Contradictory court rulings issued on the Affordable Care Act are leaving millions of low- and middle-income people wondering whether federal subsidies for healthcare premiums will continue.
In one ruling, a federal court panel in Virginia backed the subsidies nationwide. But a divided panel in Washington, D.C., said that financial aid can be paid only in states that have set up their own insurance markets, or exchanges.
Missouri and 35 other states have not set up their own exchanges, instead relying on the federal government’s program. Should the Washington ruling stand, eligible recipients would have to pay the full cost of care.
Among them is Linda East, 52, who said she was “devastated” Tuesday when she discovered her subsidy may be in danger.
Before the Affordable Care Act marketplace opened, the Bonne Terre woman was uninsured for years.
She tried the federal marketplace and found coverage for $525 a month. She said she couldn’t afford that. But with a subsidy, her premium dropped to $136 a month, and she has kept her primary care doctor.
“Without this insurance, I really couldn’t get the proper care that I do get,” East said.
The judges on the Washington case were Thomas Griffith, an appointee of President George W. Bush; A. Raymond Randolph, an appointee of Bush’s father; and Harry Edwards, an appointee of President Jimmy Carter, who dissented.
The challengers to the law say a literal reading of that language invalidates the IRS subsidy to people in the federal exchanges. The opponents say that people who would otherwise qualify for the tax credits should be denied that benefit if they buy insurance on a federally facilitated exchange.
But about 100 miles to the south of D.C. in Richmond, Va., the three-judge 4th U.S. Circuit Court of Appeals panel unanimously came to the opposite conclusion, ruling that the Internal Revenue Service correctly interpreted the will of Congress when it issued regulations allowing consumers in all 50 states to purchase subsidized coverage.
The question about the legality of subsidies was raised after health law opponents filed lawsuits that claimed the tax credits enacted by Congress as part of the Affordable Care Act were intended to encourage states to set up their own health benefit exchanges and that the penalty for not doing so was withdrawal of tax credits for lower-income residents.
The case revolves around four words in the Affordable Care Act, which says the tax credits are available to people who enroll through an exchange “established by the state.”
The administration of President Barack Obama and congressional and state legislative supporters of the Affordable Care Act say the challengers are failing to consider the words of the statute in its entirety.
The Obama spokesman said the administration would seek a hearing by the full 11-judge appeals court in Washington. The full court has seven judges appointed by Democratic presidents, including four appointed by Obama.
The White House also declared that policyholders will keep getting financial aid as the administration sorts out the legal implications.
Spokesman Josh Earnest said the adverse decision in Washington would have “no practical impact” on tax credits as the case works its way through the courts.
Still, the decision creates a climate of uncertainty just months away from the start of the federal exchange’s open enrollment on Oct. 1. Some worry that people looking to enroll or re-enroll may be scared off by the impending decision of whether their subsidies would count for anything.
Both cases are part of a long-running political and legal campaign to overturn the legislation by Republicans and other opponents of the health care law.
SIGNIFICANT IMPACT
Eighty-five percent of Missourians who bought a plan on the exchange received some level of financial assistance for those plans, according to a May 2014 report from the U.S. Department of Health and Human Services.
If these subsidies were taken away, it would mean health insurance premiums would skyrocket for those individuals.
For Leslie Terrebonne, 62, it’s a matter of subsidy or no coverage at all. She said her tax credit is for more than $300 and a lower-tier plan without the subsidy would have too high of a deductible for her to afford.
The Florissant resident said she is a heart attack survivor, and the idea of losing coverage “just shakes me to my core.”
Yet Brad Byars, an attorney at Armstrong Teasdale who specializes in healthcare policy, said Missourians won’t be affected by this, at least not in the immediate future.
Missouri falls under the 8th U.S. Circuit Court of Appeals, which would have to come to its own decision on the matter.
“The ruling by the D.C. circuit is merely persuasive,” Byars said. “Until there’s any circuit ruling on this, it wouldn’t have any immediate implications on Missouri.”
If the Washington ruling is upheld, though, he said he believes constituents will pressure their legislators to create a state-based exchange in order to keep the subsidies.
Still, Byars acknowledged that U.S. Republican legislators may use it as leverage to tweak provisions in the law, such as the unpopular medical device tax. Or they could once again deem the law a failure and attempt to repeal it.
U.S. Sen. Roy Blunt, R-Mo., for example, has called for repeal in the past, as well as voiced support for the ENFORCE the Law Act, which would allow Congress to authorize a lawsuit against the executive branch for not properly implementing the law.
Blunt commended the Washington appeals court decision in a news release.
“The court is just upholding the plain text of the president’s healthcare law, which was terribly written and poorly implemented,” he said. “President Obama continues to ignore his constitutional duty to uphold the law, and this is yet another reminder that Congress must hold him accountable.”
Sen. Claire McCaskill, D-Mo., who is historically supportive of the healthcare law, blamed state governments instead of the president.
In a news release, she said the Affordable Care Act is here to stay.
“This particular issue would be less pressing if more state governments had set up their own marketplaces instead of abdicating their responsibilities to the federal government,” she said in the release.
In the Washington case, a group of small business owners argued that the law authorizes subsidies only for people who buy insurance through markets established by the states — not by the federal government.
That’s no mere legal distinction, because the federal government is running the markets, or exchanges, in 36 states.
The divided Washington appeals court agreed with that objection, in a decision that could mean premium increases for more than half the 8 million Americans who have bought taxpayer-subsidized private insurance under the law.
The majority opinion concluded that the law, as written, “unambiguously” restricts subsides to consumers in exchanges established by a state. That would invalidate an IRS regulation that tried to sort out confusing wording in the law by concluding that Congress intended for consumers in all 50 states to have subsidized coverage.
“At least until states that wish to can set up exchanges, 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,” the majority wrote.
“But, high as those stakes are, the principle of legislative supremacy that guides us is higher still,” the opinion added.
Tim Greaney, co-director of the Center for Health Law Studies at St. Louis University School of Law, said the majority opinion in the Washington case is nonsense.
“It really comes down to judging what the Congress intended,” Greaney said of the Affordable Care Act. “Nobody can read the history of the ACA and rationally conclude that there was anything but an intention to extend tax credits to everyone whether there was a federal support exchange or a state exchange.”
This report was prepared in collaboration with Kaiser Health News, an editorially independent program of the Kaiser Family Foundation.