Federal Judge Rules Certain Subsidies To Affordable Care Act Policyholders Illegal, Supreme Court May Decide
A federal judge in Oklahoma has ruled the tax credit subsidies to help consumers pay for their insurance under the Affordable Care Act cannot go to residents in states that are not running their own insurance exchanges, the Christian Science Monitor reports.
At issue in the lawsuit Pruitt v. Burwell is whether an Internal Revenue Service rule that allows the federal government to issue tax credits to ACA insurance policyholders conflicts with the actual language of the ACA, which seems to limit provision of these tax credits to only those policy holders enrolled in health care exchanges set up and run by the states. U.S. District Judge Ronald White’s decision claims any notion of the ACA’s "basic purpose" is inadequate to overcome the text as it is currently written; and any invalid reading of the ACA must be struck. Democrats contend the law was written to allow anyone to get subsidies — and that any language in the law that contradicts that was written in error.
“'The text is what it is, no matter which side benefits,’" quoted White in his decision. "Such a case (even if affirmed on the inevitable appeal) does not ‘gut’ or ‘destroy’ anything. On the contrary, the court is upholding the Act as written." Hammering home his point, White added, "Congress is free to amend the ACA to provide for tax credits in both state and federal exchanges, if that is the legislative will.”
As written, the ACA authorizes the federal government to issue tax credits to qualified policy holders of the state-run exchanges. No problem would exist with this stipulation if every state ran its own exchange. However, 34 states, some of which could not find enough insurance companies willing to commit to a state marketplace, did not set up their own insurance exchanges and so the federal government stepped in to run marketplaces for these states.
This, then, is exactly where a problem arises since the language of the law does not authorize tax credits to be issued through non-state exchanges. To remedy this, the Obama administration might have requested Congress amend the law appropriately. Instead, the administration compelled the IRS to enact a regulation requiring the U.S. Treasury to provide subsidies for those purchasing health plan coverage on all exchanges.
Some see this as an abuse of executive power and filed legal challenges, including Pruitt v. Burwell. White’s decision on the matter says the IRS is overstepping its authority and, according to The Wall Street Journal, his decision may prompt the Supreme Court to take up and ultimately decide the matter.