LITTLE ROCK — Conflicting decisions Tuesday by two federal appellate panels regarding implementation of part of Affordable Care Act will have no immediate effect on Arkansans who have obtained health care coverage under the law, state officials said Tuesday.
In a 2-1 ruling, a panel of the U.S. Circuit Court of Appeals for the District of Columbia said the Affordable Care Act does not authorize the Internal Revenue Service to provide tax credits to subsidize the purchase of health insurance through the federal exchange, but instead allows the tax credits to be made available only through state-based exchanges.
But also Tuesday, the 4th U.S. Circuit Court of Appeals in Richmond, Va., ruled that the way the IRS has been providing the tax credits is “a permissible exercise of the agency’s discretion.”
Arkansas Insurance Commissioner Jay Bradford said Tuesday the Obama administration likely will ask that all 11 judges on the D.C. court consider that case, and the plaintiffs in the Virginia case may appeal the other decision, but for now it appears that nothing will change for consumers.
“At this point in time everything is staying the status quo, and we’ll go forward with out processes here in the state,” he said.
Arkansas is one of 36 states that use the federally run exchange. State Insurance Department spokeswoman Alice Jones said 41,937 Arkansans have obtained insurance through the exchange — not counting those who have obtained insurance through the so-called private option, Arkansas’ version of Medicaid expansion — and that about 38,000 of them, or roughly 90 percent, have obtained tax credits.
According to a U.S. Department of Health and Human Services report released June 18, the average monthly premium for Arkansans selecting the silver plan was $393 and the average monthly tax credit was $309.
Cheryl Smith, executive director of the federally facilitated Arkansas Health Insurance Marketplace, is working with the marketplace’s board of directors to prepare the state to switch to a state-run exchange, should lawmakers choose to go that route. She said Tuesday the D.C. court’s ruling means “the work … just becomes that much more important.”
“If this ruling stands, a state-based exchange will be the only way subsidies can flow,” she said.
The conflicting decisions drew quick — and predictable — responses from partisans on Capitol Hill and the White House.
Democrats, who support the Affordable Care Act, predicted that the Supreme Court ultimately will agree with the Obama administration reading of the law and allow federal subsidies for individuals purchasing health insurance through either federal or state exchanges.
Republicans in opposition to the law said the D.C. Circuit Court of Appeals correctly determined that the law, as written, allows subsidies only for those purchasing insurance through state-run exchanges — a ruling they said affirmed their belief that the law is fatally flawed and needs to be repealed and replaced.
White House Press Secretary Josh Earnest said the ruling would have no practical impact on people obtaining insurance through the federal exchange.
“While this ruling is interesting to legal theorists, it has no practical impact on their tax credits right now. The case before the D.C. Circuit was simply another failed partisan attempt to harm the Affordable Care Act,” he said.
Senate Majority Leader Harry Reid, D-Nev., said the Supreme Court would overrule the D.C. Circuit ruling, saying it is “absurd to think Congress intended subsidies” only for those using state exchanges.
Sen. John Boozman, R-Ark., said the law was “very clear” in limiting federal tax credits to those on state-run exchanges and not the federal exchange, and simply confirms the law is unworkable.
“I think this is just another nail in the judicial coffin of Obamacare,” he said. “Obamacare’s policy is such that it is just not workable.”
Boozman said states that now rely on the federal exchange should have the option of switching to a state-run exchange to get the subsidy or be able to opt out of the health law that now mandates individuals purchase insurance.
The court decision was also thrust into this year’s hotly contested U.S. Senate race in Arkansas, with Republican challenger Tom Cotton and Democrat Sen. Mark Pryor issuing dueling statements.
“Today’s ruling is just the latest example of why we must start over on health care reform,” Cotton said. “As a result of this court decision, we now know that the Obama administration has illegally spent billions of dollars on unlawful subsidies, for which American taxpayers will be asked to foot the bill. This raises the serious question of whether Sen. Pryor even read the Obamacare legislation prior to voting for it.”
“Congressman Cotton isn’t leveling with Arkansans,” Pryor responded. “And that’s because he has no solutions except kicking 180,000 working Arkansans off of their private health care plans, raising taxes on nearly 40,000 more, and returning to the days where insurance companies denied coverage to Arkansans with pre-existing conditions.”
— Stephens Washington Bureau reporter Peter Urban contributed to this report.