(Reuters) – A federal judge in Oklahoma ruled on Tuesday that tax subsidies vital to the implementation of President Barack Obama’s signature healthcare law are unlawful, giving a boost to opponents of the measure known as Obamacare.
U.S. District Judge Ronald White found that the Internal Revenue Service rule that the Obama administration issued to set up tax-credit subsidies to help people afford insurance premiums under Obamacare was “an invalid implementation” of the law based on his interpretation of it.
White, who was appointed by Republican President George W. Bush, put his ruling on hold pending an appeal.
A U.S. Justice Department spokesman said the Obama administration will appeal the decision.
The 2010 Obamacare law, officially known as the Affordable Care Act, was the most sweeping overhaul of the U.S. healthcare system in decades and was intended to increase the number of Americans with health insurance. It set up health insurance exchanges and tax-credit subsidies to help people buy insurance coverage.
Five million people could be affected, analysts have estimated, if the administration loses in court and the subsidies disappear from the federal marketplaces that have been set up in states that did not create their own exchanges.
The Oklahoma case was brought by Attorney General Scott Pruitt, a Republican, who said in a statement that Tuesday’s ruling “is a consequential victory for the rule of law.” Other cases have been brought by conservative lawyers representing individuals and business owners.
So far, two federal appeals courts have issued rulings on the issue. The 4th U.S. Circuit Court of Appeals in Richmond, Virginia backed the Obama administration in July.
On the same day, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit ruled in favor of people challenging the law. That decision was thrown out on Sept. 4 when the court agreed to rehear the case. The appeals court will hear a new round of oral arguments on Dec. 17.
A federal judge in Indiana is also considering the issue in a lawsuit filed by state officials.