A three-judge panel of the liberal DC Circuit Court of Appeals, which is headquartered in Washington, D.C., has ruled that the Federal exchanges that were set up by the Feds to service those states that refused to set up their own state ObamaCare exchanges (such as North Carolina) are issuing illegal subsidies to policyholders because the ObamaCare legislation clearly delineates state exchanges as the portals for obtaining health insurance coverage through the health care law.

The ruling, in a case known as Halbig v. Burwell, was by a 2-1 majority.  The Obama administration is now likely to ask for an en banc hearing, in which the full DC Circuit will review the case again and make a final ruling for the court.  If the administration does not prevail in the en banc hearing, the next stop will be the Supreme Court.

The Federal exchanges offer health insurance in 36 states, mostly through the online portal, HealthCare.gov.  On average, health insurance obtained via the federal exchanges are offered with a 76% subsidy in taxpayer funds.  Currently, of the eight million persons signed up for ObamaCare, slightly more than two-thirds of them signed up through the Federal HealthCare.gov portal.  If, and I emphasize IF, the en banc court and SCOTUS validate the panel’s ruling, this two-thirds would be denied subsidies, their premiums would jump 76%, and the vast majority would find the coverage unaffordable and drop out.

If that should come to pass, the Obama administration would probably try to exercise the maximum degree of pressure and coercion to get the 36 abstaining states to create their own exchanges.