This week, two federal courts issued conflicting rulings on a key section of the Affordable Care Act, or Obamacare, that provides tax subsidies in about three dozen states—possibly sending health care back to the Supreme Court in the near future.
At the crux of the two rulings announced this week is Section 1311 of the ACA, which says that tax subsidies are only available for insurance purchased on “an Exchange established by the State.” The IRS has ruled that Section 36B of its own code includes subsidies for insurance purchased in one of the 36 states using federally run exchanges.
On Tuesday, a divided D.C. Circuit Court of Appeals struck down those subsidies in the case of Halbig v. Burwell. Just two hours later, however, a unanimous Fourth Circuit Court of Appeals upheld the subsidies in the case of King v. Burwell.
The plaintiffs in these cases are individuals and employers from states that did not establish their own exchanges. They argue that subsidies in their states are illegal under the letter of the ACA.
In response, the government says that plaintiffs are making a distinction without a difference, that the federal exchanges are considered equal to state exchanges and that the courts should defer to the IRS.
Joining us to discuss these important rulings are two leading authorities on the matter.
Michael Cannon is the director of health policy studies at the Cato Institute. Along with Case Western University law professor Jonathan Adler, Cannon is credited with crafting the argument against the ACA tax subsidies.
Nicholas Bagley is Assistant Professor of Law at the University of Michigan Law School. Prior to joining the Law School faculty, he was an attorney with the Appellate Staff in the Civil Division at the U.S. Department of Justice.
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