When it comes to eligibility for health care subsidies, not everyone is on the same page (or apparently even in the same book).
A federal appeals court in Washington, D.C., has ruled that nearly 5 million Americans in 34 states who used the federal online health insurance exchange to enroll in health coverage are not eligible for billions of dollars in tax subsidies to help them afford the premiums.
Meanwhile, an appeals court in Virginia reached the opposite conclusion, saying the tax subsidies are legal, regardless of whether a federal or state exchange was used.
According to The New York Times, the U.S. Court of Appeals for the District of Columbia Circuit said that under the Affordable Care Act, known as Obamacare, only people who obtained health insurance through a state exchange are eligible for subsidies.
In fact, language in the statute says that tax credits are allowed for “health plans offered in the individual market within a state which cover the taxpayer, the taxpayer’s spouse, or any dependent of the taxpayer and which were enrolled in through an exchange established by the state under 1311.”
Thirty-four states declined to set up their own health care exchanges, forcing their residents to use a federal marketplace to buy individual health insurance instead.
The Obama administration plans to ask the full D.C. circuit to reconsider the ruling by a three-judge panel. The Times reported:
“You don’t need a fancy legal degree to understand that Congress intended for every eligible American to have access to tax credits that would lower their health care costs, regardless of whether it was state officials or federal officials who were running the marketplace,” said Josh Earnest, the White House press secretary. “I think that is a pretty clear intent of the congressional law.”
The contradictory rulings on health care subsidies could put the question in the lap of the U.S. Supreme Court.
According to NBC News, the subsidies are vital to the success of Obamacare, and the Virginia court thought so, too.
“It is … clear that widely available tax credits are essential to fulfilling the act’s primary goals and that Congress was aware of their importance when drafting the bill,” the three-judge Richmond panel ruled.
“With only 16 state-run exchanges currently in place, the economic framework supporting the act would crumble if the credits were unavailable on federal exchanges.”
Right now nothing will change. About 6.7 million Americans will receive tax credits to help them pay their premiums for insurance purchased through the online exchanges, NBC said. About 4.7 million or (70 percent) of those people used a federal exchange.