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Wisconsin Tax Credits Could Be In Jeopardy Following Rulings On Health Care Subsidies

Financial Assistance Will Continue For Now As Cases Make Their Way Through Court

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The E. Barrett Prettyman Federal Courthouse in Washington, D.C., where an appeals court ruled that the U.S. government can't subsidize health plans bought on federally run exchanges. Photo: NCinDC (CC-BY-ND).

Future tax credits for health coverage could be in jeopardy for the majority of states, including Wisconsin, after two federal courts handed down conflicting rulings on Tuesday on whether the U.S. government can subsidize health coverage sold on federally run exchanges.

Most people in the U.S. who bought private health insurance through the marketplace received subsidies. In Wisconsin, 90 percent of people who signed up on the exchange did.

Dave Obey, a former Democratic congressman who voted for the Affordable Care Act, said the federal appeals court ruling against the subsidies creates chaos for Americans who can’t afford coverage on their own.

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“The way to undo the damage done by this decision is to have states like Wisconsin reconsider their woefully cruel decision not to set up state run exchanges, if the court decision is not reversed on appeal,” said Obey.

Like a lot of other states led by Republican governors opposed to the health law, Wisconsin relied on a federal exchange instead of creating its own.

Gov. Scott Walker is following the legal battle and remains opposed to health reform.

“Ultimately, it could end up in the U.S. Supreme Court, but they put an injunction on it so it has no immediate impact on state of Wisconsin,” said Walker. “It’s frustrating (that) they passed something years ago without knowing what was in it.”

The ruling against subsidies strikes at the heart of the health care law, and comes in the wake of a more symbolic blow to the Affordable Care Act involving contraceptive coverage.

“It seems like there is endless drama on the health care reform law,” said Robert Kraig, executive director of Citizen Action of Wisconsin. “What we really need to be doing right now is not continuing to have the fight of 2010, but figuring out how to implement this law in the best possible way.”

The Obama administration said that financial assistance in the form of tax credits will continue as litigation over subsidies works its way through the courts.