Two federal appeals courts today have issued contradictory rulings on a key financing issue. The rulings came within hours of each other. A divided court panel in Washington called into question the subsidies that help millions of low- and middle-income people pay their premiums. The court said financial aid can only be paid in states that have set up their own insurance exchanges.
But in Virginia, another appeals panel unanimously came to the opposite conclusion. That court said the IRS had correctly interpreted the will of Congress when it issued regulations allowing consumers nationwide to purchase subsidized coverage.
The White House says policyholders will keep getting financial aid as the administration sorts out the legal implications. Both cases are part of a long-running political and legal campaign to overturn the health care law.
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A federal appeals court has delivered a serious setback to President Barack Obama's health care law, potentially derailing subsidies for many low - and middle - income people who have bought policies.
If upheld, the decision could mean premium increases for more than half of the 8 million Americans who purchased taxpayer-subsidized insurance under the law. It affects consumers who purchased their coverage through the federal insurance marketplace - or exchange - that serves 36 states.
A three-judge panel in Washington ruled 2-1 that the law, as written, only allows insurance subsidies in states that have set up their own exchanges. That invalidated an Internal Revenue Service regulation that allowed subsidies in all 50 states. Presumably, Kentucky would not be directly impacted by the ruling, since it manages its own exchanges as the Affordable Care Act (Obamacare) originally intended.
It is unknown how this impacts Illinois. Illinois operates a "partnership" exchange with the federal government, and not a totally independent exchange like Kentucky.
Other neighboring states that let the Federal Government totally manage their health care exchange, and could be impacted, include Tennessee, Missouri, Indiana, and Ohio. Indirectly, it is not yet known how even the state run exchanges across the nation could be impacted if the ruling is allowed to stand. The Obama Administration says the health care subsidies will keep flowing, despite the court decision.
