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Two federal appeals court rulings on the Affordable Care Act's insurance subsidies create more confusion surrounding the healthcare law
Government subsidies paid to patients who bought health insurance through the federal exchange are invalid, according to a ruling Tuesday by a federal appeals court in Washington, D.C.
Meanwhile, a federal appeals court in Richmond, Virginia, upheld the legality of the subsidies, according to a report in the New York Times.
Elimination of the subsidies would be a major blow to the Affordable Care Act (ACA) and to millions of patients from 36 states who purchased insurance from the federal exchange and could see their premiums rise drastically as a result. The ruling does not impact exchange customers in the state-run exchanges.
The three-judge panel ruled 2-1 to that the ACA “does not authorize the Internal Revenue Service (IRS) to provide tax credits for insurance purchased on federal exchanges,” only for state-based exchanges.
The ruling in favor of the subsidies found that a rule issued by the IRS made the subsidies permissible.
The New York Times reported that President Barack Obama’s administration plans to appeal the D.C. ruling, which the Justice Department called “incorrect” and “inconsistent with congressional intent.”
Premium subsidies are a major tenet of the ACA and are a key piece of enabling uninsured Americans to afford health insurance. Individual insurance customers who earn up to $45,960, and families of four who earn up to $94,200 are eligible for subsidies, according to government figures.
How high are premiums for these patients expected to rise if this decision is upheld? Consulting firm Avalere Healthreleased an analysis that found that premiums could increase by anywhere from 58% to 95%, depending on the state.