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Old 07-22-2014, 09:34 AM  
Stinger Stinger is offline
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Fed appeals court panel says most Obamacare subsidies illegal

This is a breaking news story. Please check back for updates.

In a potentially crippling blow to Obamacare, a top federal appeals court Tuesday said that billions of dollars worth of government subsidies that helped 4.7 million people buy insurance on HealthCare.gov are not legal under the Affordable Care Act.

In its decision, a three-judge panel said that such subsidies can be granted only to people who bought insurance in an Obamacare exchange run by an individual state or the District of Columbia — not on the federally run exchange HealthCare.gov. Plaintiffs in the case known as Halbig v. Burwell argued that the ACA, as written, only allows that often-significant financial aid to be issued to people who bought insurance on a marketplace set up a state.

The decision is certain to be challenged by the Obama Administration, and does not immediately have the effect of law. But if it is ultimately upheld, it would cause insurance rates for those people who lost the subsidies to dramatically rise.

HealthCare.gov serves residents of the 36 states that did not create their own health insurance marketplace. About 86 percent of its 5.45 million customers received a subsidy to offset the cost of their coverage this year because they had low or moderate incomes.

In a report issued Thursday, the consultancy Avalere Health said that if those subsidies were removed this year from the 4.7 million people who received them in HealthCare.gov states, their premiums would have been an average of 76 percent higher in price than what they are paying now.

Another report by the Robert Wood Johnson Foundation and the Urban Institute estimated that by 2016, about 7.3 million enrollees who would have qualified for financial assistance will be lose access to about $36.1 billion in subsidies if those court challenges succeed.

Before the decision, a leading Obamacare expert who was firmly opposed to the plantiffs' arguments said a ruling in their favor could have major consequences for the health-care reform law.

"If the courts were to decide that the Halbig plaintiffs were right, it would be a huge threat to the ACA," said that expert,Timothy Jost, a professor at the Washington and Lee University School of Law.

"It's a very big deal," said Ron Pollack, founder of the health-care consumers advocacy group Families USA, and Enroll America, a major Obamacare advocacy group.

Pollack noted that the more than 5 million people who have received subsidies via HealthCare.gov "would have them taken away."

"It certainly would cause a lot of people to rejoin the ranks of the uninsured," Pollack said. "The provision of the tax credit premium subsidy makes a huge difference in terms of whether people considering enrollment or enrolling in coverage will find such coverage affordable."

Last week, two analyses underscored the potential effects of the subsidies ultimately being deemed illegal.

The consultancy Avalere Health said people who currently receive such subsidies in the affected stateswould see their premium rates raise an average of 76 percent.

And the Robert Wood Johnson Foundation and the Urban Institute said that by 2016, about 7.3 million enrollees would lose about $36 billion in subsidies.

On Monday, one of the intellectual godfathers of the argument that is the basis of the Halbig case, as well as three other similar pending court challenges, said that tens of millions of people would be freed from Obamacare mandates in the affected states if the challenges prevailed.

Michael Cannon, director of health policy studies at the libertarian Cato Institute, said more than 250,000 firms in those states—which have about 57 million workers—would not be subject to the employer mandate being phased in starting next year. That rule, which hinges on the availability of subsidies on Obamacare exchanges, will compel employers with 50 or more full-time workers to offer affordable health insurance or pay a fine.

Courts could cause big Obamacare $$$ hike

And if the challenge prevail, a total of about 8.3 million individuals will be "free" of Obamacare's rule that they have health insurance or pay a fine equal to as much as 1 percent of their taxable income, said Cannon, who with law professor Jonathan Adler laid the groundwork for the challenges to the HealthCare.gov subsidies.

Oral arguments heard by a three-judge panel on that DC federal appeals court in March—when two of the judges appeared sympathetic to the plaintiffs—gave Halbig supporters renewed hope that their claim would succeed.
Read MoreWhat's really surprising about Hobby Lobby ruling

Halbig was the first of those cases decided at the appellate level.

In the other case that has been heard on appeal, one first filed in Virginia federal district court, the 4th U.S. Circuit Court of Appeals is expected to issue a ruling any day.

However, that circuit is widely expected to rule against the plaintiffs' claims challenging the legality of the Obamacare subsidies on HealthCare.gov.

--By CNBC's Dan Mangan


Dan ManganHealth Care Reporter

http://www.cnbc.com/id/101819065
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Old 07-22-2014, 09:41 AM   #2
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Old 07-22-2014, 09:52 AM   #3
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Gotta pass it to see what's in it...
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Old 07-22-2014, 09:53 AM   #4
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Well, this lines up with what I read earlier: That there's no funding mechanism for the state exchanges in ACA. States that refuse to set up an exchange, means the Feds have to set one up and there's nothing in the law that provides funding for that.
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Old 07-22-2014, 10:17 AM   #5
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Old 07-22-2014, 10:24 AM   #6
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Old 07-22-2014, 10:25 AM   #7
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Old 07-22-2014, 10:29 AM   #8
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Old 07-22-2014, 10:33 AM   #9
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Big blow. Might get en banc review by the entire Court of Appeals, and then, regardless of that outcome, will likely get cert from the SC.
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Old 07-22-2014, 10:34 AM   #10
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cosmo - let us know what Salon and HuffPost say.
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Old 07-22-2014, 10:52 AM   #11
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So, as it turns out, you may not even be able to keep your plan if it's from Obama
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Old 07-22-2014, 11:13 AM   #12
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This isn't going to affect my free cell phone, gasoline and mortgage, right?
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Old 07-22-2014, 11:14 AM   #13
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cosmo - let us know what Salon and HuffPost say.
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Old 07-22-2014, 11:15 AM   #14
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So, as it turns out, you may not even be able to keep your plan if it's from Obama
"If you like the pre-subsidy cost of your plan, then you can keep it."
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Old 07-22-2014, 11:15 AM   #15
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sounds like its a no impact decision for now. The subsidy will continue as appeals go forward
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