Dueling Circuits – Affordable Care Act Update

District of Columbia Circuit Court of Appeals has ruled against the Obama administration’s interpretation of a key provision of the Affordable Care Act.

Jul 22, 2014

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A three judge panel from the District of Columbia Circuit Court of Appeals has ruled against the Obama administration’s interpretation of a key provision of the Affordable Care Act.  The D.C. Circuit panel ruled this morning in Halbig v. Burwell that the federal tax subsidies for lower income individuals are authorized only if coverage is purchased through exchanges established by the states.  If the panel’s narrow reading of the statute is upheld on appeal it could block the payment of premium subsidies to income-eligible individuals among the nearly 5 million people who purchased coverage through the federal exchange (healthcare.gov).

Hours later, a three judge panel from the 4th Circuit Court of Appeals issued a ruling in a separate case that directly contradicts the D.C. Circuit ruling.  In King v. Burwell, The 4th Circuit panel’s broader interpretation upheld the Administration’s position by ruling, in part:

“…we uphold the rule as a permissible exercise of the agency’s discretion.”

Either ruling could be appealed to its respective full Circuit Court.  The Obama administration has indicated that it will appeal the ruling in Halbig v. Burwell.  If the issue is not resolved in the Circuit Courts, the issue may eventually be decided by the Supreme Court.