The ACA states that states can establish or operate the exchanges, or the federal government will step in to do so.
So far, 16 states and the District of Columbia have elected to set up their own exchanges, while 34 states rely on federally run exchanges.
The conflict at the center of the Halbig case (and three other challenges across the country) has to do with tax subsidies granted to those who seek to obtain insurance from the exchanges. The ACA grants the credits to qualifying individuals in order to defray the cost of the insurance. Millions of Americans are expected to take advantage of the subsidies.
But challengers to the law dispute who is eligible for the tax credits.
On one side, the IRS interprets the law as authorizing the agency to grant tax credits to individuals using either the state or federal exchanges. On the other side are challengers to the law who question that interpretation.
The challengers say that while the text of the law allows the subsidies for the state-run exchanges, there is nothing in the law that says the subsidies should be available for the federal exchanges.
Michael A. Carvin, a lawyer for the challengers, argued in court briefs that the IRS is wrong in its interpretation of the law and the agency purports to "dispense billions of dollars in federal spending that Congress never authorized."
As of March 7, 2.6 million people have selected a federal exchange and 85% of them have selected a plan with financial assistance, according to U.S. Health and Human Services statistics.
If this panel of judges rules against the law in this case, the government could ask that a larger panel of judges on the same court hear the case. But supporters are concerned that one of the challenges, currently playing out in four different federal courts across the country, could one day end up, front and center, at the highest court in the land.