Contradictory court rulings Tuesday called into question the legality of health insurance subsidies that help consumers purchase coverage in Maine and 35 other states through the Affordable Care Act. But health care experts say there is little chance that those who have purchased subsidized plans will pay higher premiums because of the rulings.

Tuesday morning, a three-judge federal appeals court panel in Washington, D.C., ruled that the subsidies should not be provided in states where the insurance marketplaces are operated by the federal government.

The majority ruled that the law as worded “unambiguously” makes the subsidies available only to those who buy policies from marketplaces run by the states.

The marketplaces are where those who aren’t covered by workplace policies – often self-employed or part-time workers – can shop for insurance, the cost of which may be offset by federal tax credits, depending on household income.

Those subsidies now offset more than 75 percent of the cost of the average plan purchased by more than 44,000 Mainers enrolled through the marketplace, according to the U.S. Department of Health and Human Services. Customers now pay an average of $82 on total monthly premiums averaging $346. The average federal subsidy of $264 a month makes up the rest of the premium, The Associated Press reported.

A few hours later in Richmond, Virginia, another three-judge appeals court panel contradicted the Tuesday morning ruling, arguing unanimously that the law says the tax credits apply regardless of whether a marketplace is run by a state or the federal government.

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“I don’t think anyone should be anxious or worried,” said Kevin Lewis, executive director of Maine Community Health Options, one of three insurers on the Maine marketplace, which is run by the federal government.

Lewis said anyone making a “common sense” reading of the law would conclude that the subsidies were meant for everyone who qualifies based on income, and that it doesn’t matter whether those subsidies were purchased through the federal government or a state-run marketplace.

At the heart of the dispute is a phrase in the law that says that a state is the only entity that can establish the subsidies.

Mitchell Stein, a Maine-based independent health policy analyst, said the Washington ruling does not hold up and would be akin to striking down the Affordable Care Act based on a typographical error.

“A year ago, everyone thought this was a joke,” Stein said. Three other court decisions went against plaintiffs looking to weaken the law, he said, in addition to Tuesday afternoon’s ruling. The Internal Revenue Service has ruled that the subsidies should apply equally in all states.

Trish Riley, a senior fellow and adjunct professor of public health at the University of Southern Maine, said partisan fighting when the law was being designed made it impossible to make corrections to the law during debate or shortly afterward.

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“The (political) right will clearly use this to terrify people,” Riley said. “I believe the law will stay intact.”

Riley, who was a liaison to Congress under Maine Gov. John Baldacci and witnessed the twists and turns of the bill becoming law, said the federally run marketplace was designed as a “backup plan,” assuming that most states would choose to run their own marketplaces. When the law became controversial, many states with Republican governors or Republican-controlled legislatures opted to let the federal government run their marketplaces.

The White House immediately announced Tuesday that policyholders will keep getting financial aid as the administration sorts out the legal implications. White House spokesman Josh Earnest said the adverse decision in Washington would have “no practical impact” on tax credits as the case works its way through the courts.

John McDonough, a Harvard University professor of public health who helped write the Affordable Care Act in the late 2000s, said the discrepancy was not noticed as the law was written. He described the court cases as a debate over “technical” mistakes in the law. Those corrections are routinely made to legislation after the fact, he said, but that process was not done for the Affordable Care Act because of the toxic political climate.

“Should people who are obtaining subsidies right now be worried? No,” McDonough said. “Don’t sweat it.”

McDonough said the Washington case will be appealed to the full District of Columbia appeals court, and with seven of 11 appeals court justices appointed by Democratic presidents, the full court will likely overturn Tuesday’s decision. The odds of the case making it to the U.S. Supreme Court are slim, he said, because most of the court rulings have gone against those opposed to the law.

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Even under a doomsday scenario in which the Supreme Court eliminates subsidies for millions of Americans, there would still be administrative workarounds to continue the subsidies.

“All a governor of a state would have to do is declare the federal marketplace in their state a state marketplace,” he said.

Maine politicians also weighed in on Tuesday’s dueling rulings.

Independent Sen. Angus King and Democratic U.S. Rep. Chellie Pingree said in written statements that the Washington decision went against the intent of the law and that they believe the legality of the subsidies will be upheld.

“This is an opportunity for Congress to put aside partisan differences to solve problems that will impact millions around the country,” King said.

Republican Sen. Susan Collins wrote in an email response to a question that the federal law needs to be reworked.

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“Ultimately, this issue will likely be decided by the U.S. Supreme Court, but these conflicting rulings are yet another reason why the administration and Congress should be working together to fix this deeply flawed law,” she wrote.

The issue of whether Maine should run its own marketplace has already become a point of debate in the governor’s race.

Republican Gov. Paul LePage released a statement Tuesday saying, “This mess is just the latest example of what a disaster the Affordable Care Act is. I urge Mainers to call on those in Congress who voted for this scheme to get to work and fix this law immediately.”

Independent candidate Eliot Cutler attacked the governor for failing to create a state-run marketplace.

“Costs are mounting in the ledger of Gov. LePage’s bad decisions,” he said at an afternoon news conference. “This is a real threat that could have and should have been avoided. Maine citizens are paying the price for a governor with no plan.”

U.S. Rep. Mike Michaud, the Democratic candidate in November’s gubernatorial election, released a statement saying a state exchange “is the best way for Mainers to access good, affordable health care.”

The Associated Press and Press Herald Staff Writer Eric Russell contributed to this report.

 


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