A unanimous panel of the Fourth Circuit in Richmond has upheld the availability of Affordable Care Act tax credits to health insurance purchasers on both state exchanges and the federal exchange.
Writing for the court, Judge Roger Gregory said:
The plaintiffs-appellants bring this suit challenging the validity of an Internal Revenue Service (“IRS”) final rule implementing the premium tax credit provision of the Patient Protection and Affordable Care Act (the “ACA” or “Act”). The final rule interprets the ACA as authorizing the IRS to grant tax credits to individuals who purchase health insurance on both state-run insurance “Exchanges” and federally-facilitated “Exchanges” created and operated by the Department of Health and Human Services (“HHS”). The plaintiffs contend that the IRS’s interpretation is contrary to the language of the statute, which, they assert, authorizes tax credits only for individuals who purchase insurance on state-run Exchanges. For reasons explained below, we find that the applicable statutory language is ambiguous and subject to multiple interpretations. Applying deference to the IRS’s determination, however, we uphold the rule as a permissible exercise of the agency’s discretion. We thus affirm the judgment of the district court.
Judge Andre Davis, who took senior status in late February, took the court’s analysis one step further, writing in concurrence that, ambiguity aside, tax credits should be available to all consumers regardless of the exchange on which they purchased their health insurance.
I am pleased to join in full the majority’s holding that the Patient Protection and Affordable Care Act “permits” the Internal Revenue Service to decide whether premium tax credits should be available to consumers who purchase health insurance coverage on federally-run Exchanges. But I am also persuaded that, even if one takes the view that the Act is not ambiguous in the manner and for the reasons described, the necessary outcome of this case is precisely the same. That is, I would hold that Congress has mandated in the Act that the IRS provide tax credits to all consumers regardless of whether the Exchange on which they purchased their health insurance coverage is a creature of the state or the federal bureaucracy.
Davis acknowledged the right of those who challenged the subsidy provision to forego purchasing health insurance on an exchange, but he added this:
What they may not do is rely on our help to deny to millions of Americans desperately-needed health insurance through a tortured, nonsensical construction of a federal statute whose manifest purpose, as revealed by the wholeness and coherence of its text and structure, could not be more clear.
In both cases, the decisions may be reviewed by a full panel of judges in the circuit (en banc), and others are percolating in district courts elsewhere across the country. But a resulting, continuing conflict in the circuits increases the likelihood of a review by the U.S. Supreme Court.
In the meantime, as the Obama administration has indicated, subsidies will continue.
That’s good news for North Carolina residents who purchased health insurance on the federal exchange. (North Carolina did not set up a state exchange). Of the 358,000 who did so, 91 percent (325,000) did so with the assistance of subsidies.
Read the full opinion in King v. Burwell here.