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Affordable Care Act

Appeals Courts Split on Subsidies

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US Court of Appeals
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An appeals court in Washington, D.C. issued a decision Tuesday that would wipe out an estimated $4.8 billion a year in subsidies to Florida individuals and families who signed up for a health plan on the federal health marketplace this year. That would make health insurance unaffordable to most of the nearly 1 million Floridians who enrolled.

But a few hours later, another appeals court in eastern Virginia issued an opinion upholding the subsidies to enrollees in the 34 states that use the federal Health Insurance Marketplace (Healthcare.gov). In its opinion on King v Burwell, that court said it makes no sense to limit the subsidies to state-run exchanges, since that would undermine the intent of the law. 

The unanimous decision, written by Circuit Judge Roger Gregory in Richmond, says the argument against the subsidies "misses the forest for the trees."

Legal scholars say those who receive subsidies for coverage won't be affected for months, if ever.

Soon after the D.C. panel issued its 2-1 opinion in favor of Obamacare opponents, the Obama administration said it will request reconsideration by the full court, all 11 members. Some have predicted that the full court would rule differently. If so, there would be no conflict among the appellate courts that made the Supreme Court's intervention necessary, but the highest court could take up the issue if it wants.

Opponents of the health law celebrated the D.C. ruling. Americans for Prosperity issued a statement calling it "further evidence that the Obama administration needs to be reined in."

Attorney Elizabeth Wydra of the Constitutional Accountability Center disagreed:  "I think it's going to be increasingly difficult for judges to sign on to the ideological battle that the folks bringing these lawsuits are trying to wage through the court system."

This will take months to sort out, so those who received subsidies shouldn't panic.

More than 90 percent of the 983,775 Floridians who enrolled in an Obamacare plan for 2014 received one of those subsidies, according to federal data. A study released last week estimated that Floridians will be receiving $4.8 billion in subsidies annually by the time all are enrolled, in 2016, as Health News Florida reported.

The 34 states that rely on the federal exchange will receive $36 billion in subsidies that year, according to the study financed by the Robert Wood Johnson Foundation.

The decision in Halbig v. Burwell was issued Tuesday morning by a three-judge panel of the U.S. Court of Appeals in Washington, D.C. The court said: "A federal Exchange is not 'an Exchange established by the State.'"

In writing the Patient Protection and Affordable Care Act, Congress used the word  "state" because it anticipated that states would want to run their own virtual health-care markets. But as it turned out, most did not, leaving the task to the federal government.

It would have been a minor glitch to fix the law if the same Congress that passed the ACA in spring 2010 were in office. But in November of that year, Republicans won enough seats to take of the House. They have been unwilling to take any action on the ACA other than vote to repeal it.

The ruling noted that strict interpretation of that language undermines Congress' obvious intent in passing the law. But it is not the court's job to rewrite the law, it says.

Opponents of the ACA see the rollback of subsidies as their best chance to kill the law. Many if not most of those who received subsidies for 2014 would not have been able to afford the coverage without it and would become uninsured, the study predicted.

Only Texas, in which more than 1 million people stand to lose an estimated $5.6 billion in subsidies, would feel a greater impact, the study says.

The decision was 2 to 1, with Judges Thomas B. Griffith and A. Raymond Randolph siding with plaintiffs, and Harry T. Edwards dissenting. The decision wasn’t easy, Griffith wrote:

“We reach this conclusion, frankly, with reluctance. 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.

“But, high as those stakes are, the principle of legislative supremacy that guides us is higher still. Within constitutional limits, Congress is supreme in matters of policy, and the consequence of that supremacy is that our duty when interpreting a statute is to ascertain the meaning of the words of the statute duly enacted through the formal legislative process.

“This limited role serves democratic interests by ensuring that policy is made by elected, politically accountable representatives, not by appointed, life-tenured judges.”

--Health News Florida is part of WUSF Public Media. Contact Editor Carol Gentry at 813-974-8629 (desk) or e-mail at cgentry@wusf.org. For more health news, visit HealthNewsFlorida.org.