WASHINGTON — Two appeals courts today split over the Affordable Care Act, reaching different conclusions about whether tax credits can help consumers buy coverage in the 36 states that use the federal health insurance marketplace.
The conflicting and nearly simultaneous rulings potentially tee up for the Supreme Court its next landmark health care case, and leave in limbo the Obama administration’s health care ambitions.
In a 2-1 ruling, the U.S. Court of Appeals for the D.C. Circuit concluded the Obama administration stretched the law too far in extending the subsidies through the HealthCare.gov website.
“We reach this conclusion, frankly, with reluctance,” Judge Thomas Griffith wrote, noting that “our ruling will likely have significant consequences both for the millions of individuals receiving tax credits through federal exchanges and for health insurance markets more broadly.”
But while the D.C.-based court struck down the tax credit, the Richmond, Va.-based U.S. 4th Circuit Court of Appeals reached a different conclusion about the same set of facts.
In its unanimous decision, the three-judge panel of the Richmond-based appellate court called extension of the tax credits by the Internal Revenue Service a “permissible exercise of the agency’s discretion.”
“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,”’ Judge Roger Gregory wrote, adding that “the economic framework supporting the Act would crumble if the credits were unavailable on federal exchanges.”