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In major-but-not-unsurprising news this week, the U.S. Circuit Court of Appeals for the D.C. Circuit on Thursday granted an en banc rehearing in Halbig v. Burwell, one of the four cases challenging the IRS' right to administer subsidies for health plans purchased on on the federal exchanges. In July, the federal appeals court for the District of Columbia overruled the IRS regulation that implements the subsidies.
When the original Halbig decision was handed down, the administration said it would ask for an en banc hearing, in which the Halbig case is heard by all the judges of the U.S. Circuit Court of Appeals, rather than the three-judge panel that originally heard the case. Healthcare Dive spoke to Mimi Riley of University of Virginia Law, who indicated that an en banc hearing is in the IRS' best interest: "It is possible that such an en banc decision in the DC circuit would likely favor the administration," said Riley.
If it does seem that an en banc decision in favor of the administration is likely, according to Riley, then other plaintiffs with the same complaint may file similar cases in other courts to help keep the issue alive.
If you remember in July, two different appeals courts handed down two very different decisions on almost-identical cases. Two hours after the Halbig decision was announced, the 4th Circuit Court of Appeals in Richmond, VA handed down a ruling in King v. Burwell that ruled in favor of the federal government. The court called the IRS policy "a permissible exercise of the agency's discretion."
The ramifications for the Affordable Care Act, if the cases are decided in favor of the plaintiffs, are huge. Approximately 5 million people are signed up for the subsidies, with discounts averaging about 75% of the face value of their premiums, according to the Department of Health and Human Services. These people may find insurance too expensive to purchase without the subsidies. And because the employer mandate applies only if employees receive federal tax credits, employers would be able to drop coverage without paying a penalty in the 36 states using the federal exchange.
"But insurers would still be required to cover individuals regardless of preexisting conditions," Tim Jost, a law professor at Washington and Lee University in Lexington, VA, wrote in a July 9 op-ed piece in The Washington Post. "Without the tax credits and mandates, insurance premiums would go through the roof and the entire individual insurance market could collapse in many states."
The debate behind the suit was in large part an argument of semantics. The Affordable Care Act mandates that federal subsidies are available to those individuals who purchased plans "through an Exchange established by the State under Section 1311." (Section 1311 created state-run exchanges.)
The plaintiffs in Halbig v. Burwell argued that since the federal government is not a state, it should not be permitted to provide subsidies for insurance plans purchased through its own exchange—which it is currently doing in all 50 states under an IRS regulation proposed in 2011. Those subsidies, the plaintiffs argue, were established as an incentive for states to establish and maintain their own exchanges, taking the onus off of the federal government. Congress, according to the plaintiffs, did not intend for them to be available for plans purchased on the federal exchange.
Oral argument is scheduled for December 17. According to the Washington Post, an opinion will likely not be issued before mid-to-late Spring.
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The site will go offline again and more data will be withheld. Is the system at risk of failure?