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Jerry Geisel

Full appeals court to review legality of premium subsidies in federal exchanges

September 4, 2014 - 12:13pm

Health Care Reform Premium Subsidies


A federal appeals court Thursday agreed to review a lower court ruling striking down health care reform law premium subsidies for lower-income individuals purchasing coverage in the federal insurance exchanges.

Without comment, the U.S. Court of Appeals for the District of Columbia approved an Obama administration request to have the full appeals court review the 2-1 decision in July by a three-judge appeals court panel that the Patient Protection and Affordable Care Act only permits premium subsidies purchased through state exchanges.

The federal government has set up exchanges in the 36 states that declined to do so.

The appeals court set a Dec. 17 hearing for oral arguments.

The immediate impact of the appeals court action is to delay a final legal resolution of the issue. With district courts split on the issue, some observers had hoped the U.S. Supreme Court would take up and resolve the controversy.

If the high court were to act, it would not do so until the full appeals court hands down its ruling, which won't be until sometime next year.

At issue is the validity of 2012 Internal Revenue Service regulations that said the premium subsidies would be available to eligible beneficiaries purchasing coverage in state or federal exchanges.

Two appeals court panels have split on the legality of the IRS rules. The District of Columbia appeals court panel ruled that the law is explicit that the subsidies only are available for coverage in purchased through state exchanges. On the same day, though, a three-judge panel of the 4th U.S. Circuit of Court of Appeals in Richmond, Virginia, said the IRS interpretation of the ACA to permit subsidies for coverage obtained in federal and state exchanges was correct.

“The economic framework supporting the (health care reform law) would crumble if the credits were unavailable on federal exchanges,” the appeals court ruled.

Of the 8 million individuals who enrolled through the end of March in health care plans offered in public health insurance exchanges, 2.6 million received coverage in state exchanges and 5.4 million received coverage in federal exchanges, according to the U.S. Department of Health and Human Services.

In both state and federal exchanges, about 85% of enrollees received health care reform law authorized premium subsidies.

 



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