After an in-depth, careful reading of the Affordable Care Act, the Federal Appeals Court panel ruled 2-1 that government subsidies used to purchase health insurance on HealthCare.gov are illegal. The ruling stated that only exchanges that are run by an individual state, or the District of Columbia, are permitted to grant such subsidies to individuals.
For practical purposes, the ruling does not have much impact on the subsidies issued to HealthCare.gov enrollees for now, as the panel does not have the rule of law. The Obama administration is expected to ask the U.S. Court of Appeals for the District of Columbia to reverse the panel’s decision and they feel confident that their request will be granted.
If the ruling were upheld, it would likely lead to the abandonment of health plans purchased on HealthCare.gov due to affordability issues. Without being offered an affordable plan, individuals would not be susceptible to the penalty associated with the Individual Mandate for not having coverage. In addition, this ruling could trickle down to the Play or Pay Mandate, as penalties also only go into effect once the first person steps into the Exchange and receives a subsidy.
This decision is an important one, and one which presents a direct challenge to the ACA. If the decision is not overturned by the U.S. Court of Appeals, the Obama administration can ask the Supreme Court to reverse it.
Stay tuned for updates on this important ruling!
