Insurance Subsidies For Federal Exchanges Struck Down
By Christine Kern, contributing writer
Ruling will likely be appealed to the U.S. Supreme Court.
A federal appeals court has ruled in a 2-1 opinion that subsidies for federal insurance premiums for nearly seven million Americans are invalid, dealing a serious blow to the ACA. The ruling sets up an almost-certain appeal to the U.S. Supreme Court.
Judge Griffith, writing for the court, concluded that in the case of Halbig v. Burwell, “The ACA unambiguously restricts the section 36B subsidy to insurance purchased on Exchanges ‘established by the State,’ and therefore we reverse the district court and vacate the IRS's regulation.” The court ruling reaffirmed the principle that the law is what Congress enacts – the text of the statute itself – and not the unexpressed intentions or hopes of legislators or a bill’s proponents.
Judge Randolph joined Judge Griffith’s opinion and wrote a concurrence. Judge Edwards dissented. The opinions are available here.
Edwards filed a dissent saying that that the opinion required a reading of the law that would “crumble” the reform law's overall structure, which shows it was not Congress' intent to have the law interpreted narrowly.
“Reading the ACA as a whole, it is clear that the statute does not unambiguously provide that individuals who purchase insurance from an Exchange created by HHS on behalf of a State are ineligible to receive a tax credit. The majority opinion evinces a painstaking effort – covering many pages – attempting to show that there is no ambiguity in the ACA. The result, I think, is to prove just the opposite.”
The ruling was the second dose of bad news for the Democrat-passed reform law this summer. Last month, the Supreme Court dealt a major symbolic blow to the law by ruling in Burwell v. Hobby Lobby Stores that the administration could not force the owners of closely held corporations to defy religious objections and cover contraceptives in their employees' insurance plans. The ruling prompted new legislation to ensure contraceptives are covered without cost for millions of women, but the future of that proposal is far from certain. The ruling prompted new legislation to ensure contraceptives are covered without cost for millions of women, but the future of that proposal is far from certain.
Nearly 7 million people used the exchanges to buy coverage in 2014, and according to The Kaiser Family Foundation, more than 80 percent of them qualified for a tax credit that averaged about $2,900 per enrollee. Most of them are likely to forgo the coverage rather than pay the full price themselves, legal experts on both sides of the issue say. That would set up a situation where only people with immediate plans to use the insurance – that is, the sick or chronically ill – would be likely to find a way to pay for it. Skewing insurers' risk pools would most likely cause prices to rise, perhaps dramatically.
The ruling could also destabilize non-group insurance markets outside the exchanges.