D.C. Appeals Panel Deals Big Blow to Obamacare Subsidies
By: Tom Howell Jr. (Washington Times) July 2014
Millions of Americans are not entitled to government health insurance subsidies under Obamacare because of the way the law is written, a divided three-judge panel of the D.C. Circuit Court of Appeals ruled Tuesday.
But the force of the legal victory was undercut just hours later when another appeals court in Richmond sided with the Obama administration on the subsidy question, setting up an almost certain extended legal battle that could soon reach the Supreme Court.
In a decision that could blow a massive hole in President Obama’s signature domestic achievement, the court held that people living in states that relied on the federal government to set up their insurance market exchanges cannot offer the subsidies considered critical to making coverage affordable.
The D.C. Circuit Court of Appeals ruled the administration used an IRS rule to stretch the meaning of the Affordable Care Act, which said financial aid to to low- and middle-income people should only flow to exchanges “established by the State.” If that means only state-run exchanges, it would cut off subsidies to two-thirds of the nation.
The 2-1 decision from a three-judge panel effectively invalidated the IRS rule that ensured subsidies flowed to every state, and the deciding judges seemed to realize the potential impact of the ruling.
“We reach this conclusion, frankly, with reluctance,” Judge Thomas B. Griffith said in his opinion for the court. “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.”
Hours later, the U.S. Court of Appeals for the Fourth Circuit upheld the administration’s interpretation of where subsidies may flow, creating a split in the circuits. The judges in Richmond reasoned that Obamacare’s language was ambiguous and that the IRS rule was “a permissible exercise of the agency’s discretion.”
