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Conflicting Obamacare court rulings likely won't matter in the long run

Tania Ruiz, a navigator with La Clinica del Pueblo (left), helps Jose Morales, 23, of Washington, D.C., as he considers signing up for healthcare.
Tania Ruiz, a navigator with La Clinica del Pueblo (left), helps Jose Morales, 23, of Washington, D.C., as he considers signing up for healthcare.
Andre Chung/MCT

Confused about Tuesday's seesaw rulings on Obamacare? In the long run, they probably won't matter, and not because they seem to cancel each other out.

First, a three-judge panel for the D.C. circuit court ruled 2-1 that tax subsidies available to help people pay for health coverage through the Affordable Care Act can only be used in the 14 states and in D.C., which run their own insurance exchanges without any help from the federal government. In other words, the ruling invalidated subsidies in three dozen states, taking subsidies from millions.

Hours later, a three-judge panel for the Fourth U.S. Circuit Court of Appeals in Richmond, VA, unanimously delivered precisely the opposite decision, upholding the IRS rule extending those subsidies to those three dozen states that don't have their own exchanges.

So the story went from "potentially crippling blow" and could "upend the law," to a split decision.

Does the D.C. court’s decision mean that consumers in the 36 states that use the federal marketplace will lose their tax credits going forward?

The federal government is appealing the early decision to the full 11-member U.S. Court of Appeals for the D.C. Circuit, so no one in those 36 states using the federal marketplace will lose their tax credits going forward. At least not yet.

There are other suits pending: A U.S. District Court in Oklahoma is hearing the case of Pruitt v. Burwell, where Oklahoma Attorney General Scott Pruitt is arguing that providing tax credits to state residents is illegal. He's hoping for a ruling similar to the D.C. circuit court. A similar case is pending in a federal court in Indianapolis, Indiana v. IRS.

Most experts believe this will end up before the Supreme Court, but that's not a guarantee. It may not matter if it does.

"At this point, health care is so politically entrenched, it will prove very difficult to take away," political analyst Marc Sandalow told KCBS News Radio in San Francisco.

"This is exactly what Republicans worried about: Once Obamacare was implemented and people started receiving coverage, taking it away would prove a political liability. There are no millions of people covered who didn't have it before, in part, due to government subsidies."

If the courts ultimately find that premium tax credits can only be provided to people in states that run their own insurance marketplaces, many people who enrolled in Obamacare wouldn't be able to afford insurance. And that would likely mean higher premiums for those who remain covered. And it may ultimately lead to a so-called "death spiral," in which the the federal marketplace would become unsustainable. And suddenly, millions who had health care coverage would have it taken away.

"Even if that were to happen," Sandalow said, "there would then be enormous pressure on Congress to somehow fix it. It seems highly unlikely that Republicans opposed to Obamacare will support taking coverage away from millions of Americans who now have it because of Obamacare.

In fact, according to a survey published earlier this month by the Commonwealth Fund, nearly three-quarters of Republicans who obtained health insurance under Obamacare are satisfied with their coverage.

It's arguable that some will see their rates jump next year and not like it, but rates were already increasing prohibitively for people before the law was passed, pricing them out of the market. It's unlikely anyone will want to return to that model, especially after they've had coverage and then saw it judicially stripped away. That will only increase the pressue on Congress to find a solution.

"At this point, the legal jeopardy to Obamacare may not be enough to counter the political jeopardy of eliminating the coverage that policy is providing," Sandalow said.

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