Braidwood’s Threat To Coverage: An Update

Oral arguments for the case were heard on Monday, and payers need to pay attention.

Hundreds of millions of Americans depend on the no-cost sharing coverage of preventative services by the ACA. Now that coverage is being threatened as the Braidwood case moves forward in the court.

As we know, in September 2022 a lower district court ruled that Braidwood Management, a Christian-owned nonprofit, should not be required to purchase insurance plans that cover PrEP drugs for HIV, claiming it violates their rights under the Religious Freedom Restoration Act. The lower court ruling was appealed by the federal government in March 2023 before it went into effect.

On Monday the Fifth Circuit Court of Appeals listened to oral arguments for the case to decide if the appeal by the federal government was unconstitutional.

Preventative services are a vital part of the ACA and without this coverage millions of Americans would lose a critical part of their healthcare—sending a ripple effect through the insurance industry and could mean big changes for payers.

The final decision will come in a few months, but regardless of the outcome, this ongoing case will most likely get appealed up to the Supreme Court.

What Happened In Court

The hearing held on March 4 presented an argument in deciding if the entities involved, particularly the U.S. PSTF, were unlawfully appointed. It was argued that the PSTF violates the appointments clause because this entity was not appointed by the president, a court or senior department head.

It was also argued that all entities violated the nondelegation doctrine, which would forbid Congress from delegating responsibilities to administrative agencies under certain cases. The district court ruled the ACA did not violate the nondelegation doctrine, but it did leave open the possibility a higher court could disagree.

Starting off, Judge Southwick inquired how the PSTF could correct its own unconstitutional authority. In order for individuals to have the protection the ACA preventive services offer, the whole market would have to adjust.

Judge Southwick said he wasn’t sure what relief would be appropriate. “[...] but it does seem to me that that does undermine everything they did,” he said.

Alisa Beth Klein, arguing on behalf of the Department of Justice, emphasized the fact that with this case, timing is everything; the whole point of the preventative services that Congress said must be covered without cost sharing is for individuals to have them in a timely fashion, so they don't get a disease at a point where the survival rates are much lower. It was also mentioned that the district court does not have to vacate universally, and they could consider a more limited remedy, injunctive, declaratory, or otherwise.

Jonathan Mitchell, representing Braidwood Management argued: “The government's request for a partial stay of the district Court's judgment pending appeal should be denied for numerous reasons. [...] there is no evidence or reason to believe that any private insurer or employer will drop or limit coverage of statutorily required preventive care in response to the district Court's ruling.”

Judge Southwick dismissed Mitchell’s argument here as speculation, saying it asked them to predict how insurance companies would react.

“How emphatic does your state of desire or your state of intention need to be to buy this particular product?” Mitchell asked, inquiring if the absence of a particular choice among products is enough to be considered injury.

Moving on in the case, Mitchell shifted the focus from Braidwood—that has its own self-insured plan and got the relief it wanted at the state level—to other Texas plans, where research showed they offered the preventative services prior to the ACA mandate. 

In order to balance the equities, these individual claims must be examined.

Mitchell went on to explain that the appeals court decision that reverses the District Court could drop at any time in the middle of a planned coverage year.

“[...] if there is a statutory departure or a violation taken by any person, private insurer or private employer in reliance on this judgment, they could be hit with penalties under the ACA, even if they acted in reliance on a District Court injunction that later gets vacated,” Mitchell said.

Overall, the case seeked to challenge the legality of the entities involved and how to solve any damage or confusion they might have caused, as well as how to give standing to the individual plaintiffs and separate them from the Braidwood case.

By the end of the hearing Klein reminded the court what is at risk: “It can't be overstated how important this guarantee of cost-free access is for the 150 million people who aren't here to protect themselves, who can otherwise be assured that when they go to get their mammograms or statins or colonoscopies or lung cancer screening, etcetera, that there's no out of pocket cost.”

What It Means For Payers And What Could Be Next?

While this case may not seem like it directly correlates with payers and their operational or financial endeavors, they should pay attention.

Preventative services by the ACA help hundreds of millions of Americans fight illnesses, and without these services, population health could be at a major risk. The effects of preventative care are not seen until years down the road, so there’s no instant economic value to payers, but they must look ahead to analyze the effect this could have on their members and the threat it could pose to their future costs and utilization.

Depending on the outcome of his case, it could possibly send insurance beneficiaries shuffling down the line to find coverage for these services. This coverage will most likely still be sought out elsewhere by beneficiaries.

Reread our previous coverage and analysis of this case to get the full scope.