WASHINGTON — Conflicting court rulings on the Affordable Care Act are unlikely to have an immediate impact on pharmacies, says Don Bell, senior vice president of legal affairs and general counsel at the National Association of Chain Drug Stores.
The District of Columbia appeals court’s decision that tax credits cannot be offered to individuals purchasing insurance through the federal health insurance exchange may be held up by a stay for months, if not a year or more, Bell said in July.
Moreover, another appeals court, in Richmond, Va., found that the tax credits could be offered through the federal exchange. The disagreement may ultimately need a resolution from the Supreme Court.
If subsidies are disallowed, they would be unavailable in the 36 states — including Texas and Florida — that do not operate their own insurance exchanges. The credits have cut insurance costs for about 5 million people for whom coverage could otherwise be prohibitive.
The “individual mandate” to buy insurance does not apply when coverage costs more than 8% of household income, noted Bell. In addition, the “employer mandate” requiring large companies to offer insurance to employees would not apply in the three-dozen states.
“Some experts predict that the economics underlying the ACA insurance market would become untenable, while others suggest that at least some of the 36 states would avoid these changes by opening insurance exchanges,” Bell said. “The bottom line for pharmacies is that less insurance coverage could mean fewer medications would be dispensed to patients.”
Cynics may note that the four judges who supported the Obama administration’s position were nominated by Democrats, while the two judges who opposed it were Republican appointees, he added. “But we should also keep in mind the complexity of the legal issues involved — the ACA is an extremely complicated statute with over 1,000 pages of tangled legalese.”
Both rulings came from panels, as opposed to the full courts.
The White House has asked the full D.C. appeals court to reconsider its panel’s 2-1 decision. Of the court’s full complement of judges, a majority were appointed by Democratic presidents. The Richmond court’s three-member decision in favor of the administration was unanimous.
At issue for both panels was the meaning of an ACA section that permits subsidies when consumers buy insurance on an exchange “established by the state.” Individuals and companies who challenged the credits contended that the statute ruled out subsidies in those states that do not have exchanges. The White House claimed that Congress intended the subsidies to be available everywhere.
“You don’t need a fancy legal degree to understand that Congress intended for every eligible American to have access to tax credits that would lower their health care costs regardless of whether it was state officials or federal officials who are running the marketplace,” said White House press secretary Josh Earnest.
District of Columbia appeals judge Thomas Griffith, a George W. Bush appointee, said in his ruling, “We reach this conclusion, frankly, with reluctance,” noting that the decision would likely have significant implications for millions of people. But he said the court had to make a ruling based on the letter of the law. Judge Harry Edwards, a Jimmy Carter appointee, said in dissent that the decision “portends disastrous consequences.”
The Richmond court said the statute’s language on the subsidies was open to different interpretations. “Applying deference to the IRS’s determination, however, we uphold the rule as a permissible exercise of the agency’s discretion,” wrote Judge Roger Gregory, who was originally nominated by President Bill Clinton.
Insurance plan enrollees receiving federal subsidies will receive an average of $4,250 each next year, and the government is expected to spend $17 billion on the credits in fiscal 2014, according to the nonpartisan Congressional Budget Office.
Exchange enrollees who chose plans with subsidies pay an average of $82 a month in premiums after the credit, 76% less than the full premium, according to the Department of Health and Human Services.