On July 22, 2014, within two hours of each other, two Federal Appeal Court panels issued conflicting rulings regarding the payment of subsidies to certain lower income taxpayers purchasing health insurance under a health insurance exchange (i.e., marketplace) created by the federal government under the Affordable Care Act ("ACA").
The U.S. Appeals Court for the District of Columbia Circuit was the first to rule. In that case (Halbig v. Burwell), a three judge panel ruled 2-1 that the government could NOT PAY a subsidy to people living in the 36 states that use a federal exchange (i.e., an exchange created by the U.S. government since the state in which the insured lives declined to do so) created under the ACA. These subsidies were created by the ACA to assist taxpayers in paying for the insurance premium required of them upon purchasing a health insurance policy through the exchange.
Two hours later, a three judge panel for the U.S. Appeals Court for the Fourth Circuit in a case styled King v. Burwell ruled 3-0 that the payment of these types of subsidies WAS PERMISSIBLE whether or not the health insurance policy was purchased from an exchange created by the federal government or by the state in which the taxpayer lives.
The rulings in both cases turned on the meaning of a provision in the ACA that permits the federal government to pay these premium subsidies only for health insurance policies purchased "through an exchange established by the state" (emphasis added).
The U.S. government has already announced its intention to seek review of the decision of the D.C. Circuit Court of Appeals by the full Court, a so-called "en banc" rehearing.
If the ruling by the D.C. Circuit Court of Appeals stands, the potential consequences to the ACA would be to not only jeopardize the ability of the government to enforce the ACA's individual mandate, but also the ACA's employer mandate. In effect, the ACA could lose much of its ability to widen access to health insurance for many Americans that are now relying upon the ACA to do so.
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