Explaining the Mixed Legal Decision on Health Insurance Subsidies

Two U.S. courts of appeal last week issued conflicting rulings about the government subsidies many people need to enable them to buy coverage under the health-care law. The mixed messages heaped confusion – and fear – onto the government-sponsored health-insurance market.

Survey after survey shows that Americans support the Affordable Care Act (ACA, or “Obamacare”), and according to a study explained by KaiserHealthNews.org, this year more than 10 million Americans got health insurance they didn’t previously have, thanks the government exchanges.

And since 2011, according to the Department of Health and Human Services, consumers have saved $9 billion on their health insurance premiums as a result of the ACA.

Still, opponents of the most significant health-care legislation in decades continue to challenge it.

Courtesy of KaiserHealthNews, here’s a brief Q&A about this latest wrench in the health-coverage works.

Q: What did the courts decide?

A: The U.S. Court of Appeals for the District of Columbia Circuit ruled that the health law’s subsidies are available only to individuals in the 14 states and the District of Columbia that run their own health insurance exchanges, not the 36 states that use the federal government exchange. The decision, was “that the ACA unambiguously restricts” the subsidies to “exchanges ‘established by the state.’ ”

But the Court of Appeals in Richmond, Va., ruled for the Obama administration, saying subsidies may be available to anyone who qualifies and buys a plan on a government – state or federal – exchange. The opinion said that although the health law is “ambiguous and subject to multiple interpretations,” the court was upholding the Internal Revenue Service’s (IRS) interpretation of the law that residents of states using the federal exchange are entitled to subsidies.

Q: What was the issue the courts decided on?

A: The case centers on a brief description in the health law that says subsidies will be available “through an exchange established by the state.”

The IRS interpreted the law to allow eligible consumers – people whose income falls below a certain threshold – to receive subsidies to help purchase coverage, regardless of whether they are in an exchange run by their state or by the federal government.

Opponents of the law seized on the fact that the law specified subsidies for only state-based exchanges. People who wrote the law fully intended that subsidies be offered on all exchanges, and say that the issue is a simple matter of language clarification.

Q: Which states have their own exchange?

A: California, Colorado, Connecticut, Hawaii, Kentucky, Maryland, Massachusetts, Minnesota, Nevada, New York, Oregon, Rhode Island, Vermont, Washington and the District of Columbia.

Idaho and New Mexico intend to set up their own marketplace for the next enrollment period, which begins in November, but used healthcare.gov this year.

Q: I live in a state with a federally run exchange, and I get a subsidy to help me buy coverage. Am I going to lose it?

A: Nothing is happening immediately. The Justice Department plans to seek a review from the full panel of 11 judges on the D.C. Appeals Court, not just the three who voted 2-1 against it last week. Six of the court’s judges would have to agree for the full panel to review the case. The full panel is dominated by judges appointed by Democrats, 7-4.

Eventually the case could be considered by the Supreme Court, but the current subsidies probably would remain in effect until there is a final legal decision on the matter.

“In the meantime, to be clear, people getting premium tax credits should know that nothing has changed; tax credits remain available,” said Emily Pierce, deputy director of the Justice Department’s office of public affairs.

Q: Are these the only two court cases?

A: No. There are two other similar cases pending in courts in Oklahoma and Indiana.

Q: If there are legal disputes ongoing about who qualifies to receive a subsidy, do I still have to buy health insurance?

A: Yes. The law’s “individual mandate,” which requires most people to purchase health insurance or pay a fine, is still in place.

Q. What if I get my insurance through work?

A: This decision applies only to policies sold on the online marketplaces. It does not affect work-based insurance, Medicare or Medicaid, regardless of where you live.

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