A federal appeals court has handed down a massive blow to President Obama’s Affordable Care Act.
In a 2-1 vote, the court decided that the federal government may not subsidize health insurance plans for people in states that choose not to set up exchanges.
“We reach this conclusion, frankly, with reluctance,” the ruling stated. “At least until states that wish to can set up Exchanges, our ruling will likely have significant consequences both for the millions of individuals receiving tax credits through federal Exchanges and for health insurance markets more broadly.”
The court agreed that subsidies can only be given to states who run exchanges, so the 36 states who chose not to set up exchanges may not receive them any longer.
“You don’t need a fancy legal degree to understand that Congress intended for every eligible American to have access to tax credits that would lower their health care costs, regardless of whether it was state officials or federal officials who were running the marketplace,” White House spokesman John Earnest said. “I think that was a pretty clear intent of the congressional law.”
People with low incomes are able to have their health care premiums paid under the Affordable Care Act through tax credits, but the law clearly says that it is only in states that have chosen to run exchanges. The federal government is now blocked from handing down those subsidies to people in the 36 states that did not opt for an exchange. Reports say that prior to the ruling, 6.7 million people have been receiving tax credits to pay their healthcare premiums, and 4.7 million of those people were receiving credits through federal exchanges, which the court ultimately agreed went against the foundation of the law.
BREAKING: Obama administration says health care subsidies will keep flowing despite court decision.
— The Associated Press (@AP) July 22, 2014
UPDATE: Separate opinion just issued in 4th Circuit finds that the Obamacare subsidies are legal http://t.co/YTjpqqVhIc
— ThinkProgress (@thinkprogress) July 22, 2014