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'Obamacare' whiplashed by conflicting court rulings

A woman reads the insurance marketplace internet site in Washington, DC on December 2, 2013
A woman reads the insurance marketplace internet site in Washington, DC on December 2, 2013

A US federal appeals court delivered a potentially crippling blow to President Barack Obama's health care law Tuesday by limiting insurance subsidies, but a second court issued a contradictory ruling on the issue.

The opposing verdicts, just hours apart, brought what one US senator described as "chaos and confusion" to the status of Obamacare, with likelihood growing that the Supreme Court will need to weigh in.

The DC Circuit Court of Appeals ruled the Obama administration can not subsidize Americans who purchased their coverage through a federal government website, and that tax credits established under the 2010 law can only be issued to residents of states that set up their own exchanges for buying insurance.

The law unambiguously "limits the availability of premium tax credits to state-established exchanges," two of the panel's three judges wrote in a 72-page ruling.

The decision could severely restrict public assistance for millions of Americans in up to 36 states.

It impacts 27 states where predominantly Republican governors or state houses are opposed to so-called Obamacare, and another nine states that have partially opted out.

The ruling stated that the law "plainly distinguishes exchanges established by states from those established by the federal government," the judges wrote.

"At least until states that wish to can set up exchanges, our ruling will likely have significant consequences, both for the millions of individuals receiving tax credits through federal exchanges and for health insurance markets more broadly."

But in neighboring Virginia, the US Court of Appeals for the 4th Circuit unanimously upheld the subsidies that were laid out in an Internal Revenue Service rule, saying the Affordable Care Act's statutory language was too "ambiguous" to restrict them.

"We uphold the rule as a permissible exercise of the agency's discretion," the panel said.

The Obama administration said it would ask the full DC Circuit court to review its case, which was decided by just a three-judge panel.

The case may eventually be decided by the US Supreme Court, which has already ruled in favor of the constitutionality of another part of the law in 2012.

"We believe that this decision is incorrect, inconsistent with congressional intent, different from previous rulings, and at odds with the goal of the law: to make health care affordable no matter where people live," Department of Justice spokeswoman Emily Pierce said.

- 'Clear' congressional intent -

But the conflicting verdicts show that "there continues to be chaos and confusion around the president's health care law," Republican Senator John Barrasso told reporters, adding that he was calling on the Supreme Court to settle the matter.

The White House argued there was no confusion about Obamacare's intent when it came to subsidies.

Sen. John Barrasso speaks during a news conference on Capitol Hill, June 24, 2014 in Washington, DC
Sen. John Barrasso speaks during a news conference on Capitol Hill, June 24, 2014 in Washington, DC

"It is pretty clear... that the intent of Congress was to ensure that every eligible American would have access to tax credits that will lower their health care costs," said White House spokesman Josh Earnest.

He added that for now, the tax subsidies remain intact and available across the country, but he repeatedly dodged questions about whether Obamacare could survive should millions of customers lose their taxpayer subsidies.

House Speaker John Boehner, the top Republican in Congress, said the DC Circuit verdict marked the second time in as many months that courts have ruled "against the president's unilateral actions regarding Obamacare."

The Supreme Court struck a severe blow to the law last month when it ruled that some for-profit companies could opt out of offering contraceptive coverage on religious grounds.

Republicans have introduced dozens of bills in recent years aimed at repealing or defunding Obamacare. None has become law.

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