How a Texas judge's Affordable Care Act ruling could impact health insurance coverage in Colorado

A federal judge in Texas threw health insurance for more than 100 million Americans into disarray last week when he ruled that certain preventive coverage requirements are unconstitutional.

That ruling — if it survives the forthcoming appeals — could ripple into Colorado, but its impacts here will likely be more muted than they are elsewhere in the country. That's because Colorado lawmakers have written many of the same coverage requirements into state law, where at least most of the judge's ruling won't apply.

Depending on how they get insurance, though, potentially over a million people in Colorado could see impacts to services they currently receive at no additional cost.

There's a lot to untangle here, so let's run down the details.

The Texas judge did what now?

Federal District Court Judge Reed O'Connor last week issued a very technical ruling on federal preventive coverage requirements. The Affordable Care Act, aka Obamacare, requires health insurers to cover preventive services at no additional costs to patients — i.e., you don't have to pay a deductible or copay for them.

To decide which services qualify for this requirement, the federal government looks to a few expert groups, including one called the U.S. Preventive Services Task Force, which makes recommendations on important preventive services.

The Daily Sun-Up podcast | More episodes

A number of employers sued, saying they don't want to pay extra for insurance that covers things they don't want, which is how the issue came before O'Connor. The judge ruled that, because the experts on the USPSTF are in his view not properly appointed to this policy-making role, it is unconstitutional for federal law to rely on their recommendations to set the preventive services that insurers are required to cover.

But O'Connor also ruled that it is constitutional to rely on the decisions made by other groups — including the Advisory Committee on Immunization Practices, which makes recommendations about vaccines, and another that makes recommendations for women's and children's health.

(To be clear, O'Connor is a different federal judge from the Texas judge whose forthcoming ruling on a widely used drug could throw reproductive health care nationwide into disarray.)

Larry Levitt, the executive vice president for health policy at the Kaiser Family Foundation, a nonpartisan health care think tank, said preventive services are among the Affordable Care Act's most popular and least controversial provisions. And he said O'Connor's ruling rests essentially on a glitch in the wording of federal law. However, because anything having to do with the Affordable Care Act is contentious in Congress, he is not optimistic about a legislative solution.

"It does not require a lot of words to fix this in legislation," he said, "but it potentially requires very difficult politics."

What preventive services are we talking about?

The Affordable Care Act, relying on expert recommendations, now requires dozens of preventive services to be covered at no extra cost. And, even after O'Connor's ruling, many of those will still be required.

Some of those were recommended by groups that O'Connor OK'd. And, in another wrinkle, O'Connor's ruling invalidating USPSTF recommendations applies only to recommendations made after 2010.

This means that many preventive services — things like well-baby and well-mother checkups, vaccinations, mammograms and colorectal cancer screenings — will still be covered at no extra charge. But newer recommendations, such as for lung cancer screenings or for cholesterol-lowering drugs like statins, will not be.

Cynthia Cox, the director of the Kaiser Family Foundation's Program on the ACA, said about 100 million people use ACA-required preventive services each year. But she said many of the most popular services will remain covered at no extra cost to patients.

"I think that the ones that would be lost would be relatively less commonly used than the ones that remain," she said.

The ruling also doesn't mean those more recently recommended services won't be covered at all anymore by insurance. And employers and insurance companies could decide to continue offering plans where those services are covered at no extra cost. But it does mean that some people could end up paying extra for them.

How does this impact Colorado?

O'Connor's ruling applies nationwide, but it applies only to federal law. Colorado lawmakers, though, have for years been writing ACA protections and requirements into state law.

So, Colorado law now says insurers must cover the total cost of services recommended by the USPSTF. Colorado is one of 15 states nationwide with such a provision in state law.

Colorado Insurance Commissioner Michael Conway said his office will continue to use all the tools at its disposal to insist that insurers cover recommended preventive health care at no extra cost.

"This ruling puts very important health care services at risk for the entire country," Conway said. "Obviously we think it was a step in the wrong direction."

But there's a catch here. State law's power to regulate health insurance only goes so far. It applies to insurance plans sold in the individual, small group and large group markets. All of those are plans that are bought from an insurance company, where the insurer carries the risk.

A lot of large employers prefer to self-fund their plans, meaning they pay their employees' medical claims themselves. Those plans are authorized by federal law, and are outside the reach of state regulatory authority.

The Division of Insurance estimates that roughly one-third of Coloradans who have health care coverage of some kind are covered by self-funded employer plans. That comes out to well over 1 million people whose coverage in Colorado could be impacted by O'Connor's ruling.

For this reason, some experts, like the Kaiser Family Foundation's Levitt, think that state legal protections won't be enough to cushion the blow.

"There are real limits to what states can do here," he said. "States I think can and will move to fill in some of the gaps that this ruling leaves. But there are still big gaps remaining."

Self-funded employer plans often use insurance companies to administer them, so people may not even realize that's what their coverage is. The Division of Insurance says to check your health insurance card to be sure. If you see "CO-DOI" written anywhere on it, you are covered by a plan regulated by the division and subject to the protections of state law.

Conway, the insurance commissioner, said he is optimistic that employers who self-fund their health insurance plans will choose to continue having preventive services covered in full.

"It's a competition source for talent," Conway said of health insurance benefits. "So stripping away something those employees have come to rely on and to expect for the better part of a decade is likely going to be a step too far."

What does this mean for HIV prevention?

Among the services impacted by O'Connor's decision are the HIV prevention drugs under the heading of pre-exposure prophylaxis, or PreP. They fall under the category of preventive services recommended post-2010 by the USPSTF.

But O'Connor also struck a blow against HIV prevention in another way: He found that requiring the plaintiffs to provide insurance that covers PreP is a violation of religious liberty.

Colorado law requires full coverage for PreP. (Again, self-funded employer plans in Colorado are exempt from this requirement.)

But O'Connor's religious liberty ruling — though not currently binding in Colorado — could open Colorado's law to legal challenges along the same lines, especially if the ruling is ultimately upheld by the U.S. Supreme Court.

If patients need to start paying for PreP themselves, it could quickly get expensive. Lindsey Dawson, the Kaiser Family Foundation's director for LGBTQ health policy, said generic PreP pills cost a few hundred dollars a year. But brand name drugs can reach $20,000 a year. And that doesn't include the associated costs for clinic visits and lab tests.

"We could expect, when we lose a prevention modality in the HIV prevention toolkit, that we would see new infections as a result," Dawson said.

What comes next?

The impact of O'Connor's ruling likely won't hit right away.

For one, insurance contracts for 2023 are already locked in. So the earliest the impacts could be seen here would be in 2024.

There's also the matter of the appeals. Both sides are likely to appeal — the federal government to overturn the ruling on USPSTF recommendations and the plaintiffs to try to invalidate even more preventive health care requirements.

Those appeals could result in a stay of O'Connor's ruling while it moves through the courts. But it also means that the final outcome could be even more dramatic.

Said Laurie Sobel, the Kaiser Family Foundation's associate director for women's health policy: "All of the preventative services are kind of up for grabs as we go through the appeal process."