Health Center Regulatory Issues

Court of Appeals Rulings Don’t “Blow Up” the ACA

By Dashawn Groves

On June 22, 2014, two U.S. courts of appeals issued conflicting rulings on whether the health insurance subsidies are available to ONLY people in states that have created their own exchanges or to all residents regardless if the exchange was created by the state or federal government. The cases center on a brief description in the Affordable Care Act (ACA) that says subsidies will be available “through an exchange established by the State.”  The Internal Revenue Service (IRS) interpreted the law to allow individuals to receive subsidies to help purchase insurance, regardless of whether they are in an exchange run by their state or by the federal government. Opponents are questioning the interpretation of the law, saying that subsidies are only available to individuals residing in the 14 states with state-based exchanges.
What does it mean for health centers and their patients?
Neither case will have an immediate impact on the ACA as it could take years for the courts to decide. Individuals across the country will continue to receive the ACA’s tax credits and subsidies, ensuring they can afford the health care they need. Health center O&E staff should continue to do business as usual, reaching out to individuals and enrolling them in Medicaid, CHIP and the Marketplace. Current subsidies would likely remain in place until there is a final legal decision on the matter.
What did the Courts decide?
The U.S. Court of Appeals for the District of Columbia was the first ruling (Halbig v. Burwell) out last week. In a 2-1 decision, the three-judge panel ruled that the health insurance subsidies were only available to the individuals in the 14 states and the District of Columbia operating their own health insurance exchanges. The majority opinion concluded “that the ACA unambiguously restricts” the subsidies to “exchanges ‘established by the state.’ “ The dissenting opinion argues, “it was well understood that without the subsidies, the individual mandate was not viable as a mechanism for creating a stable insurance market.”

Shortly following the Halbig v. Burwell ruling, a three-judge panel on the Fourth Circuit Court of Appeals in Richmond, VA unanimously ruled in King v. Burwell that the subsidies were available to residents in all states.  Similar to the dissenting opinion in Halbig v. Burwell, the Fourth Circuit concluded that “established by the State” is ambiguous, when read in combination with another section of the ACA, and could include federal exchanges.  The “broad policy goals of the Act,” described above, primarily persuaded the court that the IRS’s interpretation of the statute was permissible.
What happens next?
The two decisions are not the final word.  All 11 judges on the D.C. Circuit Court could be asked to decide the Halbig v. Burwell case, a process called “en banc” review.  The Obama administration has said it will ask the court for such a review.  A majority of the judges would have to agree to rehear the case for it to be reconsidered in this way.  The challengers in King v. Burwell could ask the Fourth Circuit to reconsider as well.  Two trial court cases raise similar issues, one in Oklahoma and one in Indiana.  Those cases could also go to appellate courts. Oklahoma is in the 10th Circuit; Indiana is in the 7th.  Depending on the outcomes of the various rulings, all the courts could end up agreeing, or there could remain a disagreement between different circuits.  Either side could appeal the rulings to the Supreme Court for consideration. It is unclear when a final decision will be made.