In a 2-1 decision, the U.S. Circuit Court of appeals in D.C. has ruled that the IRS tax credit subsidies that 36 states have been receiving are illegal. The Halbig v. Burwell ruling is based upon the legal tenets of the Affordable Care Act (ACA), which contains statutory language mandating that subsidies be issued through state healthcare exchanges. Thirty-six states failed to create healthcare exchanges, a factor not anticipated by the Obama administration. However, in conjunction with the Obama administration, the IRS reinterpreted the language of the ACA and still issued tax credit subsidies to residents in those states to assist in their payments to the federal exchange, Healthcare.gov.
White House Press Secretary Josh Ernest stated in a press conference that President Obama intends to ignore the court ruling and will keep the healthcare subsidies “flowing.” This decision seems to be in line with the previous decision to interpret rather than enforce the actual tenets of Obamacare, which thus allowed the IRS to skirt legal statutes and provide subsidies to those who otherwise would not be able to purchase healthcare. President Obama has been criticized on numerous fronts for essentially “rewriting’ law and in this case it was to suit the intended goals of Obamacare, known as his signature piece of legislation which passed without a single Republican vote.
The D.C. appeals court ruled against the legality of the IRS distributing premium subsidy tax credits in the federal Obamacare exchange because explicit permissions to do so do not exist in the law. Contrary, language does exist which mandates the distribution of subsidies through state-run healthcare exchanges. Supporters of the ACA assumed that each state would set up a healthcare exchange under which subsidies would be distributed and it is clear that the intention of Obamacare was to provide subsidies to all Americans in need of such financial assistance. When the state exchanges were not created, the administration informally authorized the distribution of subsidies regardless of the legal statues of the ACA. By some reports, these subsidies have increased the enrollment numbers for Obamacare by approximately $8 million.
District of Columbia Appeals Court judge Thomas Griffith who wrote today’s ruling expressed his reluctance to do so and his understanding of the ramifications of the court’s decision on Americans who will be affected by it. This ruling takes a major hit at one of the main tenants of Obamacare and will have far-reaching repercussions for those who cannot afford their healthcare premiums but are mandated by Obamacare to purchase basic healthcare insurance.
If the ruling is upheld, an estimated $36 billion in healthcare subsidies could be withheld which could effectively paralyze Healthcare.gov. However, Obama has already indicated that the administration will ask for a full “en-banc”review of the ruling, which is a review by the entire 11-member appeals court panel.
If today’s ruling by the D.C. appeals court stands, by some indications, recipients of past subsidies would not be asked to refund the IRS tax credits that they have already received. However, the repercussion of the ruling would mean that in 36 states residents would no longer receive healthcare subsidies. In effect, this would deal a major blow to Obamacare, a law that was controversial from the start, has served to increase partisan divide, threaten the economy and has already faced three major challenges by the United States Supreme Court.
Opinion by Alana Marie Burke