What do conflicting Obamacare rulings mean for the future of health reform?
As you’ve probably heard, two federal appeals courts issued contradictory rulings this week concerning the part of the Affordable Care Act that provides subsidies to individuals who can’t afford health insurance premiums. So what does this mean for the future of Obamacare?
First, some background. Both cases center on a single phrase in the section of the health care reform law that states the government can provide subsidies to those who buy insurance on an exchange “established by a state.”
In the case before the District of Columbia appeals court, Halbig v. Burwell, a three-judge panel ruled that the law should be interpreted exactly as written — thus only allowing the subsidies in the 16 states (and the District of Columbia) which have set up their own exchanges.
Thus, participants in the 34 remaining states would not be eligible for the subsidies — a development that would largely gut the whole health reform program.
Just a couple of hours after the D.C. court issued its ruling, the Fourth Circuit Court of Appeals in Richmond, VA, released its decision — and it was exactly the opposite of that of its sister circuit.
In King. v. Burwell, the judges ruled that the ACA language was ambiguous, so that the Obamacare subsidies should available to participants using any health exchange, state-established or not.
The Obama administration immediately announced it would seek an “en banc” hearing in the D.C. case — bringing the matter before the entire 11-member appeals court. The administration also said all subsidies will continue during the appeals process.
Whatever the outcome, it’s entirely possible that the question will end up before the U.S. Supreme Court.
If D.C. decision does hold up …
For the sake of argument, let’s say the D.C. court’s decision stands. What would that mean for Obamacare?
Here’s what Tiffany Downs, an attorney for the law firm FordHarrison, had to say:
The D.C. Circuit’s ruling … is a significant setback for the Obama administration …
The ruling could impact the ACA’s requirement that large employers offer affordable health care as defined by the Act or pay a penalty. The penalty is triggered when an employee receives a subsidy for purchasing insurance on an Exchange. Reducing the number of individuals who receive subsidies will decrease the number of employers subject to the penalty.
Additionally, this ruling could impact the individual mandate, which requires most Americans to obtain health insurance that meets the requirements of the Act or face a penalty. Low-income individuals are exempt from this requirement. The Act defines low-income individuals as those for whom the annual cost of health coverage exceeds eight percent of their projected household income.
In calculating this percentage, the premium tax credit is deducted from the cost of the health insurance. Thus, if the tax credit is not available for insurance purchased on federal Exchanges, the number of people exempt from the individual mandate will increase exponentially.
What are administration’s chances?
What are the chances the D.C. ruling actually stands up? Not very good, according to Tom Goldstein, an attorney with extensive experience before the Supreme Court and co-founder of SCOTUSblog.
Writing in the Washington Post, Goldstein said he thought “the administration probably will come out ahead in the end.”
Why? Because under the law, courts defer to a broader interpretation of a statute “if the language is ambiguous and the administration’s position is reasonable,” Goldstein said.
What’s more, many other sections of the law refer to an exchange established by a state, but actually cover the federal government.
“Also, the law actually requires every state to set up an exchange, and it refers to all the exchanges as having been established by states,” Goldstein writes. “So you can look at the statute as a whole and reasonably read it to extend the subsidies to residents of every state.”
So. At least one expert thinks the administration will eventually win this battle. But making predictions about the outcome of federal court cases — especially ones that may well involve the Supreme Court — is a tricky business indeed.
We’ll keep you posted.
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