Two appeals courts issue conflicting decisions on ‘Obamacare’

A federal appeals court dealt a potentially serious setback to President Barack Obama’s landmark health care reforms Tuesday in a ruling that could see many low- and middle-income consumers stripped of subsidies that encouraged them take out insurance through the federal marketplace.

But in a separate ruling just hours later, another appeals court upheld the key provisions, deferring to the Internal Revenue Service to make judgments about what subsidies may be handed out under the Affordable Care Act (ACA).

If the first ruling — by the U.S. Court of Appeals for the D.C. Circuit — is upheld, the decision could mean premium increases for more than half of the 8 million Americans who have so far purchased taxpayer-subsidized coverage under the ACA.

The three-judge panel ruled that the law, as written, allows for tax relief only for those who purchase health insurance through state-run exchanges, not the federal exchange.

The 2-1 decision would affect consumers who bought coverage in the 36 states served by the federal system. The majority opinion concluded that the ACA “unambiguously” restricts subsides to consumers in exchanges established by a state. 

The subsidies, in the form of tax credits, are available to people with annual incomes of up to 400 percent of the federal poverty level, or $94,200 for a family of four.

“We reach this conclusion, frankly, with reluctance,” Judge Thomas Griffith said Tuesday. “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.”

In his dissent, Judge Harry Edwards called the ruling “a not-so-veiled attempt to gut the Patient Protection and Affordable Care Act” and warned that the panel’s ruling “portends disastrous consequences.”

The D.C. Circuit Court’s decision directly conflicted with that of the Fourth Circuit Court of Appeals, which issued a decision upholding the same provisions of the law.

The Fourth Circuit’s three-judge panel unanimously said that the law was ambiguous and that it would defer to the IRS’s determination whether subsidies may go to individuals who purchased health insurance on the federal or a state-run exchange.

The conflicting decisions arose from two of several pending lawsuits against ‘Obamacare.’ The ACA — a potential legacy issue of the Obama administration — passed in 2010 and upheld as constitutional in 2012 by the Supreme Court, despite fervent challenges by opponents, especially congressional Republicans.

The Obama administration sharply attacked the D.C. Circuit Court’s ruling, adding that it would likely appeal the decision.

“You don’t need a fancy legal degree to understand that Congress intended for every eligible American to have access to tax credits that would lower their health care costs, regardless of whether it was state officials or federal officials who were running the marketplace,” said White House press secretary Josh Earnest. “I think that is a pretty clear intent of the congressional law.”

Meanwhile, House Speaker Rep. John Boehner, R-Ohio, a vocal opponent of the ACA, hailed the first decision as evidence of the law’s failure.

“Today’s ruling is also further proof that President Obama’s health care law is completely unworkable. It cannot be fixed,” Boehner said in a press release. “Republicans remain committed to repealing the law and replacing it with solutions that will lower health care costs and protect American jobs.”

Al Jazeera and wire services