Federal Court Says Some Obamacare Subsidies Illegal
by Kim Trobee
The U.S. Court of Appeals for the District of Columbia ruled that some of the subsidies issued to people through the HealthCare.gov website are illegal.
The site, administered by the IRS, gave millions of people subsidies, even though the Affordable Care Act is clear in restricting them to state-run exchanges.
The decision in Halbig v. Burwell is one of four cases that involve tax credits and subsidies under the health care plan. Andrew Kloster, legal fellow at The Heritage Foundation, said the ruling reaffirms “that the administration cannot rewrite the health law that was passed.”
It also “stops the Internal Revenue Service from doing the same,” he said. “The statute is clear in the Affordable Care Act that the subsidies are to be directed only to states that elected to set up insurance exchanges.”
Only seven states have partnered with the federal government to set up an exchange. Twenty-seven states have no state exchange at all.
In a separate opinion, issued later today, the 4th U.S. Circuit Court of Appeals upheld the subsidies in their entirety. The White House claims the D.C. decision was “undermined” by the 4th Circuit’s decision. Yet, the opinion in the D.C. case will affect millions of people.
“We reach this conclusion, frankly, with reluctance,” the judges wrote in the D.C. opinion. “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.”
States are struggling to keep their state exchanges afloat, said Nina Owcharenko, director for the Center for Health Policy Studies at The Heritage Foundation.
“Only 17 states have set up Obamacare exchanges and some already are looking at abandoning their exchanges and using the federal exchange,” she said. “This is more bad news for Obamacare’s future as enrollees in the federal exchange could face higher costs of coverage.”
