Appeals Court Lands Blow to Obamacare Subsidies

July 22, 2014
Laura Joszt

A new ruling from the DC Circuit Court of Appeals has invalidated the healthcare subsidies for people in states with federally run marketplaces.

A new ruling from the DC Circuit Court of Appeals has invalidated the healthcare subsidies for people in states with federally run marketplaces.

The 3-person court ruled that the subsidies available under the Affordable Care Act can only be provided to residents of states that set up their own health insurance marketplaces. As such, millions of Americans living in states that have federally run marketplaces would not be eligible for the subsidies.

The government will ask the entire appeals court to review the decision. The government has mostly brushed off Tuesday’s ruling.

“…to be clear, people getting premium tax credits should know that nothing has changed, tax credits remain available,” Emily Pierce, spokesperson for the Department of Justice (DOJ), said in a statement Tuesday.

The case Halbig v. Burwell is one of 4 concerning the issues of subsidies making its way through the federal court system. Just hours later judges in Virginia ruled to uphold the legality of subsidies for insurance exchanges in every state.

The conflicting rulings make it more likely that the Supreme Court will eventually have to hear one of the cases and decide on the legality of subsidies in federally run marketplaces.

“It’s important for people all across the country to understand that this ruling does not have any practical impact on their ability to continue to receive tax credits right now,” White House spokesperson Josh Earnest said in a press conference Tuesday morning.

If the subsidies were to be struck down for states that did not set up their own marketplaces, it would be a Republican victory and a crippling blow to the health reform law. However, the DOJ and the White House believe common sense will prevail.

“You don’t need a fancy legal degree to understand that Congress intended for every eligible American to have access to tax credits to lower their healthcare costs regardless of whether it was state officials or federal officials who were running the marketplace,” Earnest said.