A recent announcement by the Washington Post revealed that the insurance subsidies that are meant to help millions of Americans pay for health insurance may be considered illegal in three dozen states according to a ruling by the US Court of Appeals for the District of Columbia Circuit. This is a major component of the healthcare law that is meant to make insurance more affordable. Over 5.4 million people signed up for healthcare coverage on the federal exchange and nearly 87% of them received subsidies. In addition, the US Court of Appeals in Richmond also made a contradictory ruling regarding the legality of the Affordable Care Act to the Supreme Court. Therefore the Supreme Court is discussing a series of legal challenges facing the law that was enacted four years ago.
What’s the biggest issue facing the ACA?
The main argument involves whether subsidies may be awarded in states that enabled the federal government to set up their insurance marketplace because they chose not to. The District case is known as Halbig v. Burwell. The DC Circuit court will review the District case and the ruling will not take immediate effect. The Obama administration has stressed the importance that people who are currently receiving subsidies will continue to do so while the courts come to a decision regarding the law.
The subsidy ruling goes to the core of the ACA. This is considered a “last chance” effort to expose the issues with the program. They believe that states that enable the federal government to set up the exchange still have the right to determine whether they want to allow subsidies to be given.
What happens if the DC decision is upheld?
The decision would effect 36 states, 27 which opted to have the federal government set up their exchanges and 9 which opted for partial help. If the decision is upheld, companies in these states will not be penalized under the employer mandate for not offering coverage to workers. The reasoning is that employer penalties take effect when an employee received a subsidy because coverage by their employer does not follow the minimum essential benefits and affordable coverage components of the law.
How does this affect Americans in those states?
Subsidies would not be given in states that opted to set up their own exchanges and thus the millions of Americans who have qualified and relied on the subsidies would no longer be able to afford coverage (the point of the law).