Federal Appeals Court Deals Blow to Affordable Care Act

By: AP
By: AP

July 22, 2014

UPDATE 2:54PM

RICHMOND (AP) - A federal appeals court in Virginia has upheld tax subsidies for low- and middle-income people who buy insurance under the Obama administration's health care reform law.

A three-judge panel of the 4th U.S. Circuit Court of Appeals on Tuesday unanimously rejected a claim that the law provides the subsidies only to people who buy policies through state-run exchanges. The court backed an Internal Revenue Service regulation that makes the subsidies available regardless of whether policies are purchased through state exchanges or one established by the federal government.

Thirty-six states are served by the federal insurance marketplace.

The decision conflicts with another one issued Tuesday by the U.S. Court of Appeals for the District of Columbia Circuit. That court ruled 2-1 that the subsidies are available only through state exchanges.


WASHINGTON (AP) - A federal appeals court has delivered a serious setback to President Barack Obama's health care law, the Affordable Care Act (ACA), potentially derailing subsidies for many low- and middle-income people who have bought policies.

A three-judge panel in Washington ruled 2-1 that the law, as written, only allows insurance subsidies in states that have set up their own exchanges. That invalidated an Internal Revenue Service regulation that allowed subsidies in all 50 states.

It affects consumers who purchased their coverage through the federal insurance marketplace - or exchange- that serves 36 states.

If upheld, the decision could mean premium increases for more than half of the 8 million Americans who purchased taxpayer-subsidized insurance under the law.

The White House says health subsidies under ACA will continue to flow for the time being despite the setback delivered by the court.

White House spokesman Josh Earnest says while the case works its way through the courts, it has "no practical impact" on tax credits.


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