This is what happens when you pass a law “in order to find out what is in it” as Nancy Pelosi famously said.
The plaintiffs in the lawsuit — three private employers and four individual taxpayers — argued that Congress intended for the subsidies to go to people in states that set up their own insurance exchanges. They cited language in the law that said the subsidies would be available to those “enrolled through an Exchange established by the State.”
Makes sense to read it first.
As my old college friend Dan McLaughlin writes over at Red State:
The legal issue is fairly straightforward. The Affordable Care Act statute provides tax credit subsidies to individuals who buy insurance on exchanges “established by the State under section 1311″ of the ACA. To an ordinary reader, an exchange “established by the State” would seem to refer to exchanges established by states, unless the statute defines the word “State” to include the federal government, or unless section 1311 has some other, broader definition. Neither is the case – in fact, a separate section of the ACA, section 1321, allows the federal government to “establish and operate such Exchanges within the State” if the State does not.
As Dan goes on to state, the law treats the Federal exchange differently than those created by the states. Furthermore, one argument that I have heard on this is that the statute was written this way on purpose in order to encourage states to set up their own exchanges by providing the subsidy to the residents of those states that do so.
This will be appealed, but given that this is an issue relating to the plain text of the law and not a constitutional matter, any judge who is intellectually honest could not help but to uphold this ruling.