Ruling: Subsidies available on both federal and state exchanges

A federal judge ruled on Wednesday that low- and middle-income people could obtain health insurance subsidies regardless of whether they bought coverage through the federal insurance exchange or state-run marketplaces, The New York Times reported.

The ruling marks a defeat for Affordable Care Act critics who claimed the plain text of the law would allow subsidies only in the 14 states that run their own exchanges.

A group of individuals and employers in states that have declined to establish their own exchanges filed the lawsuit, Halbig v. Sebelius. The claimed the phrase "established by the State" rather than "established under this Act," limit the tax credits to those states running their own exchanges.

"[O]ne cannot look at just a few isolated words ... but also must at least look at the other statutory provisions to which it refers, Judge Paul L. Friedman of the U.S. District Court for the District of Columbia said in the ruling. Doing so reveals the federal government can create an exchange established by the state on behalf of that state.

"Plaintiffs' proposed construction in this case--that tax credits are available only for those purchasing insurance from state-run exchanges--runs counter to this central purpose of the Affordable Care Act: to provide affordable health care to virtually all Americans," Friedman said.

Several Virginia residents and Oklahoma and Indiana officials have filed similar lawsuits against federal exchange subsidies, reported the NYT. And in Missouri, newly introduced legislation would suspend insurance companies' state licenses if they accept federal subsidies as premium payments from low- and middle-income residents, FierceHealthPayer reported yesterday.

Industry experts predict 84 percent of exchange consumers should ultimately qualify for subsidies. As of Nov. 2, only 30 percent of subsidy-eligible consumers have signed up for the federally-run health insurance exchanges, and only 23 percent of subsidy-eligible consumers in state-based marketplaces.

The lagging rates of subsidy-eligible enrollees likely stems from a lack of public knowledge about subsidies. A December Enroll America survey found majorities in almost every demographic group lacked knowledge of subsidies, newly-available plans and the open enrollment deadline, FierceHealthPayer previously reported.

For more:
- here's the ruling (.pdf)
- read the NYT article
- here's the LA Times article

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