Is it even legal...

…for the Administration to allow federal subsidies for policies purchased directly by a health insurance companies/co-ops, as opposed to one purchased on an exchange?

This is suddenly an extremely important question, given that the ongoing issues with Healthcare.gov has the Administration on the verge of allowing federal subsidies to get provided for policies purchased directly from health insurance companies:


Note that this proposed “fix” runs explicitly counter to the text of the legislation, which stipulates that federal subsidies will only be provided for people who obtain their health insurance on exchanges “established by the state.”

Of course this is the very stipulation that is at issue in some of the legal challenges currently winding their way through the federal judiciary.  But, the question takes on even more urgency now, given the proposed “fix”.

There seems to be no way, given both the text of the ACA as written, and the intent of the ACA as generally understood at the time it was passed, that people who obtain their health insurance directly from a health insurance company can qualify for a federal subsidy.

Not that we expect the Administration to enforce the law…but the private sector for-profit and not-for-profit enterprises who are providing health insurance will not themselves want to run afoul of the law. 

Republican leaders should be highlighting this proposed egregious violation of the ACA before the Administration actually rolls it out.  The subsidies are potentially illegal and will be challenged in court, hopefully on an expedited basis given the harm that can result if they are used improperly by unsuspecting people believing they’re entitled to them.  And the health insurance companies should be fully aware of this before actually implementing this “fix” on behalf of the Administration.