Federal judge rules against health care tax subsidies

Federal judge rules against health care tax subsidies

[JURIST] A U.S. District judge for the US District Court for the Eastern District of Oklahoma [official website] on Tuesday struck down [order] federal tax subsidies under the Patient Protection and Affordable Care Act (PPACA) [text, PDF]. Judge Ronald White found that the Internal Revenue Service rule, which provides subsidies to individual customers in states that have declined to set up a health care marketplace, is an “invalid implementation of law.” White has put his holding on hold pending appeal. Oklahoma Attorney General Scott Pruitt said, “[t]oday’s ruling is a consequential victory for the rule of law. … 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.”

Comprehensive health care reform [JURIST backgrounder] was passed by Congress in March 2010 after over a year of debate, and legal challenges surrounding the provisions of the PPACA have reinvigorated legal debate in 2014. Earlier this month two US federal appeals courts issued conflicting rulings [JURIST report] within hours of one another on the issue of whether subsidies may be awarded by the federal government in states that elect not to set up their own health insurance exchanges. The US Supreme Court [official website] ruled [JURIST report] in June in Burwell v. Hobby Lobby [SCOTUSblog backgrounder] that closely held corporations can deny contraceptive coverage to their employees for religious reasons. Two weeks after the Hobby Lobby decision, US Senators Patty Murray and Mark Udall introduced a bill [JURIST report] to restore full contraception coverage for employees of closely held corporations.