LANSING – Two separate federal circuit courts of appeals issued conflicting rulings on the same issue in the federal Patient Protection and Affordable Care Act on Tuesday on the question of whether residents in state operating under the federal health care exchange can receive tax subsidies to purchase insurance.
One ruling held that residents in those states are ineligible while the other said they are eligible.
Michigan operates under the federal exchange, as the Legislature refused to establish either a state exchange or a combined state-federal exchange, though Snyder called for the Legislature to establish one or the other.
President Barack Obama’s administration has rejected the ruling by the D.C. circuit, and the administration is expected to request a rehearing before the full panel of the court.
The 2010 Affordable Care Act held that tax subsidies would be available to persons purchasing their coverage under a state run exchange. The U.S. Internal Revenue Service issued a ruling saying that under the statute, subsidies would be paid for all persons getting their insurance on either a state or federal exchange.
Most states, and most of those with either Republican governors or Republican-dominated Legislatures, did not enact the state exchanges.
Should the ruling by the D.C. circuit stand, it could affect perhaps as many as 4.5 million individuals and families who have acquired insurance through the federal exchange.
The D.C. Circuit ruled 2-1 that the law only permits subsidies for persons who purchased coverage through the state exchanges. The dissenting judge argued the ruling was an attempt to thwart congressional intent and overturn the ACA.
The Richmond Circuit said the statutory language in the ACA was ambiguous and the court would therefore give deference to the subsidies ruling.
In arguing for the subsidies, the administration held that the federal exchange was in effect a state exchange for each state because it stood in the place of a state-run exchange.
More than 300,000 people signed up for health insurance through the exchange in Michigan by the March 31 deadline for open enrollment. It is unclear how many may have signed up since.
The court rulings have no effect on Michigan’s Medicaid eligibility expansion program, Healthy Michigan, which has seen so far more than 330,000 people sign up for the program.
The D.C. Circuit ruling was hailed by conservative groups – though most were silent following the Richmond Circuit ruling.
Republican U.S. Senate candidate Terri Land said the DC Circuit ruling showed how the ACA is “fatally flawed.” Leading up to the sign-up period, Ms. Land said some 225,000 people in the state lost their insurance (how many later signed up for coverage or may have gotten coverage through the Healthy Michigan plan is unknown) and she said if elected she would vote to repeal the ACA and replace it with a market-based system.
Mark Totten, running for the Democratic nomination for attorney general, said that Attorney General Bill Schuette supported the D.C. Circuit ruling and in effect then called for a massive tax increase on Michigan residents buying insurance.
And the Michigan League for Public Policy said it was confident that when the full D.C. Circuit heard the case, it too would rule that the subsidies apply to both the state and federal exchanges.
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