If people use the federal exchange, the Affordable Care Act as enacted into law, does not provide for any subsidies. Only people that use the state exchanges are entitled to subsidies. I can’t wait to see how this plays out.
Oct. 25, 2013, 6:01 a.m. EDT
Court could block Obamacare subsidies in 34 states
Commentary: Legal challenge could knock out the federal exchanges
By Diana Furchtgott-Roth
The administration is interpreting the Affordable Care Act in extraordinary ways, and the courts are beginning to take note.
On Tuesday Judge Paul Friedman of the U.S. District Court for the District of Columbia said he would rule on whether people who sign up for health insurance on federal exchanges in 34 states can get subsidies.
Under the Affordable Care Act, subsidies are only available for state exchanges. But through regulation the Internal Revenue Service has extended subsidies to federal exchanges too.
Separately, the White House signaled on Wednesday that it is postponing for a few months the penalties for people who do not sign up for health insurance — even though earlier this month President Barack Obama attacked congressional Republicans who sought to postpone penalties for a year. Also see: Obamacare penalties to be delayed.
Several groups are challenging the federal subsidies. Judge Friedman ruled that their case could go forward, disappointing the administration. The Justice Department argued that the court should throw out the case because the plaintiffs had no standing. After the judge’s ruling, the plaintiffs are standing tall.
Next week, Judge James R. Spencer of the U.S. District Court for the Eastern Division of Virginia in Richmond is expected to rule on the same challenge from another group of plaintiffs. In August, U.S. District Judge Ronald White allowed Oklahoma to proceed with a similar case against the subsidies
The implications are immense. Family plans will cost $20,000 a year in 2016, according to the IRS. If Americans on the federally run exchanges do not qualify for health-insurance subsidies, few will sign up. Plans will be simply unaffordable. Obamacare will collapse not because of Congress, but due to flaws in the structure of the law.
The text of the Affordable Care Act states that people who buy health insurance from state exchanges get subsidies if they earn under 400% of the poverty line, currently $94,000 for a family of four. Most applicants will qualify for some subsidy.
According to the law, subsidies are available to those who get their health insurance “through an Exchange established by the State under section 1311 of the Patient Protection and Affordable Care Act.” Or, in another section, those “enrolled in through (sic) an Exchange established by the State under section 1311.”
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