Texans Who Signed Up For Health Insurance Could Lose Subsidies

WASHINGTON (July 22, 2014) A ruling Tuesday from a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit could be bad news for Texans who enrolled for taxpayer-subsidized health insurance under the president’s Affordable Care Act.

The panel ruled 2-1 that the law, as written, only allows insurance subsidies in states that set up their own health care exchanges.

Texas is one of the 36 states that did not.

The ruling invalidated a U.S. Internal Revenue Service regulation that allowed the subsidies, in the form of tax credits, in all 50 states.

According to federal figures, more than 730,000 Texas residents enrolled for coverage through the federal exchange and that 84 percent of them selected plans with tax credits.

The average monthly premium in Texas after tax credits is now $72, an average subsidy of $233.

If the decision is upheld, it would mean premium increases for most of those enrolled in Texas and more than half of the 8 million Americans who purchased taxpayer-subsidized insurance under the law.

The administration could request a hearing before the full appeals court or could appeal directly to the U.S. Supreme Court, which seems more likely after a three-judge panel of the 4th U.S. Circuit Court of Appeals issued a conflicting ruling later in the day on Tuesday.

The appeals court in Virginia upheld the tax subsidies for low- and middle-income people who buy insurance under health care reform law, voting 3-0 to reject a claim that the law provides the subsidies only to people who buy policies through state-run exchanges.

The court backed the IRS regulation that makes the subsidies available regardless of whether policies are purchased through state exchanges or one established by the federal government.

The White House said the subsidies will continue for the time being despite the ruling.

While the case works its way through the courts, it has "no practical impact" on tax credits, White House spokesman Josh Earnest said Tuesday.

He said the White House is confident in the administration’s legal case.

But critics of the law say the ruling could mark the beginning of the end for the Affordable Care Act.

"Should this ruling withstand scrutiny all the way through the Supreme Court, it will be the end of Obamacare in those 36 states,” said Americans for Limited Government President Nathan Mehrens.

“It will be such a mess that perhaps the only solution will be for Congress to repeal the law,” he said.