October 21, 2014

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Obama’s health care law hit by ruling, but subsidies to continue

President Barack Obama speaks at the Walker Jones Education Campus in Washington Monday.   (AP Photo/J. Scott Applewhite)

President Barack Obama speaks at the Walker Jones Education Campus in Washington Monday. (AP Photo/J. Scott Applewhite)

WASHINGTON (AP) — A federal appeals court delivered a potentially serious setback to President Barack Obama’s health care law Tuesday, imperiling billions of dollars in subsidies for many low- and middle-income people who bought policies.

The Obama administration immediately declared that those policyholders would keep getting financial aid for their premiums as it seeks review of the ruling. White House spokesman Josh Earnest said the decision would have “no practical impact” on tax credits as the case works its way through further appeals.

In the case, decided by the U.S. Court of Appeals for the District of Columbia Circuit, a group of small business owners argued that the law authorizes subsidies only for people who buy insurance through markets established by the states — not by the federal government.

A divided court agreed, in a 2-1 decision that could mean premium increases for more than half the 8 million Americans who have purchased taxpayer-subsidized coverage under the law. The ruling affects consumers who bought coverage in the 36 states served by the federal insurance marketplace, or exchange.

In Tuesday’s ruling, two judges appointed by Republican presidents voted against the administration’s interpretation of the law while one appointed by a Democratic president dissented. The Obama spokesman said the administration would seek a hearing by the full 11-judge court. The court has a majority of judges appointed by Democratic presidents, including four appointed by Obama.

The majority opinion concluded that the law, as written, “unambiguously” restricts subsides to consumers in exchanges established by a state. That would invalidate an Internal Revenue Service regulation that tried to sort out confusing wording in the law by concluding that Congress intended for consumers in all 50 states to have subsidized coverage.

In reaction, Justice Department spokeswoman Emily Pierce said the decision was incorrect, inconsistent with the intent of Congress, and at odds with the goals of the health care law.

The administration is expected to seek a hearing from the full 11-member appeals court.

The issue is crucial to the success of the health law because most states have been unable or unwilling to set up their own exchanges. The inaction stems in many instances from opposition by Republican governors to the Affordable Care Act.

The small business owners filing the lawsuit say the tax credits enacted by Congress were intended to encourage states to set up their own health benefit exchanges and that the penalty for not doing so was withdrawal of tax credits for lower-income residents.

Supporters of the act say the purpose of the tax credit was not to promote the establishment of state exchanges, but rather to achieve Congress’s fundamental purpose of making insurance affordable for all Americans.

The case revolves around four words in the Affordable Care Act, which says the tax credits are available to people who enroll through an exchange “established by the state.”

The challengers to the law say a literal reading of that language invalidates the IRS subsidy to people in the federal exchanges. The opponents say that people who would otherwise qualify for the tax credits should be denied that benefit if they buy insurance on a federally facilitated exchange.

“It is implausible to believe that Congress gave the IRS discretion to authorize $150 billion per year in federal spending, particularly when Congress had directly spoken to this issue,” the challengers to the IRS subsidy said in a court filing. “Major economic decisions like these — indeed, any decisions granting tax credits — must be made unambiguously by Congress itself.”

The Obama administration and congressional and state legislative supporters of the AffordableCare Act say the challengers are failing to consider the words of the statute in its entirety.

“Congress did not provide that the tax credits would only be available to citizens whose states set up their own exchanges,” says an appeals court filing by congressional and state legislative supporters of the Affordable Care Act. Congressional lawmakers and state legislators supporting the act said that limiting the subsidies to state exchanges could destabilize important aspects of the law, such as the individual mandate requiring most people to buy insurance.

The judges on the case were Thomas Griffith, an appointee of President George W. Bush; A. Raymond Randolph, an appointee of Bush’s father; and Harry Edwards, an appointee of President Jimmy Carter, who dissented.

A lower court had ruled that the law’s text, structure, purpose, and legislative history make “clear that Congress intended to make premium tax credits available on both state-run and federally-facilitated Exchanges.”

But the appeals court concluded the opposite — that the letter of the law “unambiguously restricts” the law’s subsidies to policies sold through exchanges established by the state.


  • SniperFire

    HAHAHAHAHAHAHA

  • golfingirl

    Tough couple of weeks for Obama!

    Just keeps making up the laws as he goes along.

    • Larry Crnobrnja

      It doesn’t change the cost of healthcare, only who is paying for it.

      • Pablo Jones

        As more people can’t afford health insurance and skip on paying their bills the cost of healthcare will increase along with the insurance to pay for it.

        • Larry Crnobrnja

          Very likely.

        • Scout

          So true.

        • Sue Lawson

          My insurance has gone up every year since I have had it. I read people with insurance pay a hidden tax for the uninsured. I pay almost $600.00 a month.

  • Joe Smith

    “the decision could mean premium increases for more than half of the 8 million Americans who purchased taxpayer-subsidized insurance ”
    They mean it will raise it for the second half as the first half already had increases.

    • golfingirl

      According to the CBO, the gross cost for spending related to subsidies to allow lower-income households to purchase coverage through the insurance exchanges will be $464 billion over ten years.

      Almost a 1/2 trillion dollars.

      Looks like a lot of that money will now have to come out of the pockets of those who enroll in an exchange, instead of the taxpayers.

      And guess what, you don’t enroll and have no insurance….the inept IRS is coming after you with the penalty.

      Plus, all the employers who put their workers into the exchanges, under the premise the workers would receive subsidies. Gave them a flat amount to enroll in their own exchange, instead of covering them as an employer. Better coverage, less cost….yeah right!

      Looks like these employees just got screwed!

      But wait….Obama is all for the working class, isn’t he?

      • Mark B

        All by Design so he can just push for single payer which was the plan all along . Soon we all will have Medicaid and health care will be horrible.

        • golfingirl

          Kind of like the VA System?

          That is your single payer model in the United States.

    • Scout

      The premiums were going to go up in Nov. anyway…what’s few dollars more?

      • Joe Smith

        Few dollars? First I lost my insurance I had for years and my new insurance rates went up about 35 % and my deducible went from $1750 to $3750 because of the bill and it does not cover some of the drugs that have been keeping me alive for the last 10 years.
        I hope that was sarcasm

        • golfingirl

          But you do get “free” birth control….unless you work for Hobby Lobby, then only 16 of the 20 types are covered.

          Sarcasm intended.

        • Scout

          Definitely sarcasm. I understand what you are going through. We can’t afford insurance anymore because our premiums tripled, and the deductible would have been
          $10,000, to a point that something had to go..and that was it. Such a quandry, and hopefully we stay healthy.

          • golfingirl

            Are you saying Obamacare costs more? Are you saying the Affordable Care Act is not really “affordable?”

            Are you saying you now have to pay for benefits you will never use, or want?

            Are you saying you were once insured, but no longer are due to the high cost?

            The goal of Obamacare is to provide affordable insurance to the uninsured, not make previously insured people uninsured.

            Ohio does not have a state exchange, so residents may not be eligible for subsidies to offset premiums, based on the court ruling.

            Are you saying President Obama was not being truthful?

            I hope it works out for you personally. My husband’s business took a big “hit” due to the law.

            But we must be making this up, since we were told this was in our best interest by the Administration.

            Real people, having real problems with this law. It is only going to get worse.

            Good luck and stay healthy.

          • Scout

            oh yea i’m making it up alright lol -sarcasm intended…but you won’t hear of these real problems in the media will you? especially small businesses have taken a big! hit-we too. keep on keeping on right.

  • SniperFire

    Pay back those illegal subsidies to the Federal taxpayer, freeloaders.

    Right now.

    • Scout

      YES!

  • Sis Delish

    Sorry, but this “Act” has the musty smell of an aged Nancy Pelosi all over it. You know that smell… you have to open it to find out how much it smells.

    • HankKwah

      You beat me to it.

      THIS is what happens when you don’t READ THE BILL YOU WANT SO BADLY TO PASS. Stupid liberals.

  • John Davidson

    Time for another “Executive Order” the Obummer fix all

  • Tim Brookes

    First World Problems
    Let us blame everything on everyone else, because we have it so hard…..

  • oldruss

    Before everyone becomes too euphoric or too despondent, depending on which side of this argument you are on, after the D.C. Court of Appeals issued its ruling, the Fourth Circuit Court of Appeals (Richmond, Virginia) issued an opinion that held directly opposite to the D.C. Circuit. It is now expected that the government will ask for a rehearing “en banc” by the D.C. Circuit (all 11 judges hearing the case), and that the D.C. Court of Appeals sitting “en banc” will uphold the ACA. Without a conflict between different Courts of Appeals (D.C. and the Fourth Circuit now agreeing with each other), the Supreme Court is less likely to take the case. There are two other similar appeals pending elsewhere, although I don’t know which circuits they may be in. I would guess that those two other cases have not reached the appellate court level yet, otherwise we’d have heard about their respective decisions. Bottom line: it’s yet to be seen how this will all shake out, and let us not forget, that should Congress chose to do so, it can amend the ACA, probably after the 2016 elections.

  • Conservator440

    And all this because Chief Justice Roberts decided that the illegal penalty was a tax. Instead of putting this monstrosity to death mercifully, he decided that the political appearance of SCOTUS was more important. Did he actually intend Obamacare’s death by a thousand cuts? And our consternation while the process plays out. Say what you mean, mean what you say. The POTUS could benefit from this advice as well.