A big defeat for Obamacare in the D.C. Court of Appeals.

"The 2-1 ruling said such subsidies can be granted only to 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."

"Section 36B plainly makes subsidies available in the Exchanges established by states," wrote Senior Circuit Judge Raymond Randolph in his majority opinion, where he was joined by Judge Thomas Griffith. "We reach this conclusion, frankly, with reluctance. At least until states that wish to can set up their own Exchanges, our ruling will likely have significant consequences both for millions of individuals receiving tax credits through federal Exchanges and for health insurance markets more broadly."

In his dissent, Judge Harry Edwards, who called the case a "not-so-veiled attempt to gut" Obamacare, wrote that the judgment of the majority "portends disastrous consequences." 

ADDED: Here's the PDF of the opinion,  Halbig v. Burwell. Excerpt:

Although both appellants and the government argue that the ACA, read in its totality, evinces clear congressional intent, they dispute what that intent actually is. Appellants argue that if taxpayers can receive credits only for plans enrolled in “through an Exchange established by the State under section 1311 of the [ACA],” then the IRS clearly cannot give credits to taxpayers who purchased insurance on an Exchange established by the federal government. After all, the federal government is not a “State,” see 42 U.S.C. § 18024(d) (defining “State” to “mean[] each of the 50 States and the District of Columbia”), and its authority to establish Exchanges appears in section 1321 rather than section 1311, see id. § 18041(c)(1). The government counters that appellants take a blinkered view of the ACA and that sections 1311 and 1321 of the Act establish complete equivalence between state and federal Exchanges, such that when the federal government establishes an Exchange, it does so standing in the state’s shoes. Furthermore, the government argues, whereas appellants’ construction of section 36B renders other provisions of the ACA absurd, its own view brings coherence to the statute and better promotes the purpose of the Act.

We conclude that appellants have the better of the argument: a federal Exchange is not an “Exchange established by the State,” and section 36B does not authorize the IRS to provide tax credits for insurance purchased on federal Exchanges. We reach this conclusion by the following path: First, we examine section 36B in light of sections 1311 and 1321, which authorize the establishment of state and federal Exchanges, respectively, and conclude that section 36B plainly distinguishes Exchanges established by states from those established by the federal government. We then consider the government’s arguments that this construction generates absurd results but find that it does not render other provisions of the ACA unworkable, let alone so unreasonable as to justify disregarding section 36B’s plain meaning. Finally, turning to the ACA’s purpose and legislative history, we find that the government again comes up short in its efforts to overcome the statutory text. Its appeals to the ACA’s broad aims do not demonstrate that Congress manifestly meant something other than what section 36B says.

UPDATE: On the same day, a panel of the 4th Circuit Court of Appeals goes the other way:

[In King v. Burwell,] Judge Roger L. Gregory, who received a recess appointment from President Bill Clinton and a permanent appointment from the second President Bush, said that the rival interpretations of the law by the plaintiffs and by the Obama administration appeared to be “equally plausible.”

But, Judge Gregory said, the administration’s position helps achieve “the broad policy goals” of the Affordable Care Act. “The economic framework supporting the act would crumble if the credits were unavailable on federal exchanges,” he said.

In a concurring opinion, Judge Andre M. Davis, a senior judge on the appeals court, said the plaintiffs’ argument “would effectively destroy the statute.” It would, he said, “deny to millions of Americans desperately needed health insurance through a tortured, nonsensical construction” of the law. Judge Davis and the other judge on the panel, Stephanie D. Thacker, were appointed by Mr. Obama.

Obviously, the Supreme Court needs to resolve this split, which is all about the extent to which judges can rewrite statutes to save them. That's what I'd say anyway, but I suspect most people think it's about whether they want to the ACA to survive or die.