Conflicting court rulings about healthcare subsidies have created confusion about the future of Obamacare. According to a Tuesday CNN report, a District of Columbia appeals court has ruled that federal subsidies, assistance with premiums, were not meant to apply to states without a state-run healthcare exchange. This could cause Obamacare policy holders in 16 states to have to pay the full price for their healthcare policies. Later in the day, the 4th Circuit panel in Virginia issued a ruling upholding the subsidies.
The court decision issued by the District of Columbia court may carry more weight than the 4th Circuit decision, but the Obama Administration intends to appeal the decision. It could potentially reach the Supreme Court since these two important courts disagreed. At this point, subsidies will reportedly continue until a decision is made.
Subsidized citizens who live in states without state-run exchanges are the only ones who would be affected. To determine if your state has a state-run exchange, you can refer to the map on Obamacare Facts.com. Obamacare policy holders in these states will continue to pay the reduced rate for their Obamacare for the time being. Subsidies are contingent upon income levels, so many people purchased healthcare policies that would be difficult or impossible to afford otherwise, leaving them no choice but to cancel their healthcare.
The negative ruling acknowledges that this would “significantly” affect many people. It involves the wording of the healthcare legislation, and the only way it could be repaired is to run it through Congress again. It is unlikely that it would pass through the Republican House.
The Obamacare subsidies that were issued during the enrolment period are not small tax credits most of the time. Depending upon how this legal situation ends, many could be faced with paying several more hundred dollars a month for the policies. The resulting default on these policies will be catastrophic.