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Dual court rulings leave everyone wondering what’s next

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It isn’t every day when two federal courts issue opposite rulings on an issue. But that is exactly what happened today when two appellate courts handed down decisions regarding the legality of subsidies paid to those who purchase health insurance on the exchanges under the Affordable Care Act (ACA). Those subsidies, in the form of tax credits, are given to those enrollees whose income falls below 400% of the federal poverty level.

Within a matter of about two hours, the two rulings left ACA-watchers scratching their heads. Both ACA haters and ACA lovers claimed victory for their side. And the bigger question is “What’s next?”

The key word in all of this is “state.” As we reported earlier this month, the case before the U.S. Court of Appeals in the District of Columbia aimed to block the ACA’s insurance subsidies in the 36 states where health care coverage could be purchased on the federally-facilitated exchange. The remainder of the states established their own exchanges or developed a state-federal partnership. At the heart of the suit is the phrase in the act authorizing subsidies in “an exchange established by the State.” The federal case argued that it is legal to provide subsidies to those who purchased coverage in states that operate their own exchange, but not in states where the federal government established an exchange.

In the first ruling, handed down by the appeals court in D.C., a 3-justice panel ruled 2–1 that the federal government may not subsidize coverage bought on the federal exchange. Two hours later, the Fourth Circuit Court of Appeals in Virginia ruled the opposite, saying the subsidies are legal.

Although the two appeals courts offered different rulings, in their opinions they agreed on one thing: those who are challenging the law through the court system don’t want to be forced to buy insurance.

Many ACA-watchers fear that eliminating the subsidies would rip the guts out of the act, as it is the subsidies that help to make the coverage “affordable” as described by the title of the law. Make the subsidies illegal, and suddenly the coverage is no longer affordable.

The federal government announced it would appeal the D.C. court ruling, asking for the entire 11-member panel to issue what is called an “en banc” review.

In addition, an Obama administration spokesman said the subsidies would continue to be offered to those who are eligible. So, in the meantime, it appears as though nothing is changing in the short term.

The case is expected to continue to work its way through the federal court system. Will it eventually make its way to the Supreme Court? Some believe the high court may be unwilling to hear another challenge to the ACA. The high court already has ruled twice on various aspects of the ACA: the first time, ruling that the law is constitutional, and the second time ruling that some employers may opt out of providing contraceptive coverage that violates their religious beliefs.

Whatever the outcome of this latest legal challenge to ACA, one thing remains. Joel Ario, managing director at Manatt Health Solutions,and  former Pennsylvania Insurance Commissioner who helped set up the exchanges when he worked at the U.S. Department of Health and Human Services, summed it up when he told NBC News: “The politics will be ugly, I think, at the end of the day.”

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Susan Rupe is assistant editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Connect with Susan →

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