A federal judge dismissed a lawsuit threatening the funding for the District’s health insurance exchange Thursday, two days before the exchange reopens its doors to potential enrollees.
D.C. Health Link‘s $28 million budget is funded in part by a 1 percent gross-receipts tax on health insurers — not only the receipts from plans sold through the federally mandated exchange, but also long-term care, disability, vision, and dozens of other health-related plans not available there.
The decision to tax plans not sold on the exchange prompted a lawsuit from the American Council of Life Insurers, who argued on behalf of its member companies that it was improper to do so based on the provisions of the federal Affordable Care Act, which provided for the state-based exchanges, as well as on constitutional grounds.
U.S. District Judge Beryl A. Howell did not accept those arguments, and in a 65-page opinion signed Thursday granted the District’s motion to dismiss the case. Congress, she said, “intended in the ACA to encourage States to operate their own Exchanges and to give the States broad authority to provide adequate funding for those Exchanges when federal funding ceased.”
The District, though not a state, operates its own exchange alongside 23 states.
Howell’s decision comes as a relief to city officials, who would have been forced to backfill the lost revenue had the lawsuit been successful. At midnight Friday, D.C. Health Link and the other exchanges authorized by the federal health reform law begin their second open-enrollment period, during which tens of thousands of city residents are expected to seek coverage.
Diane C. Lewis, chairwoman of the exchange’s executive board, called the ruling “a victory for the District’s residents and small businesses” and said it “reaffirms the broad benefits of DC Health Link, which the District Council recognized when enacting our enabling legislation and passing our financial sustainability plan.”
Representatives for the American Council of Life Insurers did not respond to an e-mail seeking comment Friday.