WASHINGTON Two federal appellate courts handed down contradictory rulings Tuesday on the legality of a central part of the Affordable Care Act that provides insurance subsidies to millions of Americans in three dozen states that rely on the new federal health insurance marketplace.
The DC Circuit Court of appeals ruled that the tax credits available under the 2010 health-care law may be provided only to residents of states that set up their own marketplaces. Less than two hours later, the Richmond-based 4th Circuit Court of Appeals ruled in a separate case that the laws language was ambiguous so that the Obama administration was free to allow the subsidies nationwide.
The ruling by the D.C. Circuit affects 27 states, most with Republican leaders who oppose the law,and another nine states that partially opted out.
California and Florida lead the way for state and federal healthcare sign-up markets. The government immediately announced it was seeking an en banc hearing in the D.C. case, requesting that it be heard before the entire appeals court. The question ultimately may end up at the Supreme Court. But if subsidies for half the states are barred, it represents a potentially crippling blow to the health-care law, which relies on the subsidies to make insurance affordable for millions of low- and middle-income Americans.
We feel very strong about the sound legal reasoning of the argument that the administration is making, White House spokesman Josh Earnest said. ... theres a clear, commonsense case to be made here which is that intent of Congress was to be sure that every eligible American who applied for tax credits to make their health insurance more affordable would have access to those tax credits whether or not the marketplace was operated by federal officials or state officials.
If the decision going against the government is upheld, it would be more damaging to the law than last months Supreme Court decision on contraceptives. In that case, the high court said certain private companies with religious objections could gain an exemption from the federal rule that company health insurance plans must cover birth control, sterilization and other measures.
The subsidies case strikes more directly at the laws heart. In his dissent, Judge Harry T. Edwards, an appointee of President Carter, called the case a not-so-veiled attempt to gut the Patient Protection and Affordable Care Act.
The ruling also has ramifications for the rule that took effect this year requiring most Americans to carry health insurance or pay a fine. But the penalty does not apply to people for whom the cheapest available coverage on the exchange, minus any subsidies, would exceed eight percent of their projected income for the year.
Without the subsidies, a swath of people may no longer be able to afford coverage and may therefore be liable for the penalty for failing to carry insurance. The penalty starts at $95 or 1 percent of income.
Removing subsidies from insurance customers living in states relying on the federal insurance marketplace would have a profound effect on the price they must pay for coverage, according to recent federal data. More than nine in 10 people in those states bought health plans with the help of the tax credits that the court has just knocked down. The average tax credit to those people for coverage this year is $276, lowering their premium from an average price of $345 per month to an average of $69.
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