Decisions from two separate federal appeals courts have placed the future of federal government healthcare subsidies in peril.
In a 2-1 ruling from the US Court of Appeals for the DC Circuit, judges ruled that President Barack Obama’s signature healthcare law allows tax credits to be offered to qualifying policyholders enrolling through state-run exchanges only. That means residents in 34 states using the federal HealthCare.gov would not be eligible for help in paying their premiums.
“We reach this conclusion, frankly, with reluctance,” wrote Judge Thomas Griffith on behalf of the 2-1 majority. “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.”
Just two hours later, however, a federal appeals court in Richmond, Va. unanimously upheld the law, subsidies and tax credits for all American intact.
Elizabeth Wydra, chief counsel at the Constitutional Accountability Center, said the differing court decisions set the stage for an ultimate showdown at the Supreme Court.
“If there is a split in the circuits, then I think the Supreme Court would have to step in,” Wydra told USA Today.
Indeed, the US government already plans to appeal the decision from the DC Circuit.
Neither ruling impacts policy today, however. White House press secretary Josh Earnest was careful to note that while the ruling may be “interesting to legal theorists,” it “does not have any practical impact on [consumers’] ability to receive tax credits right now.”
Because of that, the National Association of Health Underwriters (NAHU) advised its members that they “may continue to work with your clients to obtain coverage in the marketplace,” and that “premium tax credit subsidies and cost-sharing assistance in both state and federally facilitated marketplaces will continue to be distributed for the time being, and likely with be continually distributed until a final decision is made.”
Current clients with subsidized coverage are unaffected by the ruling, and even if subsidies are ruled unconstitutional by the Supreme Court it is unlikely clients will have to repay subsidies retroactively.
If the ruling is indeed struck down, producers in the majority of US states would be faced with fewer affordable options for clients required by law to carry health insurance.
Already, producers say they have had difficulty finding solutions for clients. According to a Morgan Stanley survey of 148 brokers, premiums increased around the country at an average 11% for group plans and 12% for individual plans.
In some parts of the country, those numbers were even higher—individual plans saw a 100% increase in Delaware, a 90% increase in New Hampshire and a 54% increase in Indiana, according to producer reports.
NAHU said it expects a final decision regarding the availability of subsidies for those in the federal marketplace “no sooner than June 2015.”
