A US federal appeals court today delivered a stinging and potentially crippling blow to President Barack Obama's health care law, ruling that insurance subsidies may not be available to millions of users.
In a judgement it said has "major consequences," the DC Circuit Court of Appeals ruled the Obama administration cannot subsidise Americans who purchased their coverage through a government website, and that tax credits established under the 2010 law can only be issued to residents of states that set up their own so-called exchanges for buying insurance.
The law unambiguously "limits the availability of premium tax credits to state-established exchanges," two of the panel's judges wrote in a 72-page ruling.
The decision could severely hamper the law's mandate of bringing affordable health care to millions of Americans.
The decision impacts 27 states where predominantly Republican governors or state houses are opposed to so-called Obamacare, and another nine states that have partially opted out.
The ruling stated that the law "plainly distinguishes exchanges established by states from those established by the federal government," the judges wrote.
"At least until states that wish to can set up exchanges, our ruling will likely have significant consequences, both for the millions of individuals receiving tax credits through federal exchanges and for health insurance markets more broadly."
The Obama administration immediately called for a review of the decision.
The case may eventually be decided by the US Supreme Court, which has already ruled in favour of the constitutionality of another part of the law in 2012.
"We believe that this decision is incorrect, inconsistent with congressional intent, different from previous rulings, and at odds with the goal of the law: to make health care affordable no matter where people live," Department of Justice spokeswoman Emily Pierce said.
She stressed that for now, the tax subsidies -- which can dramatically reduce insurance costs for low income families or individuals -- remain intact and available across the country.
But House Speaker John Boehner, the top Republican in Congress, hailed the verdict as a victory over White House executive overreach.
"For the second time in a month, the courts have ruled against the president's unilateral actions regarding Obamacare.
