Then in 2012 the Internal Revenue Service simply declared that subsidies would be available in both the state-run and federal exchanges. In its rule-making the IRS noted that “commentators disagreed on whether the language . . . limits the availability of the premium tax credit only to taxpayers who enroll in qualified health plans on State Exchanges,” conceding the controversy but offering no legal justification for nationwide subsidies.
In King, the High Court will scrutinize this IRS decree using the traditional canons of statutory construction. The English language is clear: Congress wrote that subsidies would be available on state exchanges only, so Washington cannot deputize itself as the 51st state—especially when the black-letter law is as consistent, tightly worded and cross-referenced as the Affordable Care Act.
To take one example, the Secretary of Health and Human Services was empowered to grant unlimited sums of money to states to establish exchanges. But the law appropriated not a penny for the federal exchanges, and HHS raided internal slush funds to build them. If there is no legal difference between the federal and state exchanges, why did HHS need this budget ruse?
The Health Policy Skeptic 