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Home ACA Repeal Texas Judge Strikes Down ACA Preventive Care Services

Texas Judge Strikes Down ACA Preventive Care Services

3 minute read
by Robert Sheen
ACA preventive care

Shortly after the White House celebrated 13 years of success with the ACA last month, Northern Texas federal judge Reed O’Connor issued a nationwide injunction regarding the law’s free preventive care services. 

O’Connor, the same judge who ruled the entire ACA unconstitutional without the federal Individual Mandate, determined in his ruling that insurers no longer need to provide free ACA preventive care services, including contraception, pre-exposure prophylaxis (PrEP), an HIV prevention medication, as well as screenings for cancer and diabetes. 

ACA preventive care case history

The decision regarding ACA preventive care services stems from the 2020 case Braidwood Management Inc. v. Xavier Becerra, previously known as Kelley v. Becerra.

In the case, Braidwood Management, a conservative Christian employer in Texas, asserted that contributing towards ACA preventive care costs infringes on their religious beliefs. The plaintiffs of the case stated that covering the costs associated with contraception and PrEP, “facilitate and encourage homosexual behavior, prostitution, sexual promiscuity, and intravenous drug use.”

O’Connor’s ruling is anchored around two main arguments. The first is that requiring organizations to contribute towards ACA preventive care costs violates the Religious Freedom Restoration Act, as asserted by the Braidwood plaintiffs.  

The second relates to the requirements for insurers to offer preventive care services and how those services are selected. O’Connor states that the method for determining the covered services is unconstitutional because the recommendations come from The U.S. Preventive Services Task Force, which supposedly “unlawfully” appoints its members and violates the Constitution’s Appointment Clause

While the implications of the ruling are new, O’Connor actually struck down ACA preventive care services in September of last year, but many key details were left out, notably how the ruling would be applied. Would it only impact the employers involved in the case? Would it apply only to employers in Texas, or would it apply nationwide?

As the recent news show, O’Connor has opted for the most dramatic of options.

Future of the ACA preventive care services

The ruling takes effect immediately, but it likely will not impact Americans’ coverage. Employers and insurers would need to provide notice to plan participants of any changes. Given that we are in the middle of the 2023 plan year, adjustments to covered preventive care services would probably be delayed to 2024 plans.

And because O’Connor applied his ruling on a nationwide level, the Biden administration filed an appeal to the ruling and is requesting  a stay, ensuring that preventive care services remain as is.

This means the case will proceed to the  court of appeals in Texas. Given their conservative views, the case will then be ushered into the Supreme Court. All this is to say that any changes regarding ACA preventive care services will take a fair amount of time.

What’s at stake?

The ACA preventive care services assist more than 150 million Americans in receiving free or low-cost care, including anti-smoking programs, cancer screenings, substance abuse counseling, and vaccinations, including for COVID-19.

If the ruling stands, insurers will once again have the ability to decide which preventative care services to offer. Given the patchwork of political views that make up the U.S., many conservative states will likely roll back the services to appeal to their residents.

The ACA remains stable

While the decision to roll back preventive care services creates real concern for millions of Americans, the ACA continues to be the bedrock of U.S. healthcare. For example, this most recent open enrollment was the strongest ever, accounting for nearly 16 million enrollees. And in March, another special enrollment period opened for beneficiaries losing Medicaid or Children’s Health Insurance Program (CHIP) coverage. 

To ensure greater enrollment over the next several years, Biden’s Inflation Reduction Act extends generous Premium Tax Credit subsidies to individuals through 2025.

On the employer side of things, ACA enforcement continues to be a focal point for the IRS. The agency recently announced that it would be hiring 20,000 additional staff thanks in part to the additional $80 billion in new funding it received.

A top priority for the tax agency will be enforcement, including the ACA’s Employer Mandate.

Under the ACA’s Employer Mandate, Applicable Large Employers or employers with 50 or more full-time employees and full-time equivalent employees must:

  • Offer Minimum Essential Coverage to at least 95% of their full-time employees (and their dependents) whereby such coverage meets the Minimum Value 
  • Ensure that the coverage for the full-time employee is affordable based on one of the IRS-approved methods for calculating affordability

Failing to meet these requirements could earn you a Letter 226J penalty notice from the IRS. 

We recently conducted a research report to understand the challenge areas employers face in managing ACA compliance. To see how organizations are fairing and where they’re focusing their efforts each year, download it below:

Download: The Challenge of ACA Compliance

To gain invaluable insights on penalty amounts, affordability percentages, filing deadlines, expert tips for responding to penalty notices, and proven strategies for minimizing IRS penalty risk, download the ACA 101 Toolkit.

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