Phia Group


Phia Group Media

The Status of Major Legal Challenges to the ACA

By: Micah Iberosi-Parnell

On June 17, 2021, the Supreme Court dismissed the latest challenge to the Affordable Care Act (“ACA”) in a 7-2 decision.

The seven justices in the majority decided that Texas and seventeen other plaintiff states failed to show they were injured, so they had no basis to pursue a case in federal court.

The case, called California v. Texas, threatened to upend the ACA and potentially leave up to 31 million Americans at risk of losing health insurance coverage.

The eighteen plaintiff states had argued that the entire ACA was rendered unconstitutional after Congress lowered the tax penalty for individuals without health insurance to $0 as part of the 2017 tax reform legislation. They claimed that the ACA increased administrative costs and enrollment in public health plans, which caused their governments to lose money.

Media coverage of the Supreme Court’s decision has largely framed it to be the end of major challenges to the ACA. However, California v. Texas did nothing to prevent future challenges to the ACA, some of which could be successful. It is possible that several years (or more) from now, states and municipalities or other employers are losing money because young, healthy employees know they will not face a tax penalty when they do not enroll in their employer’s health plan.

Another major challenge to the ACA, Kelley v. Bercerra, is already in federal district court and overseen by Judge O’Connor — the same judge who struck down the entire ACA in the first phase of Texas v. California in 2018.

These plaintiffs have a good chance of winning, too. Multiple Supreme Court justices have indicated they are receptive to the types of arguments made by the Kelley plaintiffs.

Specifically, the Kelley plaintiffs are challenging Section 2713 of the ACA that prevents insurers from charging copays and coinsurance for “preventative services” like mammograms. They argue:

  1. The ACA is not clear enough about what preventative services health plans need to cover; and
  2. the organizations who do decide what preventative service must be covered were not properly appointed under the Constitution and cannot be held properly accountable by the president because of it.

Right now, three organizations decide what preventative services must be covered: 1) the Preventive Services Task Force (PSTF); 2) the Advisory Committee on Immunization Practices (ACIP); and 3) Health Resources and Services Administration (HRSA), which was tasked with developing new guidelines about preventive services for women and children. These organizations are composed of scientists, clinicians, and researchers who mostly volunteer their time.

To the frustration of health plans, the PSTF, at least, does not consider cost-effectiveness when deciding what services must be covered without cost sharing. If the Kelley plaintiffs are successful, health plans may be able to charge copays and coinsurance for preventative services.

This result would likely be a mixed bag for self-insured health plans. On one hand, plans may be able to save money by covering fewer preventative service. Long-term, though, health plans might see higher claim costs as fewer covered employees receive preventative care like routine screenings.

Either way, nothing will change any time soon. Kelly v. Bercerra is still in its early stages, and it will likely take years to reach the Supreme Court.