WASHINGTON – A federal appeals court dealt a major blow to ObamaCare on Tuesday, ruling against the legality of some subsidies issued to people through the Affordable Care Act exchanges.
The ruling is likely to be appealed. And a separate federal appeals court — the Fourth Circuit Court of Appeals — hours later issued its own ruling on a similar case that upheld the subsidies in their entirety.
But the decision Tuesday morning by a three-judge panel of the U.S. Court of Appeals for the District of Columbia nevertheless strikes at the foundation of the law by challenging subsidies that millions of people obtained through the federally run exchange known as HealthCare.gov.
The panel of the U.S. Court of Appeals for the District of Columbia ruled 2-1 that the IRS went too far in extending subsidies to those who buy insurance through that website.
The suit maintained that the language in ObamaCare actually restricts subsidies to state-run exchanges — of which there are only 14 — and does not authorize them to be given in the 36 states that use the federally run system.
The court agreed.
“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,” the ruling stated.
The case, Halbig v. Burwell, is one of the first major legal challenges that cuts to the heart of the Affordable Care Act by going after the legality of massive federal subsidies and those who benefit from them.
The decision said the law “unambiguously restricts” the subsidies to insurance bought on state-run exchanges.
The dissenting opinion, though, claimed political motivations were at play. “This case is about Appellants’ not-so-veiled attempt to gut the Patient Protection and Affordable Care Act (‘ACA’),” the dissent stated.
The ruling, though likely to be appealed, could threaten the entire foundation of the newly devised health care system. Nearly 90 percent of the federal exchange’s insurance enrollees were eligible for subsidies because of low or moderate incomes, and the outcome of the case could potentially leave millions without affordable health insurance. (read more)