Appeals Court Premium Subsidy Decision Looms

Appeals Court Premium Subsidy Decision Looms

Our Thinking / Healthcare /

Appeals Court Premium Subsidy Decision Looms
Calendar08 July 2014

A federal appeals court in Washington, DC could rule as early as this week on another legal challenge to the ACA.  At issue in Halbig v. Burwell is whether the ACA’s statutory text gives the IRS authority to offer premium subsidies through federally-run health insurance exchanges. Two legal challenges to that authority have failed in federal courts at the district court level, but an appellate decision for the plaintiffs could put the issue on the Supreme Court’s agenda starting in October. Nullifying subsidies in states using federal exchanges would both weaken the viability of the public exchanges and effectively gut the employer “play or pay” mandate for employers with employees only in those states.

On the heels of its Hobby Lobby ruling, the Supreme Court last week granted Wheaton College's request for a temporary exemption from complying with the Affordable Care Act’s accommodation available to nonprofit religious organizations that object to the contraceptive mandate. The accommodation provides that nonprofit religious organizations that certify their religious objections to contraception don’t have to provide the coverage, but they do need to certify their objections to either their insurers or third-party administrators, which are then required to offer the services at no cost to either the religious organization or the covered employees and dependents. Wheaton, a Christian school, objected to the process for claiming the current accommodation granted these organizations, a number of which are challenging the accommodation process in lower courts. Under the Supreme Court’s order, until Wheaton College’s lawsuit is resolved, it only needs to notify the Department of Health and Human Services of its religious-based objections.

In last week’s Hobby Lobby ruling, the Supreme Court cited the accommodation as one example of how the Obama administration could let closely held, for-profit corporations opt out of the mandate if their owners have religious objections to birth control.  But given the lawsuits aimed at the policy, the administration is under pressure to develop alternative work-around options to ensure contraceptive coverage for women whose employers don’t provide it because of religious objections.

Congress returns this week for its final month of the summer session with little ACA-related legislative action expected. Lawmakers will, however, try to advance some fiscal 2015 spending bills currently mired in wariness over potentially contentious amendments to modify and restrict funding for the law.

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