Art credit: insureblog.blogspot.com
The 4th Circuit Court of
Appeals ruled Tuesday that ObamaCare subsidies issued through the federal
exchanges are legal, contradicting a separate ruling by the D.C. Circuit Court
on the same day.
Fourth Circuit Judge Roger Gregory argued that
because the statutory language of the Affordable Care Act (ACA) is ambiguous,
courts should defer to the interpretation of the Internal Revenue Service and allow
the subsides to stand.
"Applying deference to the IRS's
determination … we uphold the rule as a permissible exercise of the agency's
discretion," Gregory wrote.
Taxpayer subsidies
of the Affordable Care Act in many states, including Ohio, could be in jeopardy
because of a federal appeals court decision this morning.
The case, Halbig v. Sebelius, did not specifically involve Ohio,
although the legal scholarship of a particular Ohioan, Case Western Reserve
University law professor Jonathan Adler, provided the basis for the argument
against providing the subsidies.
In a nutshell, the U.S Circuit Court of Appeals for the District
of Columbia ruled that when Congress wrote the Affordable Care Act, or ACA, it
specifically said that federal taxpayer subsidies should help offset the costs
for people buying health coverage in new, state-based marketplaces.
But a number of states, including Ohio, declined
to set up their own marketplaces, or “exchanges,” in the ACA’s parlance.
Instead, they piggybacked on the federal exchange, although each state offered
policies specific to insurers and medical providers in the state.
The problem with this, as Adler first found while doing academic
research, is that Congress specifically called for subsidies in state
exchanges. While the federal exchange offered a fallback in states that would
not set up their own, state-specific exchanges – many in states with Republican
governors – that did not automatically transfer the right to give subsidies in
federal-exchange states. Adler wrote this first in a scholarly paper after
reviewing the law, and his analysis soon made the rounds in conservative
and libertarian circles and became championed as a legal theory for challenging
the ACA.
More than 80 percent of policy buyers on ACA exchanges have
relied on subsidies. Three dozen states are using the federal exchange. So in
those states, a court agreeing with Adler and other conservative legal
authorities could shoot a substantial hole in the underpinnings of the ACA –
namely, insurance coverage made affordable through federal subsidies.
In a 2-1 ruling today in Washington, D.C., a federal appeals
court did just that. The court ruled that language in the ACA “unambiguously
restricts” the taxpayer subsidies to exchanges “established by the state.”
President Barack Obama’s administration argued that Congress
intended for subsidies to be offered in every state, and that the ACA
established complete equivalence.
But the appeals court said that the wording in the ACA “plainly
distinguishes exchanges established by states from those established by the
federal government.”
The ruling was 2-1, and parties in the case may ask the full
court for an opinion. Some analysts believe the full court may be more friendly
to the Obama administration. If not, the Obama administration could appeal to
the U.S. Supreme Court, although that would come with risk.
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More from The Washington Post is here.
And Jonathan
Adler's report in the WaPo is here.
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