News & Updates

D.C. Court of Appeals Panel Rules Subsidies Obtained Through Federally Run Exchanges Illegal

A 3-Justice panel of the U.S. Court of Appeals for District of Columbia Circuit has ruled that subsidies provided through federally run ( exchanges are illegal according to language in the Affordable Care Act (ACA).

The ruling of the 3-judge panel, while notable, does not carry with it the effect of law. The Administration’s next move is likely to be a request that all 11 members of the D.C. Court of Appeals review the ruling. A decision by the majority of the court’s justices upholding the ruling would have the effect of law. Over the past year, the Administration has appointed 4 new judges to the U.S. Court of Appeals for District of Columbia giving Democratically-appointed justices the majority for the first time in 4 decades.

In a separate ruling, also announced today, a 3-judge panel for the U.S. Court of Appeals for the Fourth Circuit issued a ruling contradictory to the D.C. Court of Appeals’ finding. In the Fourth Circuit, justices ruled that the ACA was ambiguous and, as a result, that IRS regulations allowing for the provision of subsidies through federally run exchanges should be upheld.

While the final outcome is still uncertain, and a Supreme Court challenge likely, the potential impact is undeniable.

Out of the nearly 7 million individuals who have received subsidies, nearly 5 million of them were from states with federally operated exchanges. Over 2 million individuals received subsidies from a state run exchange in one of the 14 states who opted to setup and run their own exchanges.



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