Two different appeals courts handed down two very different decisions Tuesday on almost-identical Obamacare cases—so what happens now?
In Halbig v. Burwell, the federal appeals court for the District of Columbia overruled the IRS regulation that implements vital ACA insurance subsidies to individuals purchasing plans on the federal exchange. Two hours later, 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 case is 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."
Jost said the Supreme Court, should it take up the case, likely will look at the context and purpose of the law as a whole. Courts "do not read statutes by cherry-picking single phrases to defeat the entire purpose of laws," he wrote.
The issue of premium subsidies is still a long way from being decided. Healthcare Dive caught up with Mimi Riley, an expert in health care law from the University of Virginia.