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Could Halbig v. Sebelius unravel Obamacare?

Halbig v. Sebelius takes aim at health-care subsidies that are used by more than 5 million Americans so they can afford insurance payments they signed up for under Obamacare

The recent Hobby Lobby decision by the U.S. Supreme Court was seen as a victory against the Affordable Care Act, also known as Obamacare, when it comes to requirements on contraception coverage.

But watch out. Any day now, a federal appeals court for the D.C. Circuit may release a ruling on Halbig v. Sebelius, which some court watchers say could eventually unravel Obamacare.

Halbig v. Sebelius takes aim at health-care subsidies which are used by more than 5 million Americans so they can afford insurance payments they signed up for under Obamacare through the Healthcare.gov website.

“This case clearly has the capacity to do grave damage to some of the basic underpinnings of the Affordable Care Act if the court were to hold in favor of the plaintiffs,” according to a statement from Steven J. Friedman, co-chair of the Employee Benefits Practice Group at Littler Mendelson.

To understand the case, one needs to review the marketplaces that offer the health insurance to consumers.

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FURTHER READING:

Hobby Lobby decision creates controversy about contraception, Obamacare

SCOTUS limits government rules requiring insurance coverage for contraceptives

Court denies contraception coverage injunction

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“One of the centerpieces of the ACA is the establishment of marketplaces – also known as exchanges – in every state, where anyone can procure health insurance,” Friedman explained. “A seminal component of the marketplace is the availability of government subsidies for many who buy their insurance through the marketplace.  The subsidies are available only to those, whose family income is less than four times the federal poverty level. For a family of four this is approximately $95,000.”

“Under the ACA, in the 34 states that refused to set up a marketplace, the federal government set one up,” he added. “This case centers round whether subsidies may be available to individuals purchasing insurance from the marketplaces established by the fed government instead of a state. Since so many states declined to establish marketplaces, the inability to provide subsidies to individuals in these states would deal a devastating blow to an essential component of the ACA.”

In a further explanation of the Halbig v. Sebelius case, the plaintiff says the Internal Revenue Service violates American law by “offering tax subsidies in all 50 states to offset the cost of health insurance,” Fox News reported. “The language in ObamaCare actually restricts subsidies to state-run exchanges – of which there are only 14 – and does not authorize them to be given in the 36 states that use the federally run system, commonly known as HealthCare.gov.”

Depending on the appeals court decision, “a significant number of Americans” could find themselves without health insurance, Newsweekreported. Under a mandate, Americans must have health insurance this year or pay a fine.

Contributing Author

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Ed Silverstein

Ed Silverstein is a veteran writer and editor for magazines, websites and newspapers. A graduate of Harvard's Kennedy School of Government, he has won several...

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