Healthcare Business News

4th Circuit upholds ACA insurance subsidies

By Joe Carlson
Posted: July 22, 2014 - 1:00 pm ET

Federal judges in Richmond., Va., unanimously upheld the legality of subsidies for insurance exchanges in every state Tuesday. The ruling came roughly two hours after a panel of judges in Washington ruled subsidies on federal exchanges were illegal under language in the Patient Protection and Affordable Care Act.

Three 4th U.S. Circuit Court judges in Virginia ruled in King v. Burwell that Congress clearly intended to make subsidies as widely available as possible to make insurance more affordable. To the Virginia judges, that meant the IRS had a right to interpret the strict wording of the Affordable Care Act to mean all states would be eligible for tax-credits.

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Two hours earlier, the D.C. Circuit Court in Washington ruled 2-1 that the IRS did not have the right to rewrite the wording of the law to suit its intent to spread subsidies widely. The White House immediately vowed an appeal of that ruling before a full panel of the D.C. Circuit, which has seven judges appointed by Democratic presidents and 4 appointed by Republicans.

The law says the tax credits are only available to Americans who enrolled “through an Exchange established by the State,” but the IRS argued that contradicted Congress' clear intend to cut the nation's pool of uninsured residents as widely as possible.

Follow Joe Carlson on Twitter: @_JoeCarlson

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