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Courts Issue Conflicting Rulings on Obamacare Subsidies

By Shekinah Harper, Editorial Intern

On Tuesday, two federal appeals court panels issued conflicting rulings on whether the government could subsidize health insurance premiums for people in three dozen states that use the federal insurance exchange.

The United States Court of Appeals for the Fourth Circuit, in Richmond, upheld the subsidies, while the United States Court of Appeals for the District of Columbia Circuit said the government could not subsidize insurance for those in states that use the federal exchange. 

The federal court of appeals in the District of Columbia claims that under the Affordable Care Act, subsidies are available only to people who obtained insurance through exchanges established by the states.

Those who filed the lawsuit objected to being required to buy insurance even with subsidies and claimed Congress confined the subsidies to state exchanges in order to provide an incentive for states to establish and operate exchanges on their own. The claims mainly came from those who were supported by conservative and libertarian organizations, in states that use the federal exchanges: Tennessee, Texas, Virginia and West Virginia.

Without subsidies, insurance would likely be unaffordable to millions of Americans. The Congressional Budget Office estimates that subsidies this year will average $4,400 for each person who receives a subsidy.

This decision is crucial regarding the Affordable Care Act because the federal exchange serves states with about two-thirds of the nation’s population. People may qualify for subsidies if they have incomes of up to $45,960 for individuals and up to $94,200 for a family of four.

Although 8 million people selected private health plans from October through mid-April, 67.5 percent of those individuals obtained coverage through the federal exchange, and most of them qualified for subsidies that reduce their premium.

If the ruling stands, the court could undercut enforcement of the requirement for most Americans to have insurance. Without subsidies, the amount of consumers without insurance would increase and they could be exempted from the “individual mandate” because insurance would be unaffordable for them.

The ruling could also undermine the requirement for larger employers to offer health coverage to their employees. That requirement is enforced through penalties imposed on employers if any of their employees receive subsidies to buy insurance on an exchange.

Due to the White House’s disagreement with the court’s ruling, the government has decided to seek further review of the court’s decision. In the meantime, people who received premium tax credits will continue to receive them.



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