Another Ruling on Subsidies by a Federal Judge

Though New York is unaffected, yet another ruling that affirms enrollees in the Federal Exchange cannot receive subsidies.

A federal judge in Oklahoma has ruled that Obamacare subsidies cannot go to residents of states that are not running their own insurance exchanges, a second blow to the Obama administration on a issue that threatens a key element of the health law’s coverage expansion.

Judge Ronald A. White said that the administration’s decision to allow subsidies to go through either a state-run health insurance exchange or the federal exchange is an improper and invalid reading of the Affordable Care Act and must be struck.

White’s ruling marks the second judgment against the government on the subsidy question and comes as the Supreme Court could decide whether to weigh in.

“The court holds that the IRS rule is arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law,” White wrote in his ruling. The IRS had allowed people to get subsidies in all states.

Oklahoma Attorney General Scott Pruitt, who brought the lawsuit, welcomed the decision.

“Today’s ruling is a consequential victory for the rule of law,” he said in a statement. “The administration and its bureaucrats in the IRS handed out billions in illegal tax credits and subsidies and vastly expanded the reach of the health care law because they didn’t like the way Congress wrote the Affordable Care Act. That’s not how our system of government works.”

Split decisions in U.S. appeals courts came earlier this year. The 4th Circuit Court of Appeals in Richmond, Va., ruled with the Obama administration, saying the IRS had the right to allow the subsidies to go to residents of any state. The D.C. Court of Appeals ruled against that regulation but it recently vacated that decision when it decided to have the full court, not just a three judge panel, rehear the case.

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Jeffrey R. Ungvary President

Jeffrey R. Ungvary