Obamacare Premium Subsidies Not a Certainty

The U.S. Court of Appeals for the District of Columbia ruled in Halbig v. Burwell that federal tax subsidies to purchase health insurance are not available if the insurance is acquired through a federal exchange (while such subsidies are available if purchased through a state exchange).  If upheld, this decision will greatly hurt Obamacare.  The same day that Halbig was decided, the U.S. Court of Appeals for the Fourth Circuit ruled that the subsidies were available if purchased through a federal exchange.  The pertinent statutory language permits the tax subsidies for insurance purchased on an exchange “established by the State.”  The government will likely request an en banc review (meaning a review by the full panel of judges, instead of the three judges who ruled on the case), and there’s a very good chance that the en banc panel will overturn the ruling (and rule consistent with the Fourth Circuit Court of Appeals).  The U.S. Supreme Court will likely hear the case if the en banc ruling does not overturn the decision.  At first blush, it appears that a statutory drafting error exists.   However, it is possible that the drafters of Obamacare intended for subsidies to be available only for health care purchased on a state exchange, thus creating incentive for the states to create exchanges.  The question is whether a court will require action by Congress to change the law’s result.  If Congress would need to act, Republicans presumably would have leverage to require changes to Obamacare.