Obviously, everyone’s concerned – and righfully so – about Tuesday’s 2-1 ruling by the D.C. Court of Appeals that the IRS overstepped in saying that premium tax credits may be provided through the federally-facilitated exchange site (Healthcare.gov). But don’t panic – this is far from over. Here are a couple things you need to know:
Though the ruling says that the ACA unambiguously says that subsidies are only available through state-based exchanges, which in theory would kill the subsidies in any state that chose not to develop its own exchange, there will be no immediate effect as the court took no action to block the subsidies at this time, acknowledging that the ruling will be appealed – something the administration has already promised.
Second, on the same day the ruling came down from the DC Appeals Court, a separate 3-0 ruling on a similar case was issued by the 4th Circuit Court of Appeals in Richmond saying that the IRS had, indeed, acted appropriately in handing out the subsidies through the FFM. Two similar cases are still pending in other courts.
Even if these cases are combined and eventually make their way up to the Supreme Court, the timing will be important. If the final ruling comes down after another open enrollment period, millions more will be covered by the subsidies, and as we all know, politically it’s very difficult to take something away when people are already benefiting from it. And, just a reminder, we all know that the subsidies are in fact legal through state-based exchanges, so it will be interesting to see if there’s increased political pressure from people receiving the subsidies for the states that are currently using the FFM to develop their own exchange.
So here we go again. Hang on – it’s going to be a fun ride.