The Obama administration is grasping at straws to defend its attempt to illegally give away billions of dollars in taxpayer funds under Obamacare, according to plaintiffs in a pending Supreme Court case that could significantly undermine the law.

Lawyers for plaintiffs in the King vs. Burwell case filed their closing brief in the case on Wednesday, the last brief to be filed before the Supreme Court hears oral arguments on March 4.

Plaintiffs filed their final brief in a pending Supreme Court case against Obamacare this week. Photo credit: Shutterstock

The Competitive Enterprise Institute is funding the case, and the group's general counsel, Sam Kazman, said it's clear the Obama administration is purposefully misapplying the law in order to dole out billions of dollars in health insurance subsidies that are not permitted by Obamacare.

"As the brief demonstrates, the government is manipulating language, purely, simply, and without justification," he said.

The key issue in the case is whether Obamacare allows the federal government to give people tax subsidies if they buy insurance on the federal government's own health insurance exchange. Plaintiffs say it's clear that the law says subsidies can only given to people who use exchanges "established by the state," and say that term is a clear reference to other language in the law that differentiates between state and federal government exchanges.

The Obama administration, in contrast, has argued that the phrase "established by the state" is a "term of art." Plaintiffs say there's no good reason why Congress would choose an ambiguous term on purpose, and say the Obama administration doesn't have any good answers to this question.

"The government's effort to explain is laughably unpersuasive," the plaintiffs' reply brief said. "Congress had to use this phrase, it argues, because of 'style and grammar,' to 'identify the exchange in a particular state.' "

Plaintiffs say that while the law clearly prevents subsidies for people who buy health insurance under the federal exchange, the IRS issued regulations that said anyone can get the subsidies. They say those regulations may have been what prompted some states not to set up their own exchanges, since the IRS was telling states that the subsidies were available for all.

"Our reply brief effectively rebuts the government's attempt to distort the law in order to rescue an unauthorized IRS giveaway of billions of taxpayer dollars," Kazman said.

Once the Supreme Court hears oral arguments, it's expected to issue some ruling by the summer.

A decision that says the subsidies can only be given to people who buy insurance under state exchanges could have a dramatic impact on enrollment. The Obama administration has said it is giving out an average of $268 per month for the average enrollee, or more than $3,000 per year.

Taking those away from everyone on the federal exchanges would mean an end to billions of dollars of subsidies, reduced enrollment, and significant damage to Democratic efforts to get more people signed up under the law.

Read the plaintiffs' reply brief here: