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What To Make Of The Conflicting Obamacare Rulings

The first ruling dealt a serious blow to the Affordable Care Act. Hours later, a second appeals court handed a victory to the Obama administration.
Posted at 6:04 PM, Jul 22, 2014

Two wildly different rulings on Obamacare issued just hours apart Tuesday — one a major setback to the health care law and the other a victory for the administration.

First, a three-judge panel appeals court in D.C. ruled the Affordable Care Act only authorizes subsidies for Americans who bought their insurance through markets created by the states — not by the feds. (Via Getty Images

But hours later, the Fourth U.S. Circuit Court of Appeals said just the opposite — siding with the Obama administration and setting the stage for what will almost certainly be a long, drawn-out legal battle. (Via The Week

But back to the D.C. ruling. If upheld, it would essentially eliminate subsidies for millions of Americans without employer-provided health plans. It will not affect the 14 states that currently run their own insurance marketplaces. But in the 27 states that chose to opt out and rely on federally run exchanges instead, and in the nine states that partially opted out — premiums could go up. (Via BKL / CC BY NC 2.0)

Which would undoubtedly undermine a key component of the Affordable Care Act. As The Daily Beast put it, "A major pillar of Obamacare crumbled under the gavel."

That's because millions of lower-income individuals who are required to purchase insurance under the law rely on these subsidies to keep the costs down. (Via Getty Images

According to federal research, on average, the 5 million people who get their insurance through the federal health insurance exchanges have seen their premiums go down from $346 to $82 a month due to those subsidies. (Via U.S Department of Health and Human Services

The D.C. court's decision Tuesday came down to what Obamacare supporters attribute to poorly worded language that lawmakers overlooked. The current law reads subsidies should be paid to those who sign up through an exchange "established by the state." (Via U.S. House of Representatives

You could argue that wording means subsidies can only go to those who buy through state-based exchanges and not federally facilitated ones. But many observers say that was never Congress' intention. 

Among them, Jonathan Cohn at The New Republic, who writes: "Not once in the 16 months I reported on the formal congressional debate did any of the law's architects suggest they were thinking along these lines. It wouldn't make sense in the context of the law, which depends upon those subsidies to accomplish its primary goal."

But many critics of the Affordable Care Act say it's not up to the courts to determine Congress' intent. As a fellow at libertarian think tank the Cato Institute wrote, "The ruling shows statutory text doesn't mean whatever the government says it means."

​But the Fourth Circuit appeals court disagreed, saying the lRS' interpretation of the law to mean the feds could provide subsidies in every state was "a permissible exercise of the agency's discretion." (Via U.S. Court of Appeals for the Fourth Circuit

​As for the D.C. ruling, the Obama administration says it plans to appeal the decision, which it called "incorrect [and] inconsistent with Congressional intent." (Via Edbrown05

For now, those getting tax credits through federally run exchanges will continue to get them while the ruling is appealed.