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Federal Court Decision Allows Health Insurance Subsidies in All States

Posted in Affordable Care Act, Legislation and Public Policy, Litigation, Private Insurers, State Matters, Tax Matters/IRS

On January 15, a U.S. federal court ruled that the intent of the Affordable Care Act (ACA) was to make health insurance subsidies available to low- and middle-income people regardless of whether they buy coverage through a state-run insurance exchange (or “marketplace”) or through the federal HealthCare.gov website. The plaintiffs in the lawsuit, Halbig v. Sebelius, had claimed that the phrase “established by the State” in the ACA was intended to limit premium tax credits to consumers in states that operate their own exchanges.

In the opinion, Judge Paul L. Friedman of the U.S. District Court for the District of Columbia wrote, “One cannot look at just a few isolated words . . . but also must at least look at the other statutory provisions to which it refers. Doing so reveals the federal government can create an exchange established by the state on behalf of that state.”

The opinion added, “Plaintiffs’ proposed construction in this case — that tax credits are available only for those purchasing insurance from state-run Exchanges — runs counter to this central purpose of the ACA: to provide affordable health care to virtually all Americans. Such an interpretation would violate the basic rule of statutory construction that a court must interpret a statute in light of its history and purpose.”

The plaintiffs have already appealed to the U.S. Court of Appeals for the D.C. Circuit.
 
Only 14 states and the District of Columbia currently operate their own state-run enrollment websites, while 36 others rely on HealthCare.gov for enrollment. Several of the 36 states have said that they intend to fully run their own exchanges in 2015 and beyond.

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