Judge William Lawrence ruled late Tuesday the state can proceed to trial on its claim that Hoosiers are not entitled to insurance subsidies, because Indiana did not establish a state-run health marketplace, called an exchange.
Under the 2010 Affordable Care Act, also known as Obamacare, states like Indiana that did not create their own exchanges had their exchanges run for them by the federal government.
The state argued that a literal reading of the law limits subsidies to health insurance policies purchased only on state-run exchanges, not federally operated marketplaces. As a result, Hoosiers cannot receive the subsidies, Pence and Zoeller claimed.
Pence reaffirmed that stance in July telling reporters that not creating a state exchange was the right thing to do, even if it means Hoosiers lose their subsidies and likely their health insurance coverage as well.
"I stand by our decision not to establish a state-based exchange in Indiana," Pence said. "The truth is, I think that ordering every American to purchase health insurance — whether they want it, or need it or not — was the wrong idea to begin with, and I think Obamacare should be repealed."
According to federal health officials, a total of 132,423 Hoosiers bought health insurance through March 31 via the healthcare.gov marketplace set up by the federal government to serve as Indiana's exchange.
Of those, 117,761 people, or 89 percent, received federal subsidies averaging $4,000 per person to defray the cost of their health insurance purchase. Without the subsidies, nearly all those Hoosiers will lose their health coverage.
It's unlikely the Indiana case ever will go to trial, as similar lawsuits already have been decided by the U.S. Circuit Court of Appeals in Washington, D.C., prohibiting the subsidies, and the Virginia federal appeals court, allowing the subsidies.
The U.S. Supreme Court is expected to hear and decide one or both of those cases before the Indiana subsidies issue is resolved.
Meanwhile, Lawrence set an Oct. 9 hearing in Indianapolis for arguments on a second component of the Indiana lawsuit concerning whether school corporations are subject to "employer mandate" penalties.
The Affordable Care Act requires employers with more than 50 workers to provide adequate health coverage to all full-time employees or pay a penalty if an employee instead purchases subsidized health coverage through the exchange.
Thirty-nine school corporations, including East Porter County School Corp., argued that because the Supreme Court has ruled Obamacare penalties technically are taxes, it is improper for one level of government to tax another.
The judge said that while the 2012 Supreme Court decision upholding the constitutionality of the Affordable Care Act subjected states as employers to the employer mandate, the question of how that applies to local government employers remains unresolved.