US & Canada

US courts issue conflicting rulings on Obamacare

Doctor Image copyright AFP

Two US appeals courts have given conflicting rulings regarding a federal regulation implementing key subsidies of President Barack Obama's signature healthcare law.

The subsidies provide cash help to low and middle income earners buying health insurance on federal exchanges.

The rulings are the latest in a series of legal challenges to key planks of President Obama's health care law.

The decisions are open to appeal, so nothing will change immediately.

"Our ruling will likely have significant consequences both for millions of individuals receiving tax credits through federal exchanges and for health insurance markets more broadly," Senior Circuit Judge Raymond Randolph wrote in his majority opinion ruling against the Obama administration's position.


Anthony Zurcher, Editor, Echo Chambers

Tuesday's duelling circuit court rulings breathe life into what previously had been considered a long-shot conservative case against the implementation of the Affordable Care Act. If this split between the lower-level courts stands, the US Supreme Court will almost certainly step in to decide the matter, possibly allowing the conservative majority on the high court to strike another blow to Barack Obama's signature legislative achievement.

We're not at that point yet, however. The Obama administration will request the three-judge panel's ruling against it be reconsidered by the entire 11-judge District of Columbia Circuit Court this autumn. Although circuit courts rarely agree to such full, "en banc" rehearings, this case is of a high enough profile - and the liberal-leaning full court likely disagrees strongly enough with the panel's decision - that it may agree to the government's request. If the administration wins at that point, there would be no dispute among the appellate courts for the Supreme Court to resolve, reducing the chances that the high court intervenes.

The US Court of Appeals for the District of Columbia ruled on Halbig v Burwell on Tuesday, one of four lawsuits currently challenging the legality of Internal Revenue Service (IRS)-funded subsidies under the Patient Protection and Affordable Care Act.

'Disastrous consequences'

The court - considered the second highest in the nation behind the US Supreme Court - returned the case to a lower court with instructions to rule in favour to plaintiffs who had fought against the subsidies being offered in 36 states.

The IRS is said to have dispensed billions of dollars in taxpayer subsidies through federal healthcare exchanges, or marketplaces.

Plaintiffs in the lawsuit argued they were injured by the IRS actions because it triggered additional taxes for employers.

The subsidies, or tax credits, have been made available to Americans with annual incomes up to 400% the federal poverty level.

That works out to $94,000 (£55,000) for a family of four.

In a dissenting opinion, Judge Harry Edwards calling the lawsuit a "not-so-veiled attempt to gut" the healthcare law, and "portends disastrous consequences".

In a separate decision issued by the Fourth US Circuit Court of Appeals on Tuesday in the case of King v Burwell, the three-judge panel ruled unanimously to uphold the Obamacare tax credits.

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Image caption US President Barack Obama has defended his signature healthcare law since its passage in 2010

That court found the wording of the healthcare law was too ambiguous to restrict availability of such government funds.

Following the decisions, the White House said those covered under Obamacare will keep receiving financial aid as the legal issues are sorted.

White House spokesman Josh Earnest said the conflicting decisions would have "no practical effect" on healthcare tax credits in the interim.

"Another partisan attempt to harm the Affordable Care Act failed today," the White House wrote later in a statement.

"This latest attempt was undermined by a unanimous judicial panel in the Fourth Circuit," the statement added. "The law was designed to make healthcare affordable through tax credits - and it is working."

Meanwhile, the US Court of Appeals for the District of Columbia's ruling may affect more than four million Americans who are currently eligible for subsidies to offset their healthcare costs.

Should this mean large numbers of people be ineligible for health insurance, it would result in higher overall premiums for non-subsidised members.

That ruling is the latest blow for the embattled healthcare law, which last month saw the US Supreme Court overturn a crucial portion regarding contraception coverage.

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