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Two conflicting appeals court decisions issued July 22 seem to put the tax subsidies offered by the Affordable Care Act – and potentially, the entire law itself – on either shaky or firm legal footing, depending on who’s doing the analysis.
Both cases were originally brought by plaintiffs who contended that the Obama Administration did not have the legal authority to issue subsidies to low-income individuals who buy insurance on the federal marketplace. They said that the ACA explicitly said that credits were only available to "state-established exchanges." When lower courts ruled against them, they appealed.
The District of Columbia Circuit of the U.S. Court of Appeals sided with the plaintiffs in Halbig v. Burwell, 2-1. The 4th Circuit of the U.S. Court of Appeals, on the other hand, sided unanimously with the government in King v. Burwell.
An estimated 5 million people have received subsidies from the 36 federal marketplaces, putting them at risk for losing those tax credits. For the time being, however, people who have been deemed eligible for subsidies will continue to receive them. And those who sign up for insurance in the next open enrollment period beginning Nov. 15 will also likely get subsidies.
"This ruling does not have any practical impact on Americans’ ability to receive tax credits right now," White House spokesman Josh Earnest said about the ruling in Halbig v. Burwell. In a briefing after both decisions were handed down, Mr. Earnest also said that the administration would essentially appeal that ruling by seeking a decision by the full panel of 11 judges who sit on the D.C. Circuit.
"You don’t need a fancy legal degree to understand that Congress intended for every eligible American to have access to tax credits that would lower their health care costs," whether state or federal officials were running the marketplace, Mr. Earnest said.
The lead plaintiff in the case heard by the D.C. Circuit was brought by Jacqueline Halbig, a senior policy adviser in the Department of Health & Human Services under President George W. Bush. The two judges ruling for her and her coplaintiffs said that their reading of the ACA "plainly makes subsidies available only on exchanges established by the states." The "legislative record provides little indication one way or the other of congressional intent, but the statutory text does," they said, adding that the language in the law is "conclusive evidence of Congress’ intent."
They said they reached their conclusion "with reluctance," because "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."
Judge Harry Edwards dissented. "This case is about appellants’ not-so-veiled attempt to gut the Patient Protection and Affordable Care Act." The argument that Congress only intended to pay subsidies on state exchanges as a way to encourage states to run their own exchanges "is nonsense, made up out of whole cloth."
Judge Edwards added, "There is no credible evidence in the record that Congress intended to condition subsidies on whether a state, as opposed to HHS, established the exchange. Nor is there credible evidence that any state even considered the possibility that its taxpayers would be denied subsidies if the state opted to allow HHS to establish an exchange on its behalf."
Those who support premium subsidies said they were dismayed by the D.C. Circuit’s ruling, but that it would not likely stand.
"Today’s decision represents the high-water mark for Affordable Care Act opponents, but the water will recede very quickly," said Ron Pollack, Executive Director of Families USA, in a statement.
The American Cancer Society, American Cancer Society Cancer Action Network, American Diabetes Association, and American Heart Association filed a joint statement saying that they believed the Halbig decision could be disastrous. "On behalf of the tens of millions of people nationwide who have experienced cancer, diabetes, heart disease, and stroke, we are deeply disappointed with the decision of the U.S. Court of Appeals for the D.C. Circuit, which denies premium tax credits that make health coverage more affordable to people who buy a plan in the federally facilitated marketplace," they said. But, they added that it would not likely be upheld.
Others who opposed the ACA and the subsidy scheme applauded the Halbig decision.
"The president has been spending money illegally, the court has ruled," said Michael Cannon, director of Health Policy Studies at the Washington, D.C.-based Cato Institute, in a briefing. An article by Mr. Cannon and economist Jonathan Adler led to the Halbig filing.
In a statement, Sen. Ted Cruz (R-Tex.), who filed a friend of the court brief in King v. Burwell, said that the D.C. Circuit’s decision "is a repudiation of Obamacare and all the lawlessness that has come with it."
The plaintiffs in King v. Burwell, however, were handed a setback by the 4th Circuit. The four individual plaintiffs, all of whom live in Virginia, which does not have a state-run exchange, did not want to be forced to buy health insurance, but said that if they didn’t, they’d be penalized. Since the ACA will give them a subsidy to buy coverage, they would be forced either to buy insurance or pay a penalty for not having coverage, they said.
They added that Congress said that only state-run marketplaces could receive federal subsidies.
The judges ruled against them, saying "we are not persuaded by the plaintiffs’ ‘coercion’ argument." They did say, however, that there was some confusion in the law. "We cannot discern whether Congress intended one way or another to make the tax credits available on HHS-facilitated exchanges," they wrote, adding that "the relevant statutory sections appear to conflict with one another, yielding different possible interpretations."
But in the end, the judges concluded that it was "clear that widely available tax credits are essential to fulfilling the Act’s primary goals and that Congress was aware of their importance when drafting the bill." Therefore, the Internal Revenue Service’s rule authorizing tax credits was "a permissible exercise of the agency’s discretion."
Mr. Cannon of the Cato Institute said that he views the 4th Circuit ruling as a kind of loss for the Obama administration because the judges said that the language in the ACA was ambiguous on the subsidies.
Families USA’s Ron Pollack, however, said that he thought the administration would ultimately prevail.
"As of today, eight judges – two federal district court judges and six appellate judges – have ruled on these challenges. Altogether, six judges have ruled that the cases should be dismissed, and only two have upheld plaintiffs’ claims," he said in a statement.
There are still more legal proceedings to be decided before there is a definitive answer on whether the subsidies – and the ACA itself – are legal. The full D.C. Circuit has to choose whether to hear the Halbig case, and the plaintiffs in the 4th Circuit could also ask for a hearing by the full panel of judges.
There are two additional major cases questioning the legality of the subsidies pending at the appeals court level.
One or all of the cases could be taken to the U.S. Supreme Court.
On Twitter @aliciaault
Two conflicting appeals court decisions issued July 22 seem to put the tax subsidies offered by the Affordable Care Act – and potentially, the entire law itself – on either shaky or firm legal footing, depending on who’s doing the analysis.
Both cases were originally brought by plaintiffs who contended that the Obama Administration did not have the legal authority to issue subsidies to low-income individuals who buy insurance on the federal marketplace. They said that the ACA explicitly said that credits were only available to "state-established exchanges." When lower courts ruled against them, they appealed.
The District of Columbia Circuit of the U.S. Court of Appeals sided with the plaintiffs in Halbig v. Burwell, 2-1. The 4th Circuit of the U.S. Court of Appeals, on the other hand, sided unanimously with the government in King v. Burwell.
An estimated 5 million people have received subsidies from the 36 federal marketplaces, putting them at risk for losing those tax credits. For the time being, however, people who have been deemed eligible for subsidies will continue to receive them. And those who sign up for insurance in the next open enrollment period beginning Nov. 15 will also likely get subsidies.
"This ruling does not have any practical impact on Americans’ ability to receive tax credits right now," White House spokesman Josh Earnest said about the ruling in Halbig v. Burwell. In a briefing after both decisions were handed down, Mr. Earnest also said that the administration would essentially appeal that ruling by seeking a decision by the full panel of 11 judges who sit on the D.C. Circuit.
"You don’t need a fancy legal degree to understand that Congress intended for every eligible American to have access to tax credits that would lower their health care costs," whether state or federal officials were running the marketplace, Mr. Earnest said.
The lead plaintiff in the case heard by the D.C. Circuit was brought by Jacqueline Halbig, a senior policy adviser in the Department of Health & Human Services under President George W. Bush. The two judges ruling for her and her coplaintiffs said that their reading of the ACA "plainly makes subsidies available only on exchanges established by the states." The "legislative record provides little indication one way or the other of congressional intent, but the statutory text does," they said, adding that the language in the law is "conclusive evidence of Congress’ intent."
They said they reached their conclusion "with reluctance," because "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."
Judge Harry Edwards dissented. "This case is about appellants’ not-so-veiled attempt to gut the Patient Protection and Affordable Care Act." The argument that Congress only intended to pay subsidies on state exchanges as a way to encourage states to run their own exchanges "is nonsense, made up out of whole cloth."
Judge Edwards added, "There is no credible evidence in the record that Congress intended to condition subsidies on whether a state, as opposed to HHS, established the exchange. Nor is there credible evidence that any state even considered the possibility that its taxpayers would be denied subsidies if the state opted to allow HHS to establish an exchange on its behalf."
Those who support premium subsidies said they were dismayed by the D.C. Circuit’s ruling, but that it would not likely stand.
"Today’s decision represents the high-water mark for Affordable Care Act opponents, but the water will recede very quickly," said Ron Pollack, Executive Director of Families USA, in a statement.
The American Cancer Society, American Cancer Society Cancer Action Network, American Diabetes Association, and American Heart Association filed a joint statement saying that they believed the Halbig decision could be disastrous. "On behalf of the tens of millions of people nationwide who have experienced cancer, diabetes, heart disease, and stroke, we are deeply disappointed with the decision of the U.S. Court of Appeals for the D.C. Circuit, which denies premium tax credits that make health coverage more affordable to people who buy a plan in the federally facilitated marketplace," they said. But, they added that it would not likely be upheld.
Others who opposed the ACA and the subsidy scheme applauded the Halbig decision.
"The president has been spending money illegally, the court has ruled," said Michael Cannon, director of Health Policy Studies at the Washington, D.C.-based Cato Institute, in a briefing. An article by Mr. Cannon and economist Jonathan Adler led to the Halbig filing.
In a statement, Sen. Ted Cruz (R-Tex.), who filed a friend of the court brief in King v. Burwell, said that the D.C. Circuit’s decision "is a repudiation of Obamacare and all the lawlessness that has come with it."
The plaintiffs in King v. Burwell, however, were handed a setback by the 4th Circuit. The four individual plaintiffs, all of whom live in Virginia, which does not have a state-run exchange, did not want to be forced to buy health insurance, but said that if they didn’t, they’d be penalized. Since the ACA will give them a subsidy to buy coverage, they would be forced either to buy insurance or pay a penalty for not having coverage, they said.
They added that Congress said that only state-run marketplaces could receive federal subsidies.
The judges ruled against them, saying "we are not persuaded by the plaintiffs’ ‘coercion’ argument." They did say, however, that there was some confusion in the law. "We cannot discern whether Congress intended one way or another to make the tax credits available on HHS-facilitated exchanges," they wrote, adding that "the relevant statutory sections appear to conflict with one another, yielding different possible interpretations."
But in the end, the judges concluded that it was "clear that widely available tax credits are essential to fulfilling the Act’s primary goals and that Congress was aware of their importance when drafting the bill." Therefore, the Internal Revenue Service’s rule authorizing tax credits was "a permissible exercise of the agency’s discretion."
Mr. Cannon of the Cato Institute said that he views the 4th Circuit ruling as a kind of loss for the Obama administration because the judges said that the language in the ACA was ambiguous on the subsidies.
Families USA’s Ron Pollack, however, said that he thought the administration would ultimately prevail.
"As of today, eight judges – two federal district court judges and six appellate judges – have ruled on these challenges. Altogether, six judges have ruled that the cases should be dismissed, and only two have upheld plaintiffs’ claims," he said in a statement.
There are still more legal proceedings to be decided before there is a definitive answer on whether the subsidies – and the ACA itself – are legal. The full D.C. Circuit has to choose whether to hear the Halbig case, and the plaintiffs in the 4th Circuit could also ask for a hearing by the full panel of judges.
There are two additional major cases questioning the legality of the subsidies pending at the appeals court level.
One or all of the cases could be taken to the U.S. Supreme Court.
On Twitter @aliciaault
Two conflicting appeals court decisions issued July 22 seem to put the tax subsidies offered by the Affordable Care Act – and potentially, the entire law itself – on either shaky or firm legal footing, depending on who’s doing the analysis.
Both cases were originally brought by plaintiffs who contended that the Obama Administration did not have the legal authority to issue subsidies to low-income individuals who buy insurance on the federal marketplace. They said that the ACA explicitly said that credits were only available to "state-established exchanges." When lower courts ruled against them, they appealed.
The District of Columbia Circuit of the U.S. Court of Appeals sided with the plaintiffs in Halbig v. Burwell, 2-1. The 4th Circuit of the U.S. Court of Appeals, on the other hand, sided unanimously with the government in King v. Burwell.
An estimated 5 million people have received subsidies from the 36 federal marketplaces, putting them at risk for losing those tax credits. For the time being, however, people who have been deemed eligible for subsidies will continue to receive them. And those who sign up for insurance in the next open enrollment period beginning Nov. 15 will also likely get subsidies.
"This ruling does not have any practical impact on Americans’ ability to receive tax credits right now," White House spokesman Josh Earnest said about the ruling in Halbig v. Burwell. In a briefing after both decisions were handed down, Mr. Earnest also said that the administration would essentially appeal that ruling by seeking a decision by the full panel of 11 judges who sit on the D.C. Circuit.
"You don’t need a fancy legal degree to understand that Congress intended for every eligible American to have access to tax credits that would lower their health care costs," whether state or federal officials were running the marketplace, Mr. Earnest said.
The lead plaintiff in the case heard by the D.C. Circuit was brought by Jacqueline Halbig, a senior policy adviser in the Department of Health & Human Services under President George W. Bush. The two judges ruling for her and her coplaintiffs said that their reading of the ACA "plainly makes subsidies available only on exchanges established by the states." The "legislative record provides little indication one way or the other of congressional intent, but the statutory text does," they said, adding that the language in the law is "conclusive evidence of Congress’ intent."
They said they reached their conclusion "with reluctance," because "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."
Judge Harry Edwards dissented. "This case is about appellants’ not-so-veiled attempt to gut the Patient Protection and Affordable Care Act." The argument that Congress only intended to pay subsidies on state exchanges as a way to encourage states to run their own exchanges "is nonsense, made up out of whole cloth."
Judge Edwards added, "There is no credible evidence in the record that Congress intended to condition subsidies on whether a state, as opposed to HHS, established the exchange. Nor is there credible evidence that any state even considered the possibility that its taxpayers would be denied subsidies if the state opted to allow HHS to establish an exchange on its behalf."
Those who support premium subsidies said they were dismayed by the D.C. Circuit’s ruling, but that it would not likely stand.
"Today’s decision represents the high-water mark for Affordable Care Act opponents, but the water will recede very quickly," said Ron Pollack, Executive Director of Families USA, in a statement.
The American Cancer Society, American Cancer Society Cancer Action Network, American Diabetes Association, and American Heart Association filed a joint statement saying that they believed the Halbig decision could be disastrous. "On behalf of the tens of millions of people nationwide who have experienced cancer, diabetes, heart disease, and stroke, we are deeply disappointed with the decision of the U.S. Court of Appeals for the D.C. Circuit, which denies premium tax credits that make health coverage more affordable to people who buy a plan in the federally facilitated marketplace," they said. But, they added that it would not likely be upheld.
Others who opposed the ACA and the subsidy scheme applauded the Halbig decision.
"The president has been spending money illegally, the court has ruled," said Michael Cannon, director of Health Policy Studies at the Washington, D.C.-based Cato Institute, in a briefing. An article by Mr. Cannon and economist Jonathan Adler led to the Halbig filing.
In a statement, Sen. Ted Cruz (R-Tex.), who filed a friend of the court brief in King v. Burwell, said that the D.C. Circuit’s decision "is a repudiation of Obamacare and all the lawlessness that has come with it."
The plaintiffs in King v. Burwell, however, were handed a setback by the 4th Circuit. The four individual plaintiffs, all of whom live in Virginia, which does not have a state-run exchange, did not want to be forced to buy health insurance, but said that if they didn’t, they’d be penalized. Since the ACA will give them a subsidy to buy coverage, they would be forced either to buy insurance or pay a penalty for not having coverage, they said.
They added that Congress said that only state-run marketplaces could receive federal subsidies.
The judges ruled against them, saying "we are not persuaded by the plaintiffs’ ‘coercion’ argument." They did say, however, that there was some confusion in the law. "We cannot discern whether Congress intended one way or another to make the tax credits available on HHS-facilitated exchanges," they wrote, adding that "the relevant statutory sections appear to conflict with one another, yielding different possible interpretations."
But in the end, the judges concluded that it was "clear that widely available tax credits are essential to fulfilling the Act’s primary goals and that Congress was aware of their importance when drafting the bill." Therefore, the Internal Revenue Service’s rule authorizing tax credits was "a permissible exercise of the agency’s discretion."
Mr. Cannon of the Cato Institute said that he views the 4th Circuit ruling as a kind of loss for the Obama administration because the judges said that the language in the ACA was ambiguous on the subsidies.
Families USA’s Ron Pollack, however, said that he thought the administration would ultimately prevail.
"As of today, eight judges – two federal district court judges and six appellate judges – have ruled on these challenges. Altogether, six judges have ruled that the cases should be dismissed, and only two have upheld plaintiffs’ claims," he said in a statement.
There are still more legal proceedings to be decided before there is a definitive answer on whether the subsidies – and the ACA itself – are legal. The full D.C. Circuit has to choose whether to hear the Halbig case, and the plaintiffs in the 4th Circuit could also ask for a hearing by the full panel of judges.
There are two additional major cases questioning the legality of the subsidies pending at the appeals court level.
One or all of the cases could be taken to the U.S. Supreme Court.
On Twitter @aliciaault
