July 22, 2014 at 1:00 am

Health law rulings may affect Mich. subsidies

Health law

President Barack Obama (J. Scott Applewhite / AP)

Washington— Federal health insurance subsidies could be in doubt for millions of Americans — including hundreds of thousands in Michigan — after two federal courts of appeal issued conflicting rulings Tuesday.

In the first case, the U.S. Court of Appeals for the District of Columbia Circuit agreed with a group of small business owners who argued the law allows subsidies only for people who buy insurance through markets established by the states. Michigan is among 36 states that did not set up their own exchanges, relying on the federal Health Insurance Marketplace instead.

In a similar case in Virginia, a three-judge panel from the 4th U.S. Circuit Court of Appeals upheld the tax subsidies for low- and middle-income people, unanimously rejecting a claim that subsidies can only be offered on state-run exchanges.

In Michigan, 237,337 residents receive federal subsidies to buy insurance under the Affordable Care Act. They’re among 5.4 million people nationally who enrolled at healthcare.gov, including 4.6 million who received subsidies, about 87 percent.

The dueling decisions cast additional uncertainty over President Barack Obama’s signature domestic achievement, which has been buffeted by litigation, technical troubles and repeated Republican repeal attempts since being passed in 2010.

The Obama administration declared Tuesday that policyholders who bought coverage through the federal exchange would keep getting their subsidies as the cases wind their way through the courts. White House spokesman Josh Earnest said the D.C. Circuit’s decision would have “no practical impact” on tax credits as the case proceeds.

Gov. Rick Snyder said he would need to read the court’s opinion and consult with legal staff on its implications.

“I need to do some homework on it,” Snyder said in a telephone interview Tuesday.

Snyder supported establishing a state-run health insurance exchange, but the measure was defeated in the state’s GOP-controlled Legislature.

The conflicting rulings “emphasize how controversial this law continues to be even in the court system,” said Marianne Udow-Phillips, director of the University of Michigan’s Center for Healthcare Research and Transformation. “It’s a really unfortunate situation.

“It would just be tragic if those people who purchased their insurance with a subsidy could no longer afford their health insurance.”

Republican U.S. Senate candidate Terri Lynn Land said the D.C. Circuit’s ruling “is further proof that Obamacare is fatally flawed.”

“(N)ow we learn another major component (of the Affordable Care Act) may fail to deliver as promised and lead to even more Michigan families losing their insurance,” Land said in a press release.

Elsie Brown, 64, of Detroit said she won’t be able to keep her health insurance if she loses her subsidy.

Her plan, from Humana Inc., costs $439 per month, but she pays just 22 cents per month because the rest is subsidized.

She has a $909 deductible for medical care and a $500 deductible for prescriptions, with a $1,450 cap on total out-of-pocket expenses. Preventive services, such as her yearly physical, are free.

“I’d have to go without insurance till I’m 65 (and qualify for Medicare),” said Brown, who had been uninsured since being laid off from her longtime job with Chase Bank at the age of 61. “I only get $1,600 a month (in Social Security), and by the time I pay the house note, the car note, car insurance, there’s nothing left.”

A health insurance education group that campaigned to get uninsured people to sign up for health plans said the subsidies are crucial to assuring affordable coverage.

“The financial assistance made available by the Affordable Care Act to help consumers afford health coverage has made a huge difference for consumers in Michigan,” Erin Knott, state director for Enroll America, said in a statement.

Blue Cross Blue Shield of Michigan reassured customers that it will continue to charge subsidized rates.

“As the courts continue to sort through this issue as the decision is appealed, our customers’ subsidized plans remain in force, and we will continue to charge them subsidized rates as provided through current regulation,” said Terry Burke, vice president of individual business for the Blues.

The Michigan League for Public Policy said the ruling from the District of Columbia panel will have no immediate impact on consumers, and predicted future rulings will uphold the subsidies.

“When the full D.C. Court of Appeals reviews this case, the League is confident the court will recognize, just as multiple other courts have ruled, that the clear intent of Congress was that all marketplace enrollees receive the subsidies for which they qualify,” policy director Karen Holcomb-Merrill said in a statement.

In the D.C. Circuit, two judges appointed by Republican presidents voted against the administration’s interpretation of the law while one appointed by a Democratic president dissented.

The Obama spokesman said the administration would seek a hearing by the full 11-judge court. The court has a majority of judges appointed by Democratic presidents, including four appointed by Obama.

The majority opinion concluded that the law, as written, “unambiguously” restricts subsidies to consumers in exchanges established by a state.

That would invalidate an Internal Revenue Service regulation that tried to sort out confusing wording in the law by concluding that Congress intended for consumers in all 50 states to have subsidized coverage.

In reaction, Justice Department spokeswoman Emily Pierce said the decision was incorrect, inconsistent with the intent of Congress, and at odds with the goals of the health care law.

The issue is crucial to the success of the health law because most states have been unable or unwilling to set up their own exchanges. The inaction stems in many instances from opposition by Republican governors and legislators to the Affordable Care Act.

Staff Writer Melissa Burden and Associated Press contributed.