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Differing Court Rulings On Obamacare Mean One Thing: Nothing Changes For Now

(via Flickr/Jennifer Boriss)

On Tuesday, two federal appeals courts issued conflicting decisions that could have major ramifications for the future of the Affordable Care Act.

The controversy hinges on whether people in the 36 states that opted NOT to set up their own health insurance exchanges can qualify for subsidies (really, tax credits) on their health insurance premiums. Missouri and Illinois are among those 36 that don't have state-run exchanges.

The St. Louis Post-Dispatch reported that "85 percent of Missourians and 77 percent of Illinoisans who bought a plan on the exchange received some level of financial assistance for those plans."

But the bottom line is that no one in Missouri or Illinois who bought insurance through the federal marketplace is going to lose their subsidies any time soon.

Here’s a little more background on what happened and what it means.

For the first time, a court ruled that that only people in states that set up their own health insurance exchanges can get subsidies. That decision came from a three-judge panel of the U.S. Court of Appeals for the District of Columbia.

As NPR's Nina Totenberg explained, the decision was based on a "glitch" in the law that applies to the 36 states that don't have their own health-care exchanges:

The problem — the glitch, as it were — is in one subsection of the Affordable Care Act. It says that subsidies can be paid to low-income insurance buyers, but mentions only exchanges "established by the states" — not those run by the federal government.

Two hours later, a federal appeals court in Richmond, Virginia reached the opposite conclusion to that of the D.C. court.

The Obama administration plans to ask the full D.C. court of appeals to review the case, while opponents of the Affordable Care Act who lost in Virginia plan to appeal to the U.S. Supreme Court.

Totenberg pointed out that ordinarily, when two circuit courts come to opposite conclusions, the situation is ripe for the Supreme Court to take it up. However, "if the D.C. Circuit undertakes a review by the full court — and most expect it will — the decision that was issued Tuesday by the three-judge panel will be voided immediately."

Kaiser Health News' Julie Rovner explained that the Obama administration is confident the D.C. Circuit decision will be overturned. Rovner quotes White House spokesman Josh Earnest: 

"You don't need a fancy legal degree to understand that Congress intended for every eligible American to have access to tax credits that would lower their health care costs, regardless of whether it was state officials or federal officials who were running the marketplace," 

Jonathan Adler, the Case Western Reserve University law professor who helped craft the case that went before the Washington court, disagrees. 

"The heart of the decision today is a reaffirmation of the principle that the law is what Congress enacts, not what Congress wanted to enact or what some, with the benefit of hindsight, wish Congress had done differently," he said.

An article by SarahKliff on vox.com looked at the different rationale of the two courts. Kliff writes that both courts looked at the vague language in the ACA -- the "glitch" -- and came to different conclusions.

"The fact is that the legislative record provides little indication one way or the other of congressional intent," Judge Thomas Griffith writes, going on to say the only appropriate course of action is to rely on the "statutory text" (that's Section 1401), which omits any mention of the federal marketplace. The Fourth Circuit, which came to the opposite conclusion, found that the intent was unclear — and in the case of ambiguity, defers to how a federal agency interprets the statute."

As a side note, Kliffalso wrote an article several months ago in the Washington Post that predicted that American territories would play a huge role in decisions related to Obamacare.  It seems that when Congress had to decide how people in the territories would be treated under ACA, it made the rules different in Guam. The people in Guam are denied subsidies.

In a follow-up post today,Kliff explained that one of the judges in the D.C. court opinion used this exception to prove his case.

The argument here is that, if the Obama administration created (and defended) a law that was a disaster for the territories — one that denied tax credits in the territories, while requiring everybody to get coverage -- why would it be unthinkable to have a similar situation in the states?

The New York Times wrote that that the plaintiffs who brought the case before the D.C. court are primarily disgruntled over the requirement to buy insurance, even though subsidies reduce the cost. One of the plaintiffs, David Klemencic, told the Times: “If I have to start paying out for health insurance, it will put me out of business. As Americans, we should be able to make our own decisions in matters like this.”

But no matter how the issue plays out in the courts, nothing is likely to be decided until sometime next year, at the earliest.

And in the meantime, your subsidies are safe.

Shula is the executive editor at St. Louis Public Radio.