A U.S. appeals court on Tuesday dealt a significant blow to the Affordable Care Act, when it threw out an IRS regulation that governs subsidies.
In essence, the decision throws out subsidies in the 36 states that did not set up their own insurance exchanges.
The decision by a three-judge panel of the United States Court of Appeals for the District of Columbia Circuit will be appealed.
A spokeswoman for the Department of Justice said the Obama administration will ask the case to be heard by the full 11-judge panel.
“We believe that this decision is incorrect, inconsistent with Congressional intent, different from previous rulings, and at odds with the goal of the law: to make health care affordable no matter where people live,” Emily Pierce said in a statement. “The government will therefore immediately seek further review of the court’s decision. In the meantime, to be clear, people getting premium tax credits should know that nothing has changed, tax credits remain available.”
According to California Healthline, an industry digest, this decision has the potential to affect nearly five million — or most — Americans who signed up for Obamacare through federal exchanges.
“Losing the subsidies would mean that millions of U.S. residents could become uninsured, since health plans sold through the exchange might be unaffordable without the assistance,” Healthline reports.
The court here was looking at some language of the Affordable Care Act. The court was deciding whether Congress intended to provide subsidies for Americans who purchased insurance through exchanges set up by states and the federal government on behalf of states.
In his concurring opinion, Senior Circuit Judge Raymond Randolph wraps up the panel’s opinion succinctly:
“As Judge Griffith’s majority opinion—which I fully join—demonstrates, an Exchange established by the federal government cannot possibly be ‘an Exchange established by the State.’ To hold otherwise would be to engage in distortion, not interpretation. Only further legislation could accomplish the expansion the government seeks.”
One of the three judges dissented, saying the majority failed to find ambiguity in the language, where there clearly was.