Healthcare reform lawsuits continue

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With just days left for patients to enroll in federal or state exchanges, the countdown to healthcare reform's latest milestone is shaping up to be a scramble.

Among the last-minute details is the Halbig v Sebelius lawsuit before the US Circuit Court in Washington, DC, in which opponents say the subsidies the IRS has allowed to flow to patients enrolled in state or federal exchanges need to be withdrawn. The plaintiffs say the law stipulates subsidies should go only to patients who have signed up for state exchanges, but the Internal Revenue Service has only used income as the subsidy criteria, meaning patients who signed up for federal programs have also benefited.

As explained by Modern Healthcare, the IRS is part of this healthcare reform issue because the agency distributes the tax credits associated with the subsidies.

If the court sides with the plaintiffs, patients in the 36 states which did not establish exchanges will lose their subsidies. “It would mean that the effort to expand insurance coverage in the vast majority of the states would be pretty much halted,” Ron Pollack of the advocacy group Families USA told Bloomberg Monday.

Bloomberg and Modern Healthcare note that the three-judge panel is comprised of judges who appear to stand on opposite sides of the issue. Judge Harry Edwards appears to be among the judges who says the IRS is right in interpreting the law to mean subsidies for those who signed up on either state or federal exchanges, whereas Judge Raymond Randolph seems to be siding with the critics of that point of view.

Bloomberg reports that Judge Edwards asked during yesterday's proceedings “Who cares who set up the exchanges?” and said that the lawsuit was an attempt to “gut the statute” establishing exchanges.

But Judge Randolph said arguments that federal exchanges provide the same service as state marketplaces and are interchangeable “is a leap, that is not an interpretation,” reports Bloomberg.

This lawsuit is one of four which are also seeking to overturn portions of the Affordable Care Act.

Bloomberg notes that Virginia's US  District Judge James Spencer “found no support in the legislative history of the Obamacare law for the idea Congress intended to condition federal funds on state participation,” and dismissed the case—now on appeal—in February. Spencer, Bloomberg notes, was appointed by President Ronald Regan.

Bill Clinton-appointee Judge Paul Freidman of Washington, DC, said in another lawsuit that while a narrow view would limit the subsidies to state exchanges, a broader interpretation could indicate that Congress means subsidies would be available to enrollees in either state or federal exchanges, reports Bloomberg.

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