Contradictory Obamacare Rulings Issued by Appellate Courts

Two federal appeals courts on Tuesday issued diametrically opposed politically charged rulings on the legality of tax credits for millions of Obamacare enrollees in 34 states who purchased their health insurance through the federal exchange.

In a 2–1 ruling in Halbig v. Burwell, judges on the D.C. Circuit Court of Appeals said that specific language in the Patient Protection and Affordable Care Act does not authorize the Internal Revenue Service to extend tax credits to an estimated 4.7 million people in 34 states who bought coverage through the federally facilitated Healthcare.gov exchange.

"We reach this conclusion, frankly, with reluctance. 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," Judges Thomas Griffith and Raymond Randolph, both Republican appointees, wrote in their majority opinion.

"But, high as those stakes are, the principle of legislative supremacy that guides us is higher still. Within constitutional limits, Congress is supreme in matters of policy, and the consequence of that supremacy is that our duty when interpreting a statute is to ascertain in the meaning of the words of the statute duly enacted through the formal legislative process. This limited role
serves democratic interests by ensuring that policy is made by elected, politically accountable representatives, not by appointed, life-tenured judges."

Senior Judge Harry T. Edwards, a Democratic appointee, dissented, and wrote that the "appellants' argument cannot be squared with the clear legislative scheme established by the statute as a whole."

Statute Upheld in 4th Circuit
About an hour later, down the road in Richmond, VA, judges in the 4th Circuit Court of Appeals in a 3–0 ruling in King, et al v. Burwell, upheld a district court ruling that the IRS had the authority to extend the tax credits.

"The plaintiffs contend that the IRS's interpretation is contrary to the language of the statute, which, they assert, authorizes tax credits only for individuals who purchase insurance on state-run Exchanges," the Richmond judges wrote.

"We find that the applicable statutory language is ambiguous and subject to multiple interpretations. Applying deference to the IRS's determination, however, we uphold the rule as a permissible exercise of the agency's discretion."
The three Richmond judges are all Democratic appointees. Judges Stephanie D. Thacker and Andres M. Davis were appointed by President Obama, and Judge Roger L. Gregory was appointed by President Clinton.

May be Headed to SCOTUS
The tax credit issue is under challenge by Republican lawmakers and conservative activists in four separate federal lawsuits, and ultimately it is expected to be heard before the U.S. Supreme Court.

White House spokesman Josh Earnest said the D.C. Court ruling would be appealed before the full court. "It's important for people all across the country to understand that this ruling does not have any practical impact on their ability to continue to receive tax credits right now," Earnest said of the D.C. court's ruling.

"Right now there are millions of Americans all across the country who are receiving tax credits from the federal government as a result of the Affordable Care Act that is making healthcare more affordable for them. While this ruling is interesting to legal theorist it has no practical impact on their tax credits right now."

A report this month from the Robert Wood Johnson Foundation and the Urban Institute estimates that 7.3 million people, or about 62% of the 11.8 million people expected to enroll in federally facilitated marketplaces by 2016, could lose out on $36.1 billion in subsidies. Residents in Texas and Florida would lose the most, $5.6 billion and $4.8 billion in subsidies at risk in this court decision, the report said.

"Millions of people already get their private health insurance through federally facilitated marketplaces, and millions more will do so in the coming years. For most of these individuals, federal subsidies make the difference in being able to afford health insurance," John Lumpkin, MD, senior vice president at the Robert Wood Johnson Foundation, said in prepared remarks.

"If financial help is available to people living in some states but not others, it will widen the substantial health insurance disparities in our nation, making it harder for millions to access the care they need."

Reaction
Nina Owcharenko, director of health policy studies at The Heritage Foundation, said that 27 states have not set up a state exchange and another seven entered into a federal-state partnership on an exchange.

"Even with federal incentives, states are struggling to keep their state exchanges afloat—especially as they prepare to take on full financial responsibility for them," Owcharenko said in prepared remarks.

"Only 17 states have set up Obamacare exchanges and some already are looking at abandoning their exchanges and using the federal exchange. This is more bad news for Obamacare's future as enrollees in the federal exchange could face higher costs of coverage."