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2-1 appellate court ruling strikes down subsidies in federal Obamacare marketplaces

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A federal appellate court this morning issued a 2-1 ruling striking down subsidies in Obamacare marketplaces that are run by the federal government, as Pennsylvania's is.

Halbig vs. Burwell was argued before the U.S. District Court of Appeals District of Columbia Circuit. Circuit Judge Thomas B. Griffith authored the majority opinion, with Senior Circuit Judge A. Raymond Randolph concurring and Senior Circuit Judge Harry T. Edwards dissenting.

"Because we conclude that the ACA unambiguously restricts the section 36B subsidy to insurance purchased on Exchanges 'established by the State,' we reverse the district court and vacate the IRS’s regulation," Griffith wrote.

"We reach this conclusion, frankly, with reluctance," he continued. "At least until states that wish to can set up Exchanges, our ruling will likely have significant consequences both for the millions of individuals receiving tax credits through federal Exchanges and for health insurance markets more broadly. But, high as those stakes are, the principle of legislative supremacy that guides us is higher still."

Griffith said the IRS interpretation that is broader than the law justifies "has major ramifications."

"By making credits more widely available, the IRS Rule gives the individual and employer mandates — key provisions of the ACA — broader effect than they would have if credits were limited to state-established Exchanges," he said.

In his dissent, Edwards said, "This case is about Appellants’ not-so-veiled attempt to gut the Patient Protection and Affordable Care Act (“ACA”)."

A three-judge panel on the U.S. Fourth Circuit Court of Appeals issued a conflicting ruling this morning in a similar case, ruling 3-0 that the IRS rule saying subsidies are legal on both state and federal marketplaces was “a permissible exercise of the agency’s discretion.”

“The ruling does not automatically doom the subsidies,” Modern Healthcare reported. “It's virtually certain that the administration will appeal Tuesday's ruling, either to a full panel of the D.C. Circuit Court or directly to the Supreme Court. Legal experts say the earliest the high court would rule is in the matter as soon as spring 2015 — setting up a period of national uncertainty, since the final word on the subsidies' legality would likely come after the re-enrollment period for next year.”

Attorney Eric Athey, co-chairman of the labor and employment division of Harrisburg-based McNees Wallace & Nurick LLC, said if the Obama administration seeks a review of the decision by the full D.C. Court of Appeals, “(known as ‘en banc’), there is a good chance that the Administration wins.”

“If you exclude senior judges from the composition of the current bench, Democratic appointees outnumber Republicans 7-4,” he said. “Although Senior Judges may participate in panel decisions (2 Senior judges participated in today's decision), they do not participate in en banc decisions.”

Regardless of the en banc outcome, he said, “it is likely that this case will ultimately go to the US Supreme Court. The outcome is harder to predict there. Chief Justice Roberts surprised many by upholding the individual mandate component of the law in 2012; he did that by overlooking some poorly written provisions within the Act. The Halbig case is similarly the result of some poorly drafted provisions in the ACA. My prediction is that Chief Justice Roberts will be the deciding vote if the Halbig case goes to the Supreme Court.”

If the Halbig decision stands, Athey said, Pennsylvania and the other 35 states that elected for a federal-run marketplace will see Obamacare plans become unaffordable for many.

“In addition, employers in these states may be free from ‘pay or play’ penalties resulting from their failure to offer coverage – since employer penalties are generally triggered when an employee obtains a premium subsidy to purchase coverage on the exchange,” Athey said.

According to a U.S. Department of Health & Human Services report last month, Pennsylvania residents who chose subsidy-eligible plans on the federal-run marketplace got premium reductions averaging 74 percent. After tax credits, those enrolled in silver plans paid monthly premiums averaging just $60, HHS said.

Write to the Editorial Department at editorial@cpbj.com

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Comments

Greg July 23, 2014 3:28 pm

I am not sure that having a single payer system where our government is completely in charge of another major portion of our lives is necessarily the best solution.

Bruce July 22, 2014 12:26 pm

You are so right Steve. The Country is crumbling while these idiots continue to either slaughter or put lipstick on the pig that is the ACA. In my opinion there should have been a single payer or public option that would have stopped all of this nonsense, but then the Insurance Companies would never have allowed that to happen would they? Wake up! Citizens in the form of Corporations own and run this country.

Steve July 22, 2014 11:35 am

This was really a no brainer decision. The law is pretty specific in what is says.

This was a really stupid mistake on the part of the Obama Administration and the Democratic Caucus in both houses when the law was written. The verbiage used is fairly simple, even for politicians, and they should have known what they wrote would end up here.

That being said, I am so sure it was a stupid mistake given the intensity of the single payer argument early on. I suspect it was a deliberate mistake to destroy Obamacare as it currently exists. To fix all these errors and changes, the Democrats could have easily slipped single payer into the equation, except that the Republicans control the House.

Responsibility for the current situation in the government and in this country is well imbedded in the simple words of the Constitution. "We the People", "For the People", "By the People". The cesspool in Washington DC we call our government is the fault of the voters.

This poorly worded law, if it was not intentional, is the result of the incompetent government "We the People" elected.

That can change in November. Frankly, at all levels of government, incumbents are proving their incompetence every day. All of them should be shown the Unemployment Line in November.

"We the People" need to reject ALL Incumbents at all levels of government in November. They no longer understand their Oath of Office, or the phrases "For the People" and "By the People".

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