Appeals courts issue conflicting rulings on key Obamacare provision

Dave Williams

Staff Writer-Atlanta Business Chronicle

Two federal courts issued conflicting rulings Tuesday on whether the health insurance exchanges operated by the federal government in 34 states under Obamacare – including Georgia – may offer tax subsidies.
A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit ruled that the language in the Affordable Care Act only permits subsidies for qualified Americans who enroll in state-run exchanges.
But within hours of that decision, another federal appeals court based in Richmond, Va., upheld the subsidies.
The offering of tax breaks to help uninsured Americans afford to sign up for Obamacare is critical to the viability of the federal health-care reform law, said Bob Christenson, a partner with Atlanta-based labor and employment law firm Fisher & Phillips LLP.
“This is a dagger in the heart,” he said, referring to the first ruling. “I don’t think the law works without the subsidy in the federal exchanges.”
The second decision represented much better news for the Affordable Care Act. The Virginia-based appellate court declared that a rule promulgated by the Internal Revenue Service allowing all state exchanges to offer tax subsidies was “a permissible exercise of the agency’s discretion.”
Obamacare’s supporters originally envisioned that all states would set up their own health insurance exchanges. However, only 16 have chosen to do so, leaving the U.S. Department of Health and Human Services to establish and operate exchanges in the other states.
Christenson said the U.S. Supreme Court probably will have the final say on the subsidies issue.
– Dave Williams covers Government