The contradicting decisions, which came just hours apart on July 22, deal with whether or not the federal government can continue to subsidize the health insurance used by millions of Americans through the federal health insurance exchange.
By a 2-1 vote in the first decision, a panel for the U.S. Court of Appeals for the District of Columbia ruled against an IRS regulation that allowed federal subsidies for middle- and low-income Americans whether they purchased health insurance through a state exchange or through the federal government.
Explaining the majority opinion, U.S. Circuit Judge Thomas Griffith explained that the justices reached their conclusion “with reluctance. 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. But, high as those stakes are, the principle of legislative supremacy that guides us is higher still.”
Griffith wrote that a study of the IRS provision in the ObamaCare law reveals an authorization of “tax credits for insurance purchased on an Exchange established by one of the 50 states or the District of Columbia....” However, he noted, “the Internal Revenue Service has interpreted section 36B broadly to authorize the subsidy also for insurance purchased on an Exchange established by the federal government under section 1321 of the Act.”
Griffith and fellow Circuit Judge A. Raymond Randolph concluded that those challenging the IRS provision “have the better of the argument: a federal Exchange is not an 'Exchange established by the State,' and section 36B does not authorize the IRS to provide tax credits for insurance purchased on federal Exchanges.”
But even as opponents of ObamaCare cheered the ruling, the 4th U.S. Circuit Court of Appeals offered its own contradictory decision in favor of the IRS-approved subsidies, with U.S. Circuit Judge Roger Gregory explaining that granting the subsidies to consumers purchasing insurance from the federal government was a “permissible exercise of the agency's discretion” in light of the law's ambiguous language.
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