FOCUS OF THE WEEK
DC Court Ruling is a Setback for ACA
July 22, 2014, 11:15:57 AM
Katie Sullivan, MA
A federal appeals court panel ruling in Washington, DC, if upheld, could majorly impact the Affordable Care Act. According to the Washington Post, a 3-judge panel sided with plaintiffs who claimed that the health law prohibits the government from providing subsides to consumers whose states did not establish their own health insurance exchanges.  

The 2-1 ruling determined that the health law “does not authorize the Internal Revenue Service to provide tax credits for insurance purchased on federal exchanges,” adding that it, “plainly makes subsidies available only on exchanges established by states.”

Twenty-seven states —including Texas, Georgia, and South Carolina —opted to utilize the federal exchange in place of a state-based one. Without federal tax credits, millions of low- and middle-income Americans would lose access to affordable health plans.

"Section 36B plainly makes subsidies available in the Exchanges established by states," wrote Senior Circuit Judge Raymond Randolph. "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."

Judge Harry Edwards, who disagreed with the conclusions of Judge Randolph and Judge Thomas Griffit, said that the decision was a "not-so-veiled attempt to gut" the ACA. He wrote that the judgment of the majority "portends disastrous consequences."

A Robert Wood Johnson Foundation and the Urban Institute report said that if the ruling was upheld, by 2016 approximately 7.3 million enrollees who would have qualified for financial assistance will be lose access to about $36.1 billion in subsidies.

However, many lower courts interpret the law differently, arguing that all states should be eligible for federal tax credit subsidies. The ruling is expected to be reviewed by a full panel of judges on the DC Circuit Court of Appeals under order of the Obama Administration. If the ruling is not struck down at that level, it may be reviewed and reversed by the Supreme Court.

Around the Web

Federal Appeals Court Panel Deals Major Blow to Health Law [The Washington Post]

Court Deals Setback to Health Care Law [The New York Times]

Fed Appeals Court Panel Says Most Obamacare Subsidies Illegal [CNBC]