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Two Federal Appeals Courts Release Rulings on Affordable Care Act Health Insurance Subsidies

Thursday, July 24, 2014  
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This week, two federal appeals courts released rulings regarding the subsidies which make health insurance more affordable for enrollees in federally-facilitated Marketplace states like Michigan.

On July 22, 2014, the United States Court of Appeals for the District of Columbia Circuit released their decision on Halbig v. Burwell, a case that involved language in the health care law that says people who get coverage through state-run Marketplaces can get federal subsidies such as tax credits. The law doesn't specifically say that those signing up on the federal Marketplace ( also are eligible for subsidies.

Two years ago, the Internal Revenue Service (IRS) interpreted the law to mean that tax credits would be available for insurance purchased through any government-run Marketplace, regardless of whether it was administered by a state or the federal government.

However, the District of Columbia Circuit Court did not agree with the IRS interpretation. The court’s ruling would not allow tax credits in the 36 states with federally-facilitated Marketplaces, including Michigan.

In a simultaneous conflicting decision, the Fourth Circuit Court of Appeals ruled in favor of providing premium tax credits in federally-facilitated Marketplace states. In its ruling, the Fourth Circuit Court of Appeals said the Affordable Care Act was ambiguous on whether subsidies should be allowed for consumers getting insurance in federally-facilitated Marketplaces. When a law is ambiguous, courts generally defer to a federal agency's interpretation of the law, which in this case is the IRS rule allowing the subsidies.

The Obama administration has indicated it will file an immediate appeal in the District of Columbia Circuit Court and ask for the case to be heard by the full 11-judge panel.

In the meantime, the decision has no immediate impact on the ability of Michiganders to use premium tax credits to lower the cost of health insurance plans purchase through the Marketplace, including those currently enrolled in Marketplace coverage. Of the 272,539 Michiganders who have selected a health plan in the Health Insurance Marketplace, 87% or 237,337 received financial assistance (a subsidy). That financial assistance has helped many Michigan residents access coverage they can afford.

We believe that when the full District of Columbia Circuit Court reviews this case they will recognize that the clear intent of Congress was that all eligible Marketplace enrollees have access to financial assistance (subsidies). 

Michigan Health Centers will continue to conduct outreach and educate patients and community members about their health insurance options, including health plans and financial help in the Health Insurance Marketplace and coverage through the Healthy Michigan Plan.

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