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Health Care Reform:

Health Insurance & Affordable Care Act

WebMD News from Kaiser Health News

Obamacare Court Decisions: FAQ

By Mary Agnes Carey

Tue, Jul 22 2014

On Tuesday two U.S. appeals courts issued conflicting rulings on a subject that’s important to millions of people: the availability of subsidies to help purchase coverage under the health-care law. KHN’s Mary Agnes Carey answers some frequently asked questions about those court decisions and how they impact consumers.

Q: What did the courts decide?

A: In a blow to the health law, the U.S. Court of Appeals for the District of Columbia Circuit ruled that the health law’s subsidies are available only to individuals in the 14 states and the District of Columbia now operating their own health insurance exchanges. The federal government now runs the exchanges in 36 states. Judge Thomas Griffith, writing the majority opinion in the 2-1 decision, said they concluded "that the ACA unambiguously restricts" the subsidies to "exchanges 'established by the state.' "

In a separate ruling, a three-judge panel for the Fourth Circuit Court of Appeals in Richmond, Va., ruled unanimously for the Obama administration, allowing subsidies to be available to residents in all states. Judge Roger Gregory, writing the opinion, said while the health law is "ambiguous and subject to multiple interpretations," the court decided to uphold the IRS's interpretation of the law that residents of states using the federal exchange are entitled to subsidies.

Q: What was the issue the courts decided on?

A: The case centers on a brief description in the health law that says subsidies will be available "through an exchange established by the state."

In implementing the law, the Internal Revenue Service (IRS) interpreted the law to allow eligible consumers to receive subsidies to help purchase coverage, regardless of whether they are in an exchange run by their state or by the federal government.

Opponents of the law questioned that interpretation, saying that the law as written clearly directs subsidies to state-based exchanges only. But proponents– including several lawmakers who helped write it – said lawmakers fully intended that subsidies be offered on all exchanges no matter if they were administered by the feds or state officials.

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