A federal appeals court on Tuesday ruled that many of the subsidies authorized by the federal government via President Barack Obama’s health care plan are illegal.
Two members of a three-judge panel from the U.S. Court of Appeals for the District of Columbia Circuit found in favor of a group of plaintiffs who argued that the Affordable Care Act authorizes subsidies only for people who purchase health insurance through exchanges run by the individual states, not the federal government.
The Obama administration created a federal insurance marketplace for residents of 35 states that did not set up their own exchanges.
The court ruling could affect some 4.7 million low- and middle-income people currently benefiting from subsidies in the form of tax credits.
The government can still appeal the ruling before the full D.C. Circuit appellate court and the question eventually could get to the Supreme Court.
In the meantime, for the moment nothing will change for people who are getting tax credits for their insurance premiums, Justice Department spokeswoman Emily Pierce said.
The three-judge panel overturned a lower court that concluded that the intention of the ACA is for the subsidies to be available in all states.
Millions of low-income people depend on the subsidies granted by virtue of the ACA to be able to fulfill their legal obligation to acquire private medical insurance.
Obama’s health care law has surmounted numerous obstacles since it was promulgated in 2010, facing heavy Republican opposition and many private lawsuits on different fronts, as well as failures in establishing the new medical insurance marketplace late last year.