Whether federal premium subsidies are available to individuals seeking health insurance coverage in federal exchanges is a legal controversy the U.S. Supreme Court should agree to decide. On the same day last month, two federal appeals courts ruled differently on an issue that directly affects millions and, more broadly, the entire health care delivery system.
In the first ruling on July 22, the U.S. Circuit Court of Appeals for the District of Columbia ruled that the law — contrary to Internal Revenue Service regulations — only permits federal premium subsidies to lower-income individuals seeking coverage in the 14 states, plus the District of Columbia, that have set up health insurance exchanges.
In the second ruling, handed down just hours after the first decision, the 4th U.S. Circuit Court of Appeals in Richmond, Virginia, said while the law's wording on the breadth of the availability of premium subsidies is “ambiguous and subject to multiple interpretations,” it is required to defer to the IRS' interpretation of the law that premium subsidies are available in state as well as federal exchanges.
The issue of the availability of federal health insurance premium subsidies is of such importance that the appeals court rulings demand prompt review by the final decision-maker: the U.S. Supreme Court.
Of the 8 million people who opted for coverage offered through exchanges, well over 5 million exchange enrollees selected plans in the federal exchange because the states in which they live declined to establish exchanges.
Most — 87% — of those federal exchange enrollees received premium subsidies, with the subsidies on average covering more than 75% of the premium.
Without those subsidies, it is safe to say that many — perhaps most — of federal exchange enrollees would not have opted for coverage and would continue to be uninsured.
That would defeat the central purpose of the health care reform law — increasing the number of people with health insurance.
It is hard for us to believe that Congress intended to limit premium subsidies to those seeking coverage in state exchanges.
What we think, though, is academic. What matters most is certainty in this area, and only the Supreme Court can provide that, which we hope it does soon.