In what is being viewed as a major setback for the Affordable Care Act, the U.S. District Court of Appeals for the D.C. Circuit has ruled that tax subsidies should be available only in states that set up their own insurance exchanges.
If upheld in higher courts, the ruling means that millions of people in 36 states, including Wisconsin, would not receive tax subsidies under the ACA because those states did not set up their own exchanges.
The 2-to-1 ruling in Halbig v. Sebelius pertains to language in the health care law that authorizes tax subsidies “in an exchange established by the state.” Parties to the lawsuit disagreed on what the statute meant, with plaintiffs arguing the Obama administration violated the law by extending subsidies to the 36 states that decided to have the federal government set up exchanges for them, rather than doing it themselves.
ACA defenders said that reading of the law was too narrow, noting that Congress also wanted the subsidies to benefit consumers in states that chose not to set up their own exchanges.
Earlier, two federal courts had ruled against the plaintiffs, but their victory in the U.S. Court of Appeals means the case likely will be appealed to the full D.C. Circuit.
