Federal Judge: No Subsidies for States That Were Unable or Unwilling to Set Up Exchanges

Via CBS:

The Affordable Care Act suffered a fresh legal setback on Wednesday, when a federal judge in Oklahoma ruled that the federal government could not provide insurance subsidies to customers in states that declined to set up their own marketplaces under the federal health care law.

The decision increases the possibility that the Supreme Court will eventually decide to weigh in on the matter. Several previous federal court decisions have come down on opposite sides of the dispute. In July, an appeals court in Richmond, Virginia, upheld the subsidies provided through federally-administered marketplaces, but an appeals court in D.C. struck them down on the same day.

For a variety of reasons, from political opposition among Republicans to difficulties building the insurance exchanges in some states, only 14 states elected to establish their own exchange to allow consumers to comparison-shop health care plans. The other 36 states punted the job to the federal government, which offered to step in if a state was unable or unwilling to erect its own marketplace.

If the decision reached Wednesday by the judge in Oklahoma is upheld by the Supreme Court, the decision could strip health insurance tax credits from more than 4 million people in the 36 states that allowed the federal government to administer their insurance exchanges.

Proponents of Obamacare have warned that such a move would effectively gut the health care law, making insurance coverage unaffordable for many consumers who rely on the tax credits to cover their premiums.

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