Two federal courts issue conflicting rulings on ACA premium subsidies August 4, 2014 General Affordable Care Act, Health Insurance Exchange, ACA 0 Two federal appeals courts issued conflicting rulings last week on whether premium subsidies can be provided under the Affordable Care Act (ACA) to individuals purchasing health insurance coverage on exchanges run by the federal government. The rulings will not, however, impact states like California that run their own exchanges. The U.S. Court of Appeals for the District of Columbia Circuit, in a 2 to 1 vote, majority opinion said that the ACA’s language unambiguously restricts premium subsidies to insurance purchased on exchanges “established by the State,” and that the IRS’ broad interpretation that subsidies could also be provided to individuals who purchased coverage on an exchange established and run by the federal government, was contrary to the statute’s plain meaning and therefore, impermissible. This ruling, if upheld, has significant implications for the future viability of the ACA’s goal to provide universal, affordable health coverage. If the decision is not reversed on appeal, it could mean at least 5 million Americans would face an average premium increase of 76 percent. The U.S. Court of Appeals for the Fourth Circuit in Richmond, Virginia, however, came to the opposite conclusion, ruling unanimously that the IRS regulation is valid. The Fourth Circuit court stated that while the language of the law is ambiguous and subject to multiple interpretations, the IRS is entitled to deference in interpreting it to write regulations implementing the program. Since 2014, the federal government has run some or all of the insurance exchanges in 36 states, while only 14 states (including California) plus the District of Columbia decided to create their own exchanges. The federal exchange serves states with about two-thirds of the nation’s population. More than 4.5 million individuals purchased coverage through the federal exchange, most of whom received subsidies. The Obama Administration has indicated it will appeal the DC circuit court ruling. In the meantime, current subsidies will not be affected. Lower federal courts are continuing to consider similar challenges to the premium subsidies, but the split between the circuit court opinions issued last week makes it more likely that the United States Supreme Court will ultimately consider the legality of the use of premium subsidies for coverage bought through the federal exchange. Comments are closed.
