Conflicting federal appeals court decisions might soon bring Obamacare back to the Supreme Court, this time to determine whether patients can receive subsidies through the federal health exchange even though the Affordable Care Act says they are only permitted through state-run exchanges.
On Tuesday, a three-judge panel of the D.C. Circuit Court of Appeals voted 2-1 that the law repeatedly refers to subsidies being available only through state exchanges and, therefore, the law must be interpreted that way. However, the Fourth U.S. Circuit Court of Appeals unanimously ruled that subsidies could come through either the federal or state exchanges.
However, the D.C court is more prominent, and observers say its verdict carries considerable weight.
“This is a hugely important decision. The government has now lost a case that really addresses the heart and soul of what this law is supposed to do,” said Grace-Marie Turner, president of the Galen Institute.
“The law specifically says, at least seven times, that the subsidies are only allowed through an exchange established by a state. It was part of Congress’ coercion to try to get the states to set up their own exchanges,” she said. “The states basically called their bluff and said, ‘Nope, we’re not doing this.’ So when the law says seven times that tax credits for health insurance can only be distributed through an exchange created by a state, the court said, ‘The law must mean what it says and we’re going to rule that way.’ Congratulations to them for upholding the rule of law.”
The administration is appealing the decision of the three-judge panel to the full D.C. Circuit, which includes seven Democratic appointees and four selections by GOP presidents. According to Turner, precedent suggests the full, or en banc, court will not be interested in second-guessing three of their colleagues, but she says there is a tinge of politics on the bench that did not exist until recently.
“The judges really respect each other. They don’t want to overrule one another, although the Obama administration has been stacking this court with several new appointees. They very likely would have the votes to overrule the three-judge panel, but it would look very, very political and would likely discredit future decisions,” said Turner, who says it is vital for one full appeals court to rule in line with the three judges.
“It is consequential, because in order for this to go to the Supreme Court, you would then have to have different rulings in the different appeals courts. There are four similar cases going through the courts. So you’d have to have another court decide the same as the D.C. Circuit Court panel has today for the Supreme Court to heart it. If there are no conflicts in the appeals courts’ decisions, then the Supreme Court would less likely take it up,” said Turner.
Tuesday’s decision in the D.C. Circuit does not force an end to subsidies through the federal exchange while the appeals process plays out. But if the decision is ultimately upheld, the implications are huge.
“About 4.5 million people, who are getting subsidies through the federal exchanges, are not getting them legally. Eighty-seven percent of the people signing up for health insurance in the exchanges are getting subsidies, some of them significant subsidies of $12,000-14,000. Those are not legal in the healthcare.gov website,” said Turner.
If the Supreme Court were to declare subsidies obtained through the federal exchange illegal, Turner says it would give great incentive for lawmakers to take a smarter approach to health care reform.
“Congress would then have to go back to the drawing board. I think people that opposed this law all along would actually have more bargaining power now to be able to move to a place where we can actually get subsidies that are structured the right way, not this “mother may I,” 159 new government rules and commissions that are basically running our health sector,” said Turner.
She says urgent action would be need to help people trapped in a system where they had to buy health insurance but could not get any help in paying a much higher than expected price tag.
“They’re not going to leave the millions of people who’ve been thrown out of their coverage out in the cold. They’re going to try to figure out how to come up with a better solution, but one that gives people and doctors choices, not government bureaucrats and politicians,” said Turner.
