Tuesday, July 29, 2014

Federal Appellate Courts Issue Conflicting Decisions

Dianne De La Mare

As you’ve read in the press, two federal courts have issued directly conflicting decisions on the same day (July 22nd) on the availability of subsidies for health insurance purchased by individuals on exchanges established by the federal government under the Affordable Care Act (ACA). A three-member panel of the DC Circuit Court of Appeals has held that the subsidy is only available for insurance purchased on a state exchange (versus a federal exchange); invalidating the Internal Revenue Service (IRS) regulation that authorizes the subsidy for insurance purchased on a federal exchange (Halbig v Burwell).

Shortly thereafter (within hours), a three-member panel of the Fourth Circuit Court of Appeals reached the opposite conclusion, and held that subsidies are available to all individuals who purchase insurance from the federal government, regardless of whether or not those exchanges were established by the federal government (as in most states) or by an individual state.(King v Burwell).

If it is eventually determined that the IRS regulation is invalid and subsidies are not available on exchanges established by the federal government, then one leg of the government’s “three-legged stool” in the ACA is removed in more than ½ the states (with federal exchanges) in the US (recall the solutions enacted in the ACA are often referred to as the “three legged stool” of health care and consists of 1) guarantee of insurance; 2) mandate of insurance; and 3) subsidies so that those who can’t afford insurance can get help).

AHCA/NCAL will keep you informed as we follow this important litigation through the judicial process. 

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