Judge Upholds Rights to Subsidies in Health Care Law
By: Robert Pear (NY Times) January 2014
WASHINGTON — A federal judge rejected a legal challenge on Wednesday to a central part of President Obama’s health care law, ruling that millions of low- and moderate-income people could obtain health insurance subsidies regardless of whether they bought coverage through the federal insurance exchange or in marketplaces run by the states.
Critics of the law said a literal reading of it would allow subsidies only in the 14 states that ran their own exchanges. But the judge, Paul L. Friedman of the Federal District Court here, said this was absurd and contrary to the whole purpose of the Affordable Care Act.
“The plain text of the statute, the statutory structure and the statutory purpose make clear that Congress intended to make premium tax credits available on both state-run and federally facilitated exchanges,” Judge Friedman said.
After analyzing the law and its legislative history, Judge Friedman said, “Congress assumed that tax credits would be available nationwide” and “on any exchange, regardless of whether it is operated by a state” or by federal officials.
The ruling is important because the federal government runs the exchange serving 36 states, accounting for about two-thirds of the nation’s population.
Ronald F. Pollack, the executive director of Families U.S.A., a liberal-leaning advocacy group, said the ruling was “an important win for health care consumers across the country.”
Sam Kazman, general counsel of the Competitive Enterprise Institute, a libertarian research organization that is coordinating the lawsuit, said the plaintiffs would appeal the decision.
From Oct. 1, when the exchanges opened, through Dec. 28, nearly 1.2 million people selected health insurance plans in the federal marketplace, and nearly one million chose plans in state exchanges.
About four-fifths of people choosing health plans at both levels of government qualified for subsidies that reduced their premiums. Subsidies may be available to people with annual incomes up to $45,960 for individuals and up to $94,200 for a family of four.
The lawsuit was filed by people in states using the federal exchange: Tennessee, Texas, Virginia and West Virginia. They objected to being required to buy insurance even with subsidies to help defray the cost.
They said the plain language of the health care law provided subsidies specifically for insurance purchased on “an exchange established by the state.” They said Congress provided subsidies in this way as an incentive for states to establish and operate exchanges, rather than leaving the task to the federal government.
However, Judge Friedman found no evidence of such a purpose. He quoted remarks on the Senate floor by Senator Max Baucus, Democrat of Montana and an architect of the law, who said in December 2009 that Congress was giving states a choice to set up their own exchanges or allow the federal government to do so.
When federal officials set up an exchange, Judge Friedman said, they “stand in the shoes of the state.”
The plaintiffs’ argument seems intuitively appealing but leads to “strange or absurd results,” the judge said, adding that courts must interpret statutes as a whole, not just isolated provisions.
