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Editor: Katharine Van Tassel
Akron Univ. School of Law

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Friday, February 21, 2014

Tax credits in federal exchanges upheld in Virginia

In a concise opinion, Judge Spencer of the Eastern District of Virginia upheld the IRS regulations facilitating tax credits for insurance purchased through federally-run health insurance exchanges.  The decision in King v Sebelius cited frequently to Halbig v. Sebelius (which I wrote about briefly here) and proceded much as that decision did.  The plaintiffs were individuals who would have been exempt from purchasing health insurance on the Exchanges but for the tax credit offered by the federal government for purchasing health insurance.  Their argument was that the ACA only permits tax credits for insurance purchased on state-based exchanges, not federally-run exchanges.  Judge Spencer, like Judge Friedman, analyzed the IRS regulations under Chevron's first prong and found that the statute was clear in its intent to create premium tax credits for all Americans purchasing health insurance, regardless of the purveyor of the exchange.  Although the court found the statute to be unambiguous, it analyzed the second Chevron prong and found that deference would be appropriate if it were at issue.  The court noted that the plaintiffs' claims rendered many absurdities in the ACA that were too tenuous to bear serious consideration, and it granted the United States' request for summary judgment. 

The Halbig and King decisions are on solid legal footing, and they have both noted the absurdity of the statutory interpretation being driven by Adler and Cannon.  Once again, the real question is what will happen next.  Briefs were already submitted in the Halbig appeal.  An appeal in King would not be surprising.  And, the decision in NFIB v. Sebelius revealed that the Supreme Court is not above absurd statutory interpretation.  (Refresher: the Medicaid expansion was not "Medicaid enough" to pass the Court's new coercion doctrine, but it was "Medicaid enough" for the remedy of severing the Secretary's power to enforce the Medicaid expansion against the states, which was found in the original Medicaid Act.  See my co-authored work with Weeks Leonard and Outterson, here.) 

http://lawprofessors.typepad.com/healthlawprof_blog/2014/02/tax-credits-in-federal-exchanges-upheld-again.html

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