Fed appeals court panel says most Obamacare subsidies illegal

In a potentially crippling blow to Obamacare, a top federal appeals court Tuesday said that billions of dollars worth of government subsidies that helped nearly 5 million people buy insurance on HealthCare.gov are illegal.

A judicial panel in a 2-1 ruling said such subsidies can be granted only to those people who bought insurance in an Obamacare exchange run by an individual state or the District of Columbia — not on the federally run exchange HealthCare.gov.

The decision threatens to unleash a cascade of effects that could seriously compromise Obamacare's goals of compelling people to get health insurance, and helping them afford it.

The Obama Administration is certain to seek a reversal of the decision by the U.S. Court of Appeals for the District of Columbia Circuit, which does not immediately have the effect of law. More