Under the Affordable Care Act (ACA), low- and moderate-income people who don’t have access to public coverage or affordable employer-sponsored coverage will get tax credits to help them pay the premiums for private coverage. Most states will set up regulated marketplaces called “exchanges” where consumers will shop for coverage. But in any states that don’t, the ACA calls for operation of a federal exchange in order to ensure that people have affordable coverage options.
Now, however, some opponents of the health reform law are arguing that people in states with a federal exchange aren’t eligible for the premium tax credits and that the Treasury Department violated the ACA when it issued a proposed rule that would provide the credits to eligible taxpayers in all states. This misguided argument runs directly counter to the ACA’s clear intent.
As health law and policy expert Timothy Jost has pointed out, the same provision of the ACA that authorizes premium tax credits for participants in the state exchanges also requires all exchanges — state and federal — to report to the federal government on the amount of advance payments of premium credits that taxpayers receive. That wouldn’t make any sense if people in a federal exchange weren’t eligible for the credits.
Nor would it make sense for families in, say, Louisiana, which is planning to have a federal exchange, to pay hundreds of dollars more in premiums each year than otherwise-identical families in other states such as Maryland, which is already planning its own exchange.
More importantly, the overall structure of the ACA is designed to ensure that all Americans have a path to affordable coverage, regardless of where they live. That’s why it provides for a federal exchange to operate in any state that doesn’t set up its own exchange.
Despite claims to the contrary, Treasury unquestionably got it right. The claim that Treasury has somehow exceeded its authority here is, sadly, just one more misleading attack on health reform.