Obamacare Rulings Have Consumers, Governors Worried

Wednesday, 23 Jul 2014 01:55 PM

By John Blosser

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Two conflicting court decisions on tax credits for Obamacare have millions of consumers worried, along with some Republican governors who opted to let the federal government run their state programs.

A decision by the U.S. Court of Appeals D.C. Circuit determined that only those enrolled in state-operated Obamacare exchanges are eligible for the tax subsidies that put the "affordable" in the Affordable Care Act, The Wall Street Journal reported.

Should the ruling stand, Bloomberg News reports, customers  in those 36 states could see their subsidies vanish, boosting their healthcare premiums by 76 percent, dealing a serious blow both to Obamacare and to those governors and legislators who declined to set up state healthcare exchanges and are facing November elections.

The ruling overturned a 2012 IRS decision that all those insured under Obamacare would be eligible for subsidies. Only 14 states have state-operated plans.

However, just hours after the D.C. ruling,  the U.S. Court of Appeals for the Fourth Circuit in Richmond, Virginia, came to the opposite conclusion, throwing the question into further legal confusion and the Obama administration and Justice Department into a flurry of opposition, The New York Times reported.

White House press secretary Josh Earnest told the Times, "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 healthcare costs, regardless of whether it was state officials or federal officials who were running the marketplace."

The question may ultimately be headed to an "en banc" review by all D.C. district judges or to the Supreme Court. If the D.C. circuit ruling stands, it could force states to set up their own exchange programs, the Times reported.

In the meantime, the Obama administration has indicated it will continue to pay subsidies.

The ruling could mean significant loss to those signed up through federal exchanges – the Times reports that the administration says average premiums dropped from $346 a month to $82 a month under Obamacare. Bloomberg reports Avalere Health estimates that 87 percent of those who bought insurance in federal exchange states could be affected, losing about $36 billion in subsidies overall.

Speaker of the House John Boehner, R-Ohio, told the Times the rulings show, "President Obama's healthcare law is completely unworkable."

The Journal reports that Robert Laszewski, health insurance consultant, noted in a blog post, "In effect, the political consequences for all of these people losing their subsidies and their coverage would immediately shift to the Republicans who control these state governments. Below the surface, lots of sensible Republicans must be sweating bullets."

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