TUESDAY, July 22, 2014 (HealthDay News) -- In a bombshell ruling that could potentially play havoc with Obamacare, a federal appeals court said Tuesday that the financial subsidies provided to millions of Americans who bought health insurance though the federal HealthCare.gov website exchange are illegal.
In a 2-1 ruling, the federal appeals court for the District of Columbia said that as the law is written, the subsidies may only be provided to people who buy health plans in states that run their own health insurance exchanges.
"We reach this conclusion, frankly, with reluctance," circuit judge Thomas Griffith wrote for the majority.
"At least until states that wish to can set up exchanges, our ruling will likely have significant consequences both for the millions of individuals receiving tax credits through federal exchanges and for health insurance markets more broadly," he concluded.
But in a dissenting opinion, Harry Edwards, a member of the three-judge panel, said, "This case is about appellants' not-so-veiled attempt to gut the Patient Protection and Affordable Care Act."
The subsidies are a crucial piece of the Affordable Care Act, also known as Obamacare.
Thirty-six states chose not to create their own websites to sign up for insurance coverage under the Affordable Care Act. Many are headed by Republican governors who oppose the controversial law.
The law, passed by Congress in 2010, requires virtually all Americans to have health insurance coverage or pay a penalty in the form of a tax. The law is particularly unpopular with Republicans, who view it as an unconstitutional intrusion by the federal government into individual rights.
Opponents of the law maintain that Congress never intended people who purchased plans in states that relied on the federally operated exchange to receive access to premium tax credits.
Families USA, a consumer advocacy group that supports the Affordable Care Act, said Tuesday's decision is not the final word.
"It will inevitably be placed on hold pending further proceedings," said Ron Pollack, the group's executive director.
Visit the official federal government website for details on coverage under the Affordable Care Act.