Federal courts have opposing views on legality of Obamacare subsidies

Two federal courts have issued conflicting rulings that put the fate of the Affordable Care Act in limbo.

 

On Tuesday morning, a federal appeals court in the District of Columbia ruled 2-to-1 that the 36 states with federally-run exchanges are not eligible for subsidies offered by the government to help low-income people buy insurance. States with their own exchanges are not affected by that ruling.

Robert Field, a professor of law and public health at Drexel University, said that decision is the most serious legal challenge to the healthcare law so far.

“The contraception ruling last month gets at a piece of it — a piece that’s very important to those who are directly affected — but only a piece of it; it doesn’t gum up the gears,” Field said. “This one, if it’s upheld, would seriously gum up the gears.”

Several hours later, a Virginia court took the opposite view, finding that the intent of Congress was to keep subsidies available to all people, regardless of who is running the exchange.

The decisions make the legal landscape more convoluted than ever, Field said.

“This will not be resolved until the Supreme Court finally hears it, which is going to be at the earliest, next year,” he said. “In the meantime, if I were a Pennsylvania recipient who was receiving a subsidy, I’d be at least a little bit worried that in the long term, that subsidy could go away.”

Pennsylvania and New Jersey have federally-run exchanges. If the D.C. ruling is upheld, the Robert Wood Johnson Foundation’s Urban Institute estimates more than 630,000 eligible people in the two states would be unable to get the tax credits, worth a total of approximately $3 billion.