Two conflicting appeals court decisions issued July 22 seem to put the tax subsidies offered by the Affordable Care Act – and potentially, the entire law itself – on either shaky or firm legal footing, depending on who’s doing the analysis.
Both cases were originally brought by plaintiffs who contended that the Obama Administration did not have the legal authority to issue subsidies to low-income individuals who buy insurance on the federal marketplace. They said that the ACA explicitly said that credits were only available to "state-established exchanges." When lower courts ruled against them, they appealed.
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The conflicting court decisions seem to put the tax subsidies offered by the Affordable Care Act - and potentially, the entire law itself - on either shaky or firm legal footing, depending on who's doing the analysis.
The District of Columbia Circuit of the U.S. Court of Appeals sided with the plaintiffs in Halbig v. Burwell, 2-1. The 4th Circuit of the U.S. Court of Appeals, on the other hand, sided unanimously with the government in King v. Burwell.
An estimated 5 million people have received subsidies from the 36 federal marketplaces, putting them at risk for losing those tax credits. For the time being, however, people who have been deemed eligible for subsidies will continue to receive them. And those who sign up for insurance in the next open enrollment period beginning Nov. 15 will also likely get subsidies.
"This ruling does not have any practical impact on Americans’ ability to receive tax credits right now," White House spokesman Josh Earnest said about the ruling in Halbig v. Burwell. In a briefing after both decisions were handed down, Mr. Earnest also said that the administration would essentially appeal that ruling by seeking a decision by the full panel of 11 judges who sit on the D.C. Circuit.
"You don’t need a fancy legal degree to understand that Congress intended for every eligible American to have access to tax credits that would lower their health care costs," whether state or federal officials were running the marketplace, Mr. Earnest said.
The lead plaintiff in the case heard by the D.C. Circuit was brought by Jacqueline Halbig, a senior policy adviser in the Department of Health & Human Services under President George W. Bush. The two judges ruling for her and her coplaintiffs said that their reading of the ACA "plainly makes subsidies available only on exchanges established by the states." The "legislative record provides little indication one way or the other of congressional intent, but the statutory text does," they said, adding that the language in the law is "conclusive evidence of Congress’ intent."
They said they reached their conclusion "with reluctance," because "our ruling will likely have significant consequences both for the millions of individuals receiving tax credits through federal exchanges and for health insurance markets more broadly."
Judge Harry Edwards dissented. "This case is about appellants’ not-so-veiled attempt to gut the Patient Protection and Affordable Care Act." The argument that Congress only intended to pay subsidies on state exchanges as a way to encourage states to run their own exchanges "is nonsense, made up out of whole cloth."
Judge Edwards added, "There is no credible evidence in the record that Congress intended to condition subsidies on whether a state, as opposed to HHS, established the exchange. Nor is there credible evidence that any state even considered the possibility that its taxpayers would be denied subsidies if the state opted to allow HHS to establish an exchange on its behalf."
Those who support premium subsidies said they were dismayed by the D.C. Circuit’s ruling, but that it would not likely stand.
"Today’s decision represents the high-water mark for Affordable Care Act opponents, but the water will recede very quickly," said Ron Pollack, Executive Director of Families USA, in a statement.
The American Cancer Society, American Cancer Society Cancer Action Network, American Diabetes Association, and American Heart Association filed a joint statement saying that they believed the Halbig decision could be disastrous. "On behalf of the tens of millions of people nationwide who have experienced cancer, diabetes, heart disease, and stroke, we are deeply disappointed with the decision of the U.S. Court of Appeals for the D.C. Circuit, which denies premium tax credits that make health coverage more affordable to people who buy a plan in the federally facilitated marketplace," they said. But, they added that it would not likely be upheld.
Others who opposed the ACA and the subsidy scheme applauded the Halbig decision.