Will States on the Federal Exchange Lose Subsidies?

Will states on the Federal Exchange lose subsidies?

That’s the question being asked after two courts issued radically different interpretations of the Affordable Care Act’s state exchange subsidy clause. For now, the subsidies will remain in place. How long are they safe? No one can say.

In fact, the two Appeals Court (DC and the 4th Circuit respectively) rulings contradict.

Ruling 1: No on Subsidies for States on Federal Exchanges
The US Court of Appeals for the District of Columbia ruled 2-1 to strike down tax credits for those on Federal Exchanges, under Halbig v. Burwell. This would mean enrollees in Oregon and Alaska will lose subsidies. It’s unlikely to impact 2015 open enrollment simply because the issue will be appealed.

Ruling 2: Yes on Subsidies for States on Federal Exchange
Just two hours later, the US Court of Appeals 4th Circuit in Richmond, Virginia ruled that the broader context of the bill implied that enrollees could receive subsidies on the Federal exchange.

What about enrollees and plans? For now, subsidies will remain in place. The subsidies already carry the weight of the Internal Revenue Service, which clarified the matter previously.

Ordinarily, conflicting rulings between appeals courts would “fast-track the matter to the Supreme Court.” However, the Obama administration will likely request an “en banc” ruling. If granted, this means each district’s judges will convene to determine a ruling. This would resolve the question of subsidies for states on the Federal exchange much earlier and ensure stability, both for the markets and for the enrollees this Fall.