.gov.

These marketplaces also offer low-earners certain subsidies to help cover the cost of healthcare, which the law states may be provided "through an Exchange established by the State.

In Halbig v. Burwell, the challengers to the law argued that this means that, technically, the subsidies should only be available to the state-run marketplaces, not through Healthcare.gov.

Today, the Court agreed.

This means that more than 5 million people in 36 states who are currently receiving health insurance subsidies through the federal marketplaces could potentially be shut out, as the graphic below shows.

The health insurance subsidies won't be cut off immediately.The Hill reports that the government is expected to appeal the decision and it looks like the case may eventually be headed to the Supreme Court.

As BI's Brett Logiurato reported, Avalere Health, an independent healthcare firm, released an analysis of each state's subsidies that show how much they will be impacted. Here's the state-by-state breakdown.

Update: We added the word "subsidies" to this headline to clarify that the ruling invalidated subsidies in these states, not Obamacare overall.

SEE ALSO: Federal Appeals Court Deals Potentially Huge Blow To Obamacare

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A federal appeals court on Tuesday dealt a setback to the Affordable Care Act, ruling that premium subsidies provided through the federal health exchange in 36 states are invalid under the writing of the law.

Here's the practical effect of the ruling, if it withstands the rest of the legal process: More than 5 million, generally low-income Americans who received tax credits through the federal exchange to purchase health insurance, would see their premiums explode.

Avalere Health, an independent healthcare firm, released an analysis last week showing that people who received premium subsidies for health insurance would see a premium hike of about 76% if courts ultimately rule they can't get tax credits through the federal exchange.

"The court case has major implications for future insurance coverage and access to care for millions of Americans," said Caroline Pearson, vice president at Avalere Health. "Depending on the ultimate decision by the courts and absent some other remedy, individuals in at least 25 states who remain in their current plans could see an average premium increase of over 70%."

The Obama administration said in May that about 87% of people who bought coverage in the 36 states served by the federal marketplace received subsidies. The potential effect of the Halbig decision would be even more pronounced in certain states — in Mississippi, for example, about 94% of people buying health insurance received federal subsidies.

Here's a map from Avalere showing the potential state-by-state effect:

For now, however, the Obama administration said the ruling would not affect premium subsidies while the administration initiates a review.

"We believe that this decision is incorrect, inconsistent with Congressional intent, different from previous rulings, and at odds with the goal of the law: to make health care affordable no matter where people live," Department of Justice spokeswoman Emily Pierce said in a statement. "The government will therefore immediately seek further review of the court’s decision. In the meantime, to be clear, people getting premium tax credits should know that nothing has changed, tax credits remain available."

A senior administration official told Business Insider that it would appeal the ruling to the full D.C. Circuit court, in which the full court would hear and decide on the case. The math for the administration is better in this situation — the appeals court is stacked with seven Democratic and four Republican appointees, four of which were appointed by Obama himself.

But even if the Obama administration prevails before the full D.C. Circuit, the case appears destined for the Supreme Court.

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Just hours after the Affordable Care Act was dealt a serious blow from a federal appeals court, a different appeals court gave the law a victory — thanks in part to an analogy based on pizza.

The Fourth Circuit Court of Appeals in Virginia on Tuesday afternoon upheld the distribution of premium subsidies under the law through both state and federal exchanges, something that has become a point of contention in federal courts.

The argument from plaintiffs challenging Obamacare holds that the way the law was written does not allow for subsidies to be provided by the federal government, pointing to a statute that says subsidies should be issued for plans purchased "through an Exchange established by the State under Section 1311" of the Affordable Care Act. Section 1311 establishes the state-run exchanges. However, the plaintiffs argued the law does not permit subsidies in federal exchanges, according to Section 1321 of the law.

The federal government has maintained Congress' intent in crafting the law was clear — that as many people as possible would be able to acquire affordable health insurance with subsidies provided either through a federal or state exchange.

The Virginia court's ruling was a unanimous 3-0 decision. In a concurring opinion explaining the rationale for the ruling, Senior Fourth Circuit Judge Andre Davis explained the debate in terms of a pizza order:

If I ask for pizza from Pizza Hut for lunch but clarify that I would be fine with a pizza from Domino’s, and I then specify that I want ham and pepperoni on my pizza from Pizza Hut, my friend who returns from Domino’s with a ham and pepperoni pizza has still complied with a literal construction of my lunch order.

That is this case: Congress specified that Exchanges should be established and run by the states, but the contingency provision permits federal officials to act in place of the state when it fails to establish an Exchange. The premium tax credit calculation subprovision later specifies certain conditions regarding state-run Exchanges, but that does not mean that a literal reading of that provision somehow precludes its applicability to substitute federally-run Exchanges or erases the contingency provision out of the statute.

On the surface, it makes sense. Davis is reading Congress' intention as asking states to establish exchanges, but saying it would be fine for the federal government to come in and run exchanges if the states fail to do so. The Internal Revenue Service later handed down a regulation in 2012 that said individuals may receive a tax credit "regardless of whether the exchange is established and operated by a state."

Davis' two colleagues agreed with the federal government's arguments in court, though they applied more caveats. Judge Roger Gregory wrote the "defendants have the stronger position, although only slightly." 

It's not the first time a food analogy has been used as a legal metaphor to explain a section of Obamacare. In 2012 oral arguments before the U.S. Supreme Court, there was a famous debate over a theoretical mandate to buy broccoli.

Just hours before the Fourth Circuit handed down its opinion, the U.S. Court of Appeals for the District of Columbia Circuit essentially came to the opposite conclusion and sided with the plaintiffs in a similar case. 

In a 2-1 decision, the D.C. court said the plaintiffs presented a more compelling argument than the federal government. It determined the law "unambiguously restricts the ... subsidy to insurance purchased on Exchanges 'established by the State."

"We conclude that appellants have the better of the argument: a federal Exchange is not an 'Exchange established by the State,' and section 36B does not authorize the IRS to provide tax credits for insurance purchased on federal Exchanges," the judges wrote in their decision.

The conflicting opinions could set up another high-profile challenge to Obamacare before the Supreme Court.

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The White House declared victory for the Affordable Care Act after a pair of federal appeals court decisions on Tuesday, saying one court's ruling trumped another's earlier in the day that dealt a significant blow to a key provision of the law.

"Another partisan attempt to harm the Affordable Care Act failed today," White House press secretary Josh Earnest said in a statement. "This latest attempt was undermined by a unanimous judicial panel in the 4th Circuit. The law was designed to make health care affordable through tax credits — and it is working."

The "partisan attempt" Earnest referred to was the 2-1 decision handed down by the U.S. Court of Appeals for the D.C. Circuit on Tuesday morning that invalidated an IRS regulation which allowed the implementation of health subsidies that are a crucial part of the Affordable Care Act. Earnest said this defeat was trumped by a unanimous 3-0 4th Circuit Court of Appeals ruling issued on Tuesday in Virginia that held the key provision of Obamacare is legal. 

Both cases dealt with the question of whether the federal government has the authority under the Affordable Care Act to distribute premium subsidies to help individuals buy health insurance. 

The plaintiffs in both cases challenged the healthcare law by arguing the way it was written does not allow for subsidies to be provided by the federal government. They pointed to a statute that says subsidies should be issued to plans purchased "through an Exchange established by the State under Section 1311" of the Affordable Care Act. Section 1311 establishes the state-run exchanges. Because of this, the plaintiffs said the law does not permit subsidies in federal exchanges.

In response to these arguments in both cases, the federal government has maintained Congress' intent in crafting the law was clear. Government lawyers argued the Affordable Care Act was created so as many people as possible would be able to acquire affordable health insurance with subsidies provided either through a federal or state exchange.

Despite the defeat in the D.C. Court of Appeals, going forward, the Obama administration does have the seeming legal edge. An administration official told Business Insider earlier Tuesday it will request an "en banc" hearing from the full D.C. Circuit Court reviewing the ruling. The court is split 7-4 toward Democratic appointees.

Because of this, legal experts consider it likely that, if the court does decide to review the panel's decision with a full bench, the administration is likely to prevail. Either way, Tuesday's dueling rulings could set the stage for a major Obamacare case in the Supreme Court. 

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Tuesday was a day full of twists and turns for the Affordable Care Act, one that could lead the law back to the U.S. Supreme Court.

At the start of the day, Obamacare was struck a seemingly serious blow after a federal appeals court in Washington threw out an IRS regulation that allows for the implementation of key subsidies for health insurance under the law. It was a "stinging defeat" for the federal government — a potential "deathblow," as The Huffington Post's banner put it.

By the end of the day, though, another appeals court ruled in the law's favor in a separate case and the Obama administration was declaring victory. It was affirmation, the White House said, that the morning's ruling was a mirage and had been "undermined."

The plaintiffs in both cases decided by the appeals courts on Tuesday are challenging President Barack Obama's signature legislation by arguing the way it was written does not allow for subsidies to be provided by the federal government.

They point to a statute that says subsidies should be issued to plans purchased "through an Exchange established by the State under Section 1311" of the Affordable Care Act. Section 1311 establishes the state-run exchanges. The plaintiffs said the law does not permit subsidies in federal exchanges, based on Section 1311 and another corresponding section of the law.

"It was a full day," Ilya Shapiro, a senior fellow in constitutional studies at the Cato Institute, told Business Insider. "The surprising part is they came on the same day. You can tell the 4th Circuit wanted to blunt or one-up the D.C. Circuit."

In the end, the conflicting court rulings could lead the law back to the Supreme Court, where it will again be at the mercy of a conservative-leaning bench that can choose to hear the case if it so desires.

"Oh, yeah. It’s a serious challenge at this point. It’s very serious. It threatens the very substance of the law," Timothy Jost, a law professor at Washington and Lee University and an Affordable Care Act supporter, told Business Insider on Tuesday. "It means 5 million people could lose their premium tax credits, and millions more could lose their health insurance."

From this point, there are two schools of thought about where the legal challenge to Obamacare could go. The first says the conflicting court opinions on Tuesday make it more likely the Supreme Court will feel a need to step in and resolve the issue. But other legal experts still think the challenge won't make it all the way to the high court, based on a coming appeal from the Obama administration that will likely reverse the D.C. Circuit Court's opinion.

Either way, the Obama administration is seen as having the legal advantage at this point, but, as the individual-mandate case showed, perception can change rapidly.

A Justice Department official told Business Insider the administration will seek an "en banc" review from the D.C. Circuit court — which, if granted, would result in a hearing before the full court, plus two senior judges who originally heard the case. The math is better for the Obama administration in this situation: The full court splits 8-5 to Democratic presidential appointees.

"Today doesn't necessarily make it more likely" that the case will head to the Supreme Court, said Nicholas Bagley, a law professor at the University of Michigan. "It may make it less likely."

Legal scholars agree that, if the D.C. Circuit court agrees to rehear the case in full, it is likely to reverse its three-judge panel's decision. But the challengers in the 4th Circuit court could shake things up by directly appealing to the Supreme Court, rather than seeking an "en banc" ruling before a 4th Circuit court that is heavily populated with Democrats, as well.

That's why University of Richmond law professor Kevin Walsh thinks there's a good chance the conflicting rulings could speed up any potential Supreme Court review. The reason: The court may never grant review if there is no split between the 4th and D.C. Circuits. But if the 4th Circuit plaintiffs seek a Supreme Court review now, while the appeals courts are split, they will be on better legal terrain.

"The Court has discretion whether to grant [the appeal], of course, but a circuit split on such an important part of a massive regulatory scheme is the sort of thing that the Supreme Court should hear," Walsh wrote on his blog on Tuesday. "Having a final decision in favor of the government therefore is of some help to the challengers because it enables them to go to the Supreme Court more quickly."

Tom Goldstein, the publisher of the widely read and oft-cited SCOTUSblog, wrote in The Washington Post on Tuesday that he expects the case to reach the Supreme Court. His "best guess," he wrote, is that a majority of justices will take a limited view of the role of the federal courts and say the administration's position on the issue is reasonable.

"The courts are required to uphold the rule if the law is ambiguous and the administration’s position is reasonable," Goldstein wrote. "The Supreme Court will probably uphold the rule under that lax standard."

Here's a map that shows which states could be affected by the ruling:

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An audit by the Government Accountability Office (GAO) released Wednesday lent political ammunition to congressional Republicans, finding that it was relatively easy to defraud the application process for health insurance subsidies under the Affordable Care Act (ACA).

During the audit, 12 GAO employees filed 18 applications using fabricated identities. Eleven of the applications succeeded, scoring an average benefit of $2,500 monthly.

Republican leaders have pointed to the findings as proof that the ACA is a bureaucratic waste, while defenders of the ACA have noted that – while the program needs tweaking – various eligibility checks did deter GAO workers at multiple points in the investigation.

“We are seeing a trend with Obamacare information systems: Under every rock, there is incompetence, waste, and the potential for fraud,” House Ways and Means Committee chairman Dave Camp (R) of Michigan told NBC News. “Now, we learn that in many cases, the exchange is unable to screen out fake identities or documents.”

During the investigation, employees attempted six online applications, six by phone, and six in-person examinations. Of the six phone applications, five went through successfully, while one was rejected when the applicant refused to provide a Social Security number.

All the online applications were caught by eligibility checks. However, all six were eventually approved after the applicants contacted the ACA’s call center.

Five of the in-person applications were not processed, as GAO officials were unable to get help. The other one was rejected when an ACA worker correctly said that the applicant’s stated income was too high for a subsidy.

“We will examine this report carefully and will work with GAO to identify additional strategies to strengthen our verification processes,” Aaron Albright, a spokesman for the Centers for Medicare & Medicaid Services, told The Associated Press.

While GOP leaders have described the ACA as ripe territory for fraudsters in light of the audit, in reality it may be hard to reap profits from the program, as the subsidies go directly to insurance companies rather than to individuals. Also, the certification process for ACA subsidy applications is still being constructed, ACA spokespeople note – and in the meantime, false applicants risk heavy fines and prosecution for perjury.

“As the GAO notes in its interim report, the steps we take to ensure that individuals and families get the premium support and coverage they deserve, and that no one receives a benefit they shouldn't, are ongoing and have not concluded,” Kevin Griffis, a spokesman for the Department of Health and Human Services, told NBC News.

The recent investigation comes as federal courts have been considering the subsidies as well. On Tuesday, the federal appeals court for the District of Columbia ruled that the federal government could not provide subsidies to residents of the 34 states that have not set up their own health-care exchanges. This development could scratch a key purpose of the ACA – namely, making health insurance affordable for low- and middle-income Americans.

That ruling is not a death knell for the law, however: The appeals court stayed its ruling pending an appeal by the Obama administration, and on the same day, the Fourth Circuit Court of Appeals in Richmond, Va., upheld the exact provision that the other court struck down.

But these recent developments have been enough for House Republicans to condemn the ACA as a bureaucratic and legal nightmare.

“Obamacare is a mess,” Rep. Charles Boustany (R) of Louisiana said in a statement. “No wonder hard-working Americans are fed up with a government that spends too much on broken programs that aren't doing the job they're intended to. We can and must do better.”

The Obama administration, for its part, has insisted on the legality of the subsidies, siding with the Fourth Circuit and saying that the challenge relied on a “tortured” interpretation of the law.

“You don’t need a fancy legal degree to understand that Congress intended for every eligible American to have access to tax credits that would lower their health-care costs, regardless of whether it was state officials or federal officials who were running the marketplace,” White House spokesman Josh Earnest said Tuesday. “I think that is a pretty clear intent of the congressional law.”

The recent GAO probe into the ACA stems from a request that House Republicans made before the health-care exchanges opened in the fall. Among the Republicans who asked the GAO to look into potentially fraudulent applications were Representatives Camp and Boustany.

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One of the key architects of the Affordable Care Act made little-noticed comments in 2012 that could provide the law's conservative challengers a major boost in the most high-profile ongoing challenge to undo it.

Earlier this week, the D.C. Circuit Court of Appeals, considered the second-most powerful court in the U.S., threw out an IRS regulation that helps the federal government hand out key subsidies under the Affordable Care Act. The court sided with plaintiffs, who argued the law specifically only allows states that run their own exchanges to provide subsidies to help lower-income people buy health insurance.

Supporters of the law have called the challenge unserious. But conservatives who support the plaintiffs in the case — Halbig v. Burwell — say one of the men that makes their case is Jonathan Gruber, the MIT economist who was one of the authors of the Massachusetts health law that served as the model for Obamacare.

Late Thursday night, comments from Gruber in 2012 were unearthed by the Competitive Enterprise Institute's Ryan Radia. During a 2012 question-and-answer session following a lecture, he made the same basic argument about the point of the lawsuit. 

Here's the key portion of Gruber's comments (emphasis added):

I think what’s important to remember politically about this, is if you’re a state and you don’t set up an Exchange, that means your citizens don’t get their tax credits. But your citizens still pay the taxes that support this bill. So you’re essentially saying to your citizens, you’re going to pay all the taxes to help all the other states in the country. I hope that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these Exchanges, and that they’ll do it. But you know, once again, the politics can get ugly around this.

At issue in the Halbig case and others making their way through the federal court system is whether Congress authorized the federal government to give out subsidies. It's a big deal, since 36 states' healthcare exchanges run at least partly through the federal government. The theory presented by the challengers posits the federal government wanted to pressure states into setting up their own exchanges by refusing them subsidies if they did not.

In the 2012 clip, Gruber seems to be suggesting Congress intended subsidies to run only through state exchanges. 

"I couldn't have said it better myself!" Michael Cannon, the director of health policy at the Cato Institute and one of the key architects of the Halbig lawsuit, told Business Insider in an interview on Friday.

Jonathan Adler, a law professor at Case Western Reserve University in Ohio and another conservative legal scholar behind the challenge, told Business Insider that Gruber's comments "just show how knowledgeable folks would understand statutory text when there was no pressure to reach 'right' answer."

For his part, Gruber on Friday called his 2012 comments a "mistake" and a "speak-o"— the spoken-word version of a typo. When Business Insider reached out for comment, he said he was busy running a conference but forwarded along an email he had sent to The New Republic's Jonathan Cohn. 

Here it is, in part:

I honestly don’t remember why I said that. I was speaking off-the-cuff. It was just a mistake. People make mistakes. Congress made a mistake drafting the law and I made a mistake talking about it.

During this era, at this time, the federal government was trying to encourage as many states as possible to set up their exchanges. [...]

At this time, there was also substantial uncertainty about whether the federal backstop would be ready on time for 2014. I might have been thinking that if the federal backstop wasn't ready by 2014, and states hadn't set up their own exchange, there was a risk that citizens couldn't get the tax credits right away. [...]

But there was never any intention to literally withhold money, to withhold tax credits, from the states that didn’t take that step. That’s clear in the intent of the law and if you talk to anybody who worked on the law. My subsequent statement was just a speak-o—you know, like a typo.

There are few people who worked as closely with Obama administration and Congress as I did, and at no point was it ever even implied that there’d be differential tax credits based on whether the states set up their own exchange. And that was the basis of all the modeling I did, and that was the basis of any sensible analysis of this law that’s been done by any expert, left and right. 

I didn’t assume every state would set up its own exchanges but I assumed that subsidies would be available in every state. It was never contemplated by anybody who modeled or worked on this law that availability of subsides would be conditional of who ran the exchanges.

But later on Friday, the conservative site Breitbart unearthed a second, perhaps more damning clip in which Gruber openly acknowledged states could "undercut the law" by revolting and not setting up their own exchanges.

However, he said he was "enough of a believer in democracy" to hope that voters would eventually vote out politicians who rejected hundreds of millions of dollars in federal-government support through tax credits as subsidies.

Cannon told Business Insider it's clear that Gruber changed his tune when he, like many other supporters of the law, realized it could become a political nightmare.

"He allows us to knock down this talking point that we keep hearing from members of the administration," Cannon said. "Which is that it's implausible that Congress intended this. Gruber went around telling people that this is how the statute works.

"And this was at a time when that language did not present any kind of threat, because everyone assumed that most or all states were going to establish exchanges. Gruber changed his story around the time that language became politically problematic."

You can watch the clips below (the first remarks start around the 31-minute mark):

This post has been updated.

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