A lawsuit challenging the heart of the health care reform law — the extension of federal premium subsidies to millions of lower-income uninsured U.S. residents to purchase coverage in a public insurance exchange — can go forward, a federal judge in Washington has ruled.

The suit, filed by four individuals, contends that the Internal Revenue Service overstepped its authority in its 2012 rule saying that the subsidies are available through state and federal insurance exchanges.

The plaintiffs argue that that under the Patient Protection and Affordable Care Act, premium subsidies are limited to states that have set up insurance exchanges, and not the 34 states where the Department of Health and Human Services established exchanges after the states declined to do so.

In rejecting the Justice Department's bid to dismiss the suit, Judge Paul Friedman of the U.S. District Court of the District Columbia said Tuesday that case will be considered on an expedited basis. But he rejected the plaintiffs' bid for a preliminary injunction to block the rules while the suit is considered.

In August, a federal judge in Oklahoma allowed a somewhat similar suit, which was filed by Attorney General Gov. Scott Pruitt, to proceed.

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The ramifications of the litigation are huge. If premium subsidies are limited to coverage provided only through state insurance exchanges, millions of uninsured U.S. residents living in states, such as Ohio, Pennsylvania and Texas, that declined to set up exchanges would lack access to the subsidies and likely would remain uninsured.

That would defeat the central purpose of the health care reform law, which is to significantly expand coverage. In 2012, about 48 million people were uninsured, according to the U.S. Census Bureau.

A ruling against the government also could have significant implications for employers. That is because health care reform law penalties against employers that do not offer coverage or do not offer affordable coverage apply only if an employee eligible for a premium subsidy uses it to buy coverage through a public exchange.

But if the courts should rule that the subsidy is available only in state-established exchanges, employers would not face the penalties if their employees live in states that have declined to set up exchanges.

Under the law, employers with at least 50 full-time employees are liable for a $2,000 per full-time employee penalty starting in 2015 if they do not offer coverage. If employee premiums for individual coverage exceed 9.5% of wages, the employer would be liable for a $3,000 penalty for that employee.