Shortly after the decision, the Department of Justice announced that it will appeal the ruling. Two lower courts had previously ruled in favor of the government, with the U.S. Court of Appeals for the 4th Circuit also ruling in favor of allowing tax credits in federally-facilitated exchanges.
There is no immediate impact from the ruling. Consumers can continue to receive tax credits for coverage purchased on federally-facilitated exchanges. However, the D.C. Circuit ruling could eventually be upheld by the Supreme Court, increasing required premium contributions for nearly 5 million exchange enrollees. Indeed, an Avalere analysis released last week found that eliminating tax credits in federally-facilitated exchange states would increase enrollee contributions by an average of 76 percent. As a result, many people enrolled in subsidized exchange coverage would find it difficult to afford their insurance. Health plans and life sciences companies could expect a decrease in enrollment, with providers seeing fewer insured patients.
The administration will appeal the case en banc to a hearing of all 11 judges on the D.C. Circuit, with the full court likely reviewing the case in early fall. The court consists of four Republican appointees and seven Democratic appointees. In addition, yesterday’s ruling increases the likelihood that the case may eventually be heard before the Supreme Court, though not likely until late 2015 or 2016. Should the Supreme Court eventually uphold yesterday’s ruling, states, Congress, and the administration will face increasing pressure to prevent large increases in consumer costs; however, political and legal considerations will make any action potentially challenging.
View the D.C. Circuit decision.