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Federal courts disagree over Obamacare, creating uncertainty about Mainers’ health insurance subsidies

A U.S. appeals court on Tuesday threw out a federal regulation that implements key subsidies that are vital to President Barack Obama’s health care overhaul.
Kevin Lamarque | Reuters
A U.S. appeals court on Tuesday threw out a federal regulation that implements key subsidies that are vital to President Barack Obama’s health care overhaul.
Posted July 22, 2014, at 11:12 a.m.
Last modified July 22, 2014, at 6:16 p.m.

Tens of thousands of Mainers could pay much more for health insurance if a legal blow dealt Tuesday to Obamacare by a federal appeals court is upheld.

The U.S. Court of Appeals for the District of Columbia Circuit ruled that the federal government can’t legally administer health insurance subsidies in Maine and 35 other states relying on the Healthcare.gov marketplace. But just hours later, another federal circuit court backed the subsidies in a separate ruling, leading to a day of dueling verdicts for the health reform law.

The success of the Affordable Care Act, President Barack Obama’s signature health reform law, hinges on the subsidies, which make health insurance affordable to millions of Americans.

In Maine, the courts’ decisions would affect all but a few of the thousands of people who signed up for private health insurance through Healthcare.gov. Eighty-nine percent of the 44,000 Maine consumers who enrolled qualified for tax credits to offset the costs of their monthly premiums. The premium for Maine consumers with tax credits averages $99 a month, according to federal figures.

Without that financial help, Maine consumers could pay nearly 80 percent more in monthly premiums, the figures show.

The tax credits are available to people with annual incomes of up to 400 percent of the federal poverty level, or $94,200 for a family of four.

Tuesday’s D.C. court ruling in Halbig v. Burwell, issued by a panel of three judges, has the potential to undermine health reform across the country. But the decision may not hold up.

The federal government is expected to ask the full D.C. Circuit, composed of 11 judges, to review the decision. With seven Democratic appointees and only four Republican appointees, the full court is expected to rule in the Obama administration’s favor.

Also on Tuesday, another federal circuit court reviewing a legal challenge to the subsidies reached the opposite conclusion. The Fourth Circuit Court of Appeals in Richmond, Virginia, upheld the subsidies struck down by the D.C. Circuit.

A Maine health reform expert says the subsidies will stay put, at least for now.

“Don’t panic,” Mitchell Stein, and independent health policy consultant, advised Maine consumers who qualified for subsidies.

If the Obama administration appeals Tuesday’s D.C. Circuit court ruling, as expected, the case could end up before the U.S. Supreme Court.

“It has no impact today,” Stein said. “It will be appealed so subsidies will continue to be paid. Nothing changes. Even if the full D.C. appellate were to agree with this decision, other appellate courts have found in the opposite direction.”

Kevin Lewis, CEO of Maine Community Health Options, a Lewiston-based startup insurer that attracted most of Maine’s new enrollees under the ACA, said the D.C. Circuit’s decision won’t affect its policyholders, given the legal hurdles ahead.

The legal challenge centered on an ambiguously worded sentence in the health reform law. Opponents of the ACA argued the statute stipulates that only marketplaces run by states could offer the subsidies, and that the law’s drafters intentionally wrote it that way to encourage states to do so. The subsidies provided in the majority of states, which deferred to the federal government’s Healthcare.gov, are therefore illegal, the plaintiffs argued.

The Obama administration countered that Congress clearly intended to make subsidies available in every state, and that the law’s entire purpose was to subsidize insurance for Americans who can’t afford coverage.

“This interpretation of the law on the basis of a technicality … would be a serious blow to the hardworking people of Maine who are looking for a means of coverage through the private marketplace,” Lewis wrote in an email.

Mere hours after the D.C. court’s decision, the Fourth Circuit Court of Appeals issued its opposing verdict, writing that the tax credits are critical to the health law’s implementation.

“It is … clear that widely available tax credits are essential to fulfilling the Act’s primary goals and that Congress was aware of their importance when drafting the bill,” the Fourth Circuit Court ruled.

Consumers for Affordable Health Care, an Augusta advocacy group that helped Maine residents sign up for health insurance under Obamacare, described the legal challenges to the subsidies as “political in nature.”

“While we are confident that these lawsuits will ultimately fail, these lawsuits and the media efforts by Obamacare opponents will confuse Mainers about the availability of these tax credits in the future,” Emily Brostek, the organization’s associate director, said in a statement.

While agreeing that the D.C. court’s decision remains far from a done deal, Emily Cooke, an attorney at Pierce Atwood in Portland with expertise in the Affordable Care Act, said observers shouldn’t disregard Tuesday’s ruling. Until and unless it’s appealed, the ruling is binding, she said.

“A court has now ruled that [the plaintiffs’] interpretation is correct … A U.S. court of appeals has determined that they have the better argument, if you will. Then of course you have a federal court at the same level on the same day saying the opposite,” Cooke said.

Tuesday’s double rulings appeared coincidental, as the courts don’t coordinate their dockets, she said.

The conservative advocacy group Americans for Prosperity labeled the D.C. court’s ruling as “further evidence that the Obama administration needs to be reined in.”

“Our country was built on a system of checks and balances,” AFP President Tim Phillips said in a statement. “No White House — Democrat or Republican — should unilaterally bypass Congress, manipulate laws, and change how they are enforced.”

U.S. Sen. Angus King described the D.C. court’s decision as unexpected and said it should prompt Congress to act to refine the law.

“There are a number of us in the Senate who have been looking for bipartisan fixes to the ACA that will help cover even more Americans, and as we await a broader review of the decision, I think this an opportunity for Congress to put aside partisan differences to solve problems that will impact millions around the country,” King said in a statement

Less than a month ago, supporters of the health reform law decried yet another ruling, when the Supreme Court decided that some private companies can now claim an exemption from a requirement that employers who provide health insurance must cover birth control.

“All of us just look forward to a time when the ACA is not this volleyball, these decisions go back and forth,” said Wendy Wolf, president of the Maine Health Access Foundation, which organized a statewide sign-up initiative called Enroll 207.

The full D.C. Circuit Court isn’t expected to review the case until early fall. Health care advocates will have already begun their next sign-up push by that time, ahead of the second open enrollment period kicking off Nov. 15.

That amounts to a “messaging nightmare” for Enroll 207 organizers, who will be encouraging Mainers to apply for subsidies as the court’s deliberations about their legality play out, Wolf said.

“It does introduce a lot of confusion and anxiety for the 89 percent of Mainers who received subsidized health insurance and are wondering is this going to go away or will it continue when we get around to the next sign up,” she said.

Reuters contributed to this report.

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