Conflicting Appeals Court Rulings have Little Effect on Subsidies…For Now

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Two U.S. appeals courts came down on different sides of the fence as to whether the Affordable Care Act allows the federal government to provide subsidies to consumers purchasing health insurance on public exchanges run by the federal government.

Halbig v. Burwell ruled subsidies were not available on the federal exchange, and hours later King v. Burwell ruled the IRS had the discretion to issue subsidies on federal exchanges as the law was ambiguous.  In all likelihood, this issue will be decided by the Supreme Court as the Obama administration has already stated they would appeal the Halbig v. Burwell decision.

The outcome of the subsidy fight will have major ramifications for the Affordable Care Act, but the White House and industry organizations are advising all to stay the course.  No immediate market changes are expected until the issue is decided by a higher court.  The majority of states utilize the federally-run exchange and a study by Avalere Health found that eliminating subsidies on these exchanges would result in 5 million consumers receiving a 76% increase in their health insurance premium.