What Will Payers Do If Courts Strike Down the ACA’s No-Cost Requirement for Preventive Services?

Mark Rakowski says he strongly believes in the health value of preventive services like cancer screenings, HIV prevention drugs, vaccines, alcohol abuse counseling, and tobacco cessation treatment. He likes that the Affordable Care Act (ACA) makes these services more affordable to patients by requiring most health plans to cover them without charging deductibles or copayments.

But the president of the nonprofit Chorus Community Health Plans in Milwaukee says that a federal lawsuit filed by conservative groups in Texas to eliminate that ACA preventive services requirement for more than 100 services may force him to do something he doesn’t want to do – make enrollees pay deductibles or copayments for these services.

Today, U.S. District Judge Reed O’Connor struck down some of those coverage requirements. He found that members of one of the agencies making coverage recommendations, the U.S. Preventive Services Task Force (USPSTF), were not lawfully appointed under the Constitution. In addition, he held that requiring the plaintiffs to pay for HIV prevention violates their religious freedom. He postponed ruling on the remedies he will order.

So payers will have to decide whether to keep first-dollar coverage for HIV prevention and for the 52 preventive services recommended by the USPSTF, or else impose deductibles and copays for at least some of those services. Services recommended by that agency include screening tests for breast cancer, colorectal cancer and lung cancer, sexually transmitted infections, diabetes, and depression.

O’Connor upheld the constitutionality of two other agencies that recommend preventive services — the Health Resources and Services Administration and the CDC’s Advisory Committee on Immunization Practices. So first-dollar coverage for the services they recommend for women and children and for immunizations is not in jeopardy.

The plaintiffs in Kelley v. Becerra claim that the ACA’s Section 2713 mandating first-dollar coverage for recommended preventive services is unconstitutional and also violates the Religious Freedom Restoration Act of 1993. O’Connor, a George W. Bush nominee who in 2018 held the entire ACA unconstitutional, could order an immediate end to the mandate or stay his ruling pending a Biden administration appeal. The case eventually could reach the Supreme Court. If the case gets that far, it would be the fourth time the country’s highest court has heard a case challenging the ACA. The three other court challenges have failed.

Rakowski says he may have to add cost sharing to some of his plans so they would remain competitive on Wisconsin’s ACA marketplace, while continuing to offer plans with no-cost preventive coverage at a somewhat higher price. That’s because he expects his competitors to establish deductibles and copays for preventive services, so they can reduce their premiums on bronze plans by 2% — enough to prompt many exchange buyers to switch plans.

“I think our competitors will add cost sharing,” he said. “I hate to admit that we’d have to strongly consider following suit.”

Item-by-item decisions

Many health plans and self-insured employers around the country would face this same dilemma. The result could be a patchwork of different health plan designs and preventive services coverage in various industry sectors and different parts of the country. People who shop for healthcare insurance may find it difficult to find that fully covers preventive services.

The ACA’s first-dollar coverage rule for preventive services applies to private plans in the individual and group markets covering nearly 170 million Americans. It’s one of the most popular provisions of the ACA, favored by 62% of Americans, according to a 2019 Kaiser Family Foundation survey.

Insurance experts and leaders of business groups focusing on healthcare purchasing predict that many health plans and self-insured employers will consider adding cost-sharing for at least some preventive services. They will make those decisions based on evaluations of costs and expectations about how employees and enrollees will react. The personal views of company executives may also be part of the equation.

The most likely services to be targeted for cost sharing are HIV prevention and contraception, due to the religious and moral judgments of the decisionmakers, some experts predict. Employers that feel most financially strapped and have workers who earn less money and stay with the company for shorter periods will be the most likely to impose out-of-pocket costs, they add.

Spending on ACA-mandated preventive services comprises 2% to 3.5% of total annual spending by private employer health plans, or about $100 to $200 per person, according to the Health Care Cost Institute.

“Many employers are likely to take a fresh look at the list of preventive services and decide item by item what they can make subject to cost sharing in the future,” says Michael Thompson, CEO of the National Alliance of Healthcare Purchasing Coalitions. “Health plans will move faster because they’ll do anything to keep their premiums competitive.”

Zachary Sherman, executive director of Pennie, the ACA marketplace in Pennsylvania, unhappily agrees. “We’d push insurers to continue offering no-cost preventive services, but I can see some plans wanting to put up cost sharing to make sure their premiums are more competitive,” he says. “That would erode the progress we’ve made in making sure people have ready access to immunizations and other key preventive services.”

It also could complicate the ACA’s risk-adjustment program, which transfers funds from plans with lower-risk enrollees to those with higher-risk members. That’s because plans that keep a zero-cost policy for preventive services such as HIV prevention, diabetes screening, and lung cancer screening for smokers may gain a higher-risk population, forcing them to eventually add cost sharing to survive financially.

Several large commercial insurers and health plan trade groups either did not respond to requests for comment or declined to comment until they have a chance to study O’Connor’s ruling and see the remedies he ultimately orders.

Payers may tread lightly

Because many Americans are now enrolled in high-deductible health plans, cost sharing for preventive services could mean hundreds or thousands of dollars in additional out-of-pocket expenditures for healthcare. In 2020, the average annual deductible in the individual insurance market was $4,364 for single coverage and $8,439 for family coverage, according to eHealth. For employer plans, it was $1,945 for an individual and $3,722 for families, according to the Kaiser Family Foundation.

Studies have shown that removing cost-sharing boosts the use of preventive services and saves lives. Following the ACA’s requirement that Medicare cover colorectal cancer screening without cost sharing, diagnosis of early-stage colorectal cancer increased by 8% per year, according to a 2017 study published in Health Affairs. A study published in Health Affairs last year found that women in high-deductible plans sharply increased their use of long-acting contraceptives due to the ACA’s no-cost-sharing mandate.

Still, some experts say employers will be cautious about increasing out-of-pocket costs for employees, who already face high medical spending. That’s a particular concern for employers because they want to encourage their workers to get screening tests to prevent expensive diseases like colon and breast cancer, says Jim Winkler, MBA, chief strategy officer for the Business Group on Health.

Worsening of healthcare disparities

Imposing cost sharing for preventive services would reverse a growing movement among employers in recent years to expand coverage of clinically effective care without deductibles or copays. It also could hamper intensifying efforts to reduce health disparities for lower-income Americans, people of color, and the LGBTQ population.

“Black and brown communities and people who are financially challenged will be disproportionally harmed by the return of cost sharing,” says A. Mark Fendrick, M.D., director of the University of Michigan Center for Value-Based Insurance Design, who helped draft the ACA’s preventive services coverage section.

That’s especially true for no-cost coverage of pre-exposure prophylaxis for HIV, a highly effective daily drug regimen that prevents high-risk individuals from acquiring HIV. The plaintiffs in the Kelley lawsuit singled out PrEP, arguing that the ACA mandate forces them to subsidize “homosexual behavior” to which they have religious objections, in violation of the Religious Freedom Restoration Act of 1993.

Since 2020, health plans must fully cover PrEP drugs and associated lab tests and doctor visits, which otherwise can cost several thousand dollars a year. Of the 1.1 million people who could benefit from PrEP, 44% are Black and 25% are Hispanic, according to the CDC. Many also are low-income. Before the PrEP coverage rule took effect, less than 15% of eligible Black and Hispanic people started PrEP treatment due to its high cost.

“This disproportionately impacts Black and Latino people,” comments Carl Schmid, executive director of the HIV + Hepatitis Policy Institute, who also noted the importance of the ACA’s no-cost coverage of tests for hepatitis and sexually transmitted infections. “If first-dollar coverage went away, people won’t pick up the drug. That would be extremely damaging for our efforts to end HIV and hepatitis.”

Jeff Levin-Scherz, M.D., MBA, population health leader, WTW, who advises employers on health plans, says it’s unfortunate that some employers and plans probably will opt not to provide first-dollar coverage for PrEP if the courts strike down the ACA mandate. It’s far better to prevent HIV than to pay for a lifetime of HIV treatment, he added.

A broader issue, experts say, is that eliminating the no-cost requirement for preventive services and leaving coverage decisions to health plans and employers will destabilize the health insurance markets, one of the big problems the ACA was intended to fix, experts say.

Plans will compete by designing their benefits to attract the least-expensive enrollees so they can offer the lowest premiums, saddling sicker and older people with skimpier coverage and higher costs, Levin-Scherz says.

“You end up with a race to the bottom,” he warns.