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Federal appeals court deals a setback to Obamacare


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Because of faulty language in the Affordable Care Act, some low and middle-income people may not be entitled to receive government assistance to subsidize their insurance. That’s being argued in several legal challenges to Obamacare currently being addressed in the federal courts. Now, two federal appeals courts handed down conflicting rulings today.

At issue is what the Obama administration argues is imprecise language. The exact wording in the ACA states that subsidies, or tax credits, should be paid to low and middle-income people who purchase insurance through an "exchange established by the state." But 36 states have not implemented their own exchanges, opting to rely on the federal exchange instead.

A circuit court in Washington D.C. said today that the ACA does not authorize the IRS to issue tax credits to people who have purchased health coverage through the federal marketplace. But, the Obama administration contends that Congress had intended to offer subsidies to low and middle-income people who bought insurance through either a state or federal health exchange created by the ACA.

And just hours after the ruling in D.C., the Obama administration’s contention was upheld by a fourth circuit court in Richmond, V.A., that ruled that the IRS can exercise its discretion on how to interpret the subsidies language.

How must the Obama administration respond now? Does the latest ruling mean that the administration will not need to move to correct the wording of the law? Given Republican opposition to Obamacare, would any effort to do so have a chance at success anyways?


Lisa McElroy, a supreme court scholar and Associate Professor of Law at Drexel University School of Law

Jonathan Wilcox, Republican Strategist; former speechwriter for Governor Pete Wilson

Matt Rodriguez, Democratic strategist, Rodriguez Strategies; former senior Obama advisor in 2008