Federal Judge rejects Challenge to Health-Care Law Subsidies

A federal judge on Wednesday upheld the legality of subsidies at the core of the federal health-care law, turning aside one of the principal remaining court challenges to the law. 

The decision hands a victory to the Obama administration, which has been fighting in court to defend the Affordable Care Act since it passed in March 2010. The Supreme Court in June 2012 upheld the law's requirement for most Americans to carry health insurance or pay a tax penalty.

Since that defeat, some conservative legal groups have focused on subsidies that lower-income consumers can receive when they buy health insurance through new exchanges established by the law. Citing a disputed passage in the law's text, they argue that the subsidies can only be given to people in states that set up their own exchanges. More than two-thirds of the states didn't do so, relying instead on a federally run exchange.

If the judge had ruled for the challengers, the decision could have upended the law's implementation by making health insurance unaffordable for many people living in states such as Texas and Florida that are served by the federal exchange. 

But U.S. District Judge Paul Friedman in Washington, D.C., ruled that Congress intended for the insurance subsidies to be available nationwide, regardless of whether people were buying coverage through a state-run exchange or the federal one.

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