Key Points:

• A court decision by a judge in Texas may increase out-of-pocket costs for preventive health care services.
• This case reintroduces a  dispute that the ACA resolved with a mandate of coverage.
• While health mandates to provide certain services without cost raised the cost of coverage, re-introducing cost sharing for these preventive services could potentially hurt efforts to improve or maintain health, especially among financially fragile Americans.

The Affordable Care Act (ACA) ensures that individuals enrolled in private health insurance have access to preventive care without cost-sharing. The coverage mandate affects over 150 million Americans with employer-sponsored coverage. The ACA mandates insurers and health plans to cover, without cost sharing by participants, 10 categories of essential preventive health services for the early detection and treatment of potentially fatal medical conditions and chronic diseases. These services include doctor check-ups, cancer screenings, diabetes and cholesterol tests, vaccines and prescription drug coverage. Also covered is behavioral health counseling and programs that support tobacco-cessation, losing weight, eating healthfully, treating depression and reducing alcohol use. 

Preventive Services May be at Risk

A federal judge’s ruling in a Texas lawsuit threatens to increase out-of-pocket costs for millions of Americans for these preventive services.  This lawsuit was filed by employers and individuals claiming that the qualifying preventive services are based on the recommendation of the US Preventive Services Task Force – a group whose members are not appointed by the President, nor confirmed by the Senate – a potential violation of the appointments clause of the constitution.

While U.S. District Judge Reed O’Connor agreed with the plaintiff’s argument, he did not immediately issue an order blocking enforcement of the mandate nor did he specify whether such an order would be nationwide, or for his district only, or  the Fifth Circuit.  This ruling is expected to be appealed to the U.S. Court of Appeals for the Fifth Circuit, and potentially to the Supreme Court, in what could be a multiyear process.

Potential Impact on Self-Insured Plans

Without this requirement, coverage of preventive services may vary significantly among insurers and health plans. Some might opt to drop coverage of certain services altogether or to impose cost sharing. The issue is comparable to state mandates for certain health services which do not apply to self-insured health plans subject to ERISA.

States and marketplaces could require fully insured plans to cover the same scope of preventive services without cost sharing. But ERISA prevents states from imposing this requirement on self-funded employer plans. This means millions of people enrolled in job-based coverage may be subject to increased out-of-pocket expenses for these preventive services.

It is unclear whether any plan sponsor will take action to amend their plans in time for the 2023 annual enrollment cycle. The inaction is likely because:

• Few plan sponsors have identified the impact of the mandate on plan costs and/or worker engagement, and
• The current period of low unemployment and competition for talent.

A cost/benefit analysis would likely confirm a significant range of results, including:

• Low costs per participant,[i]
• High favorability among participants (especially because the impact on coverage costs is not known),

Improvements in health, as well as early detection of disease coupled with interventions, that may significantly offset the added expense.

[i] Employee Benefits Research Institute, The Impact of Covering Select Preventive Services on Employer Health Care Spending, 10/20/22, Accessed 10/20/22 at: https://www.ebri.org/docs/default-source/fast-facts/ff-444-preventiveservices-20oct22.pdf?sfvrsn=8efb382f_2