The U.S. Supreme Court today agreed to review a challenge to the tax subsidies allowed under the Affordable Care Act, a critical aspect of the law meant to help uninsured individuals better afford health care coverage.
The Supreme Court said it will hear a Republican-backed appeal of a July 22 decision of the U.S. District Court for the Eastern District of Virginia that upheld the validity of subsidies offered to individuals on the federal exchange. On the same day, a three-judge panel on the D.C. Circuit Court of Appeals declared the law’s premium subsidies invalid in more than two dozen states due to the law’s specific language.
At issue is the wording of the health care reform law that says individuals qualify for the tax credits when they buy insurance on a marketplace “established by the state.” Only 14 states have set up their own marketplaces, with the rest, mostly Republican states, relying on the federal exchange.
Alden Bianchi, practice group leader of law firm Mintz Levin’s employee benefits and executive compensation practice, predicted the high court will reject the challenge to the subsidies, with the understanding that the ACA never intended for that literal an interpretation of the law.
“At the end of the day, I’d be surprised to see the court side with the challenge,” he said.
The Supreme Court’s decision will be filed by June. Until then, Bianchi said, “It’s status quo.”
“The ACA is the law of the land,” he said, adding that employers and benefit advisers should proceed with that understanding.
“There’s nothing to change or do,” he said.
In fact, he said that some legal experts believe that no matter what ruling the Supreme Court hands down on this case, the ACA’s premium subsidies will survive.
A colleague of his, he said, predicts “Obamacare has been so ingrained that in any state where the subsidies would go away, you can expect the legislature to move quickly to adopt the exchange,” Bianchi said.
Originally, he said, he thought the invalidation of subsidies in states relying on the federal exchange would “blow a hole in Obamacare.”
“But that’s probably not the case,” he added.
A rule issued by the Internal Revenue Service says that consumers can claim tax credits no matter where they live, and the Obama administration says the IRS approach is consistent with the law’s aims.
In September, the full U.S. Court of Appeals in Washington said that it will rehear the case Halbig v. Burwell, setting up the possibility the court will reverse the ruling of the three-judge panel that ruled the subsidies void on the federal exchange.
New arguments in that case are set for Dec. 17.
