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1 Day, 2 Courts, 2 Contradictory Rulings on Federal Taxes for Affordable Care Act Insurance

July 22, 2014

Ron Johnson, vice president of policy and advocacy for AIDS United

Ron Johnson, vice president of policy and advocacy for AIDS United

In a major lawsuit, a D.C. federal appeals court panel ruled on July 22 that government subsidies provided to almost five million people enabling them to buy health insurance on the federal exchange are illegal.

According to CNBC's coverage of the decision, known as Halbig after the name of the person who brought suit: "The 2-1 ruling said such subsidies can be granted only to people who bought insurance in an Obamacare exchange run by an individual state or the District of Columbia -- not on the federally run exchange" There are currently only 14 states that run their own exchanges.

It turns out that millions of lives could be negatively affected over an issue of semantics.

"Section 36B plainly makes subsidies available in the Exchanges established by states," Senior Circuit Judge Raymond Randolph wrote in his majority opinion. "We reach this conclusion, frankly, with reluctance. At least until states that wish to can set up their own Exchanges, our ruling will likely have significant consequences both for millions of individuals receiving tax credits through federal Exchanges and for health insurance markets more broadly." Judge Thomas Griffith was the other jurist ruling for the plaintiffs.


In his dissent, Judge Harry Edwards wrote that the judgment of the majority "portends disastrous consequences."

Indeed, though no data is available on just how many HIV-positive people rely on subsidies to be able to afford health insurance, Ronald Johnson, the vice president of policy and advocacy for AIDS United, said the decision was a "very serious and damaging development." Johnson contends that the ruling undermines the goal of the Affordable Care Act (ACA) of providing affordable health coverage to Americans.

"I'm not a lawyer," he continued, "but I don't think this is consistent with what Congress intended. Lower court opinions have sided with the law. The Appeals Court panel's decision is a surprising and disappointing one that could put in jeopardy health coverage for millions of people, including a significant number of whom are HIV-positive."

As if affirming his statement, two hours after Halbig came down, a Fourth Circuit Court of Appeals in Virginia sided with other previous lower court rulings saying the language was "ambiguous" and could be read in various ways, deferring to the IRS rule. "Applying deference to the IRS's determination, however, we uphold the rule as a permissible exercise of the agency's discretion," the decision read.

While the Obama administration will certainly appeal Halbig, perhaps helped by the Virginia court's ruling, Johnson said further analysis of the decision was needed. The D.C. panel could put a stay on its ruling, which would enable subsidies to continue until the appeals process -- which may go as high as the Supreme Court -- decides the issue once and for all.

The current consensus is that the ruling will have no immediate effect. White House spokesman Josh Earnest said the ruling "does not have any practical impact on premium subsidies issued to enrollees now."

And Emily Pierce, a spokeswoman for the Justice Department, told the Wall Street Journal, "We believe that this decision is incorrect, inconsistent with congressional intent, different from previous rulings, and at odds with the goal of the law. In the meantime, to be clear, people getting premium tax credits should know that nothing has changed, tax credits remain available.''

Johnson is concerned, as are other HIV and health care advocates, that without a stay or a final decision, the subsidies will stop, people won't be able to pay their premiums, insurance companies will consider the policies unpaid, and the insurance will be cancelled.

"It certainly would cause a lot of people to rejoin the ranks of the uninsured," Ron Pollack, founder of Families USA, a health care consumer advocacy group told CNBC. "The provision of the tax credit premium subsidy makes a huge difference in terms of whether people considering enrollment or enrolling in coverage will find such coverage affordable."

Johnson summed it up perfectly: "One thing I can be very sure of saying is that the insurance companies aren't going to be left holding the bag."

Sue Saltmarsh has worked in the HIV/AIDS field for over 20 years, the first 10 as an herbalist and energy therapist at Project Vida, the last six as a writer and copy editor for Positively Aware magazine. She is now a freelance writer and editor and is also able to devote more time to her passion as founder and director of the Drive for Universal Healthcare (DUH).

Copyright © 2014 Remedy Health Media, LLC. All rights reserved.

This article was provided by TheBody.
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