The Patient Protection and Affordable Care Act (ACA) has always faced tremendous challenges due to the sheer magnitude of both the changes it authorized and the people it will impact. Now two different Federal Circuit Courts of Appeal have made the law’s implementation even more difficult by issuing conflicting rulings on the same day.

The Federal Appeals Court serving the District of Columbia, which is generally considered the stronger source for rulings of federal regulations, found that the Internal Revenue Service (IRS) regulations that allowed subsidies to individuals insured in states without state-operated marketplaces (called “exchanges”) violated the direct wording of the statute. (See Halbig  v. Burwell, No.1:13-cv-00623 (DC Cir. July 22, 2014.) The statute, the Court said, clearly intended subsidies to go only to individuals participating in state-operated exchanges and not federal exchanges.

In the meantime, the United States Court of Appeals for the Fourth Circuit (in Richmond, Virginia) held that the statute was ambiguous and, therefore, gave deference to the opinion of the agency implementing the statute, in this case the IRS, to interpret its meaning.  The IRS rule was upheld “as a permissible exercise of the agency’s discretion.” (See King v. Burwell  No. 14-1158 4th Cir. July 22, 2014.) Most states that chose not to set up exchanges submitted briefs opposing subsidies.

The ACA was signed into law in 2010 and requires most citizens to have health insurance or pay a penalty. A subsidy in the form of a “premium tax credit” is granted to exchange participants whose income is below a certain level. The IRS final rule implementing that provision interpreted the ACA as authorizing the IRS to grant tax credits to individuals who purchased health insurance using either state-run insurance exchanges or a federal exchange. While the majority of Americans already have healthcare under existing plans through their employers or from the government under existing plans like Federal Employee Health Benefits, Medicare, Tricare, or through the Department of Veterans Affairs, this D.C. Circuit Ruling, if upheld, could terminate insurance premium subsidies for as many as 4.5 million people. The Justice Department said it will request a rehearing of Halbig v. Burwell by the full D.C. Circuit.