Conflicting court rules leave Obamacare subsidies in limbo

Two US appeals courts have diverged on President Obama’s flagship healthcare law

The US Court of Appeals for the District of Columbia, ruled that the Affordable Care Act, better known as Obamacare, doesn’t authorise the US government to provide subsidies to Americans to help them purchase health insurance in 36 states. Photograph: Joe Raedle/Getty Images

The US Court of Appeals for the District of Columbia, ruled that the Affordable Care Act, better known as Obamacare, doesn’t authorise the US government to provide subsidies to Americans to help them purchase health insurance in 36 states. Photograph: Joe Raedle/Getty Images

Thu, Jul 24, 2014, 01:00

The US Supreme Court could be asked to revisit president Barack Obama’s signature healthcare law after two courts issued conflicting rulings on government subsidies offered to low and middle-income earners to buy health insurance under the law.

The US Court of Appeals for the District of Columbia, considered the second-highest court in the country after the Supreme Court, ruled that the Affordable Care Act, better known as Obamacare, doesn’t authorise the US government to provide subsidies to Americans to help them purchase health insurance in 36 states.

These are states that declined to set up exchanges through which reduced health insurance is sold but where the federal government offers customers insurance through the Healthcare.gov website.

The US Court of Appeals for the Fourth Circuit, based in Richmond, Virginia, ruled on Tuesday a few hours after the DC court’s judgment that the federal government could offer subsidies in states.

That court said the US tax authority, the Internal Revenue Service, correctly interpreted the 2010 law when it said that all public exchanges selling insurance could offer subsidies by way of tax credits.

Subsidies

The availability of subsidies is central to Obamacare, which was intended to help almost 50 million Americans without protection from high healthcare costs. Almost nine in every 10 people out of more than five million people who signed up for cheap insurance under Obamacare have received financial help from the federal government.

The DC court decision will have no immediate bearing on Obamacare customers as the White House has asked the full DC Circuit Court to review the decision in the appealed case, known as Halbig vs Burwell, arguing that the law should offer subsidised insurance to all customers, regardless of who sells the insurance.

“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 are running the marketplace,” said White House spokesman Josh Earnest.

The 2010 law, which survived an early Supreme Court challenge and a rocky technical roll-out last year, has been targeted in a series of legal actions by conservative activists opposed to increased government costs and financial entitlements under federal programmes.