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Jerry Geisel

Court ruling on health care reform law premium subsidies expected soon

July 6, 2014 - 6:00am


The U.S. Court of Appeals for the District of Columbia is expected to issue a decision soon on a lawsuit alleging, contrary to an IRS rule, that health care reform law premium subsidies can be used by eligible individuals to buy coverage only in state exchanges—not those set by the U.S. Department of Health and Human Services in states that declined to set up exchanges.

In January, Judge Paul Friedman of the U.S. District Court for the District of Columbia rejected the argument that would affect individuals obtaining federal premium subsidies to buy coverage in states such as Ohio, Pennsylvania and Texas that did not set up exchanges.

“There is no evidence that either the House or Senate considered making tax credits dependent on whether a state participated in the exchanges,” he ruled.

If premium subsidies are limited only to coverage through state exchanges, millions of lower-income uninsured U.S. residents would lack access to subsidies and may remain uninsured.

As of mid-April, the Department of Health and Human Services said 2.6 million people who bought health insurance through a public exchange did so through 15 state exchanges, with 5.4 million people securing coverage through federal exchanges. It also said more than 80% of the more than 8 million total exchange enrollees qualified for premium subsidies.

“If premium subsidies were not available in federally established exchanges, it would be like pulling out all of the girders from a skyscraper, causing the entire edifice to topple in fairly short order,” said Gretchen Young, senior vice president of health policy with the ERISA Industry Committee in Washington.

“Without the subsidies, probably most individuals in the federal exchanges would not be able to afford coverage. Only the sickest and those most in need of insurance would be left in these plans, which quickly would face an unsustainable risk pool,” she said.

 



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