<p>Does the Affordable Care Act authorize individuals to receive tax credits when they purchase health insurance through federal health exchanges? Apparently, it depends on which appellate court you ask.<br />
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On Tuesday, the Fourth Circuit Court of Appeals and the D.C. Circuit Court of Appeals issued contradictory rulings on this question. The D.C. Circuit found that tax credits cannot be offered to individuals who purchase insurance through federally-operated exchanges. The Fourth Circuit – in a decision released just hours after the D.C. Circuit’s decision – found that the tax credits could be offered through the federal exchanges.<br />
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The Supreme Court ultimately may need to resolve the difference, although the Obama Administration may first ask the D.C. Circuit to reconsider its decision.<br />
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NACDS.org asked Don Bell, NACDS’ senior vice president, legal affairs and general counsel, to make sense of the situation, and what it means for pharmacies, for individuals and for employers.<br />
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Q: What is the short-term impact of the contradictory rulings?<br />
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A: <em>There should be no immediate impact on pharmacies and patients. The Obama Administration has about two months to file a motion for a “stay” asking the D.C. Circuit – and, if necessary, the Supreme Court – to delay the impact of the D.C. Circuit’s decision against the tax credits. I expect a stay would be granted, but there are no guarantees. A stay would postpone any impact for several additional months, if not a year or more, as the litigation continues.<br />
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</em>Q: Pardon the hypothetical question, but if the tax credits ultimately are disallowed, what would that mean?<br />
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A: <em>The tax credits would not be available to taxpayers in 36 states – including big states like Texas and Florida – that do not operate state insurance exchanges. The tax credits have reduced insurance costs for about five million people, so eliminating the tax credits could make health coverage unaffordable for many in those states. The “individual mandate” to purchase insurance does not apply when insurance costs more than 8% of household income. In addition, the “employer mandate” requiring large employers to offer health insurance to employees would not apply in those 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. The bottom line for pharmacies is that less insurance coverage could mean fewer medications would be dispensed to patients.<br />
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</em>Q: Two courts, two totally opposite decisions – what do you make of that?<br />
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A: <em>Cynics may understandably point to the fact that the four judges who supported the Administration’s position were nominated by Democrats, while the two judges who opposed the Administration were Republican appointees. 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. Speaking of which, NACDS is always ready to help our members who are working to understand and comply with the law.</em></p>
