Six reasons for employers to waive preventive care out-of-pocket costs

On Tuesday, the Supreme Court heard oral arguments in Kennedy v. Braidwood Management, a case in which an employer is arguing that the formation of the U.S. Preventive Services Task Force (USPSTF) violates the Constitution’s appointments clause. The Affordable Care Act (ACA) regulations require that employer-sponsored health plans cover USPSTF-approved preventive care without cost sharing. The Supreme Court’s eventual decision could leave employers with important decisions about coverage for preventive care.

A district court found for the plaintiff that the USPSTF was improperly constituted since its members were not constitutionally appointed, and the 5th Circuit Court of Appeals upheld this finding. The plaintiffs also objected to being required to provide coverage of oral contraceptives and HIV prevention medication (PrEP) on the basis of their religious beliefs, and the appeals court sent this issue back to the district court for further analysis without ruling on its merits.

The Supreme Court has several options in this case: It could rule narrowly or broadly in favor of the plaintiffs, rule against them, or avoid making a substantive ruling altogether. A narrow ruling for the plaintiffs might apply only to their specific circumstances, leaving preventive care provisions intact for other employers. A broader ruling could eliminate the requirement for insurers to cover services recommended by the USPSTF without cost-sharing — potentially limited to those recommendations issued after 2010, including PrEP. A very broad decision could strike down all preventive service mandates under the Affordable Care Act. Alternatively, the court may rule against the plaintiffs entirely or decline to decide the case on procedural grounds.

Preventive health care coverage has proven to be a worthwhile benefit that saves lives and improves health. Regardless of the Supreme Court decision, there are compelling reasons for employers to maintain coverage of preventive services without cost sharing like deductibles and copays.

The three federal panels whose recommendations determine what services have no patient cost sharing are:

1. The Advisory Committee on Immunization Practices (ACIP) recommends childhood and adult vaccines. The District and Fifth Circuit Court rulings did not affect these recommendations, which must be approved by the director of the Centers for Disease Control and Prevention.
2. The Health Resources and Services Administration (HRSA) recommends women’s and children’s health services, including screening, testing, prenatal care, contraceptives, and wellness examinations. The District Court and 5th Circuit Court rulings did not affect these recommendations, which must be endorsed by the secretary of Health and Human Services.
3. The USPSTF makes recommendations for screening to detect cancer and other diseases, and medications to prevent diseases such as metastatic breast cancer and HIV. The Affordable Care Act does not require these recommendations to be approved by a federal appointee, in part to insulate the USPSTF from political interference. The District Court and 5th Circuit Court rulings affect the recommendations published after the ACA was enacted.

Among the preventive services that employers would no longer be required to offer without cost sharing in ACA-compliant employer-sponsored health plans based on this ruling would be screening for lung cancer, colon cancer (for those ages 45-49), and hepatitis C, and medication to prevent heart disease, recurrence of breast cancer, and transmission of HIV.

In Braidwood v. Kennedy, Supreme Court is hearing challenge to ACA rule requiring free preventive care

Here are some considerations for employers as they consider the future of coverage for preventive care.

1. Providing preventive care without cost sharing can prevent future chronic diseases or death

Although the cost of most of these preventive services is low, removing cost sharing generally increases utilization of medical services. This is a foundational principle of value-based insurance design, which recommends that the highest value services have low or no cost sharing, while low-value services are subject to higher levels of cost-sharing. The removal of cost sharing has increased the use of preventive services, leading to improved health outcomes. More than one-third of respondents on a 2023 survey said would they forego preventive services if they were not covered by insurance. Coverage for preventive care without out-of-pocket costs also directly aligns with public health policy support for protecting the health of Americans and the fight against chronic conditions.

Removing cost sharing for preventive services is especially important because 29% of those with employer-sponsored health insurance have high-deductible health plans (HDHPs). These members must pay the entire cost of all medical care before they meet their annual deductible. For those with deductibles, the average aggregate deductible for HDHPs was $4,991 in 2024, and the Affordable Care Act allows a family plan deductibles of up to $18,400 in 2025.

2. Providing coverage without cost sharing for most of these services is inexpensive

The cost of delivering most of the preventive care covered in this ruling is quite modest. Some of these services, such as screening for drug use or referring for mental health services, are delivered during existing office visits, so there is little incremental cost. Each USPSTF-recommended blood test generally should cost under $50. Colonoscopies are expensive, but the incremental cost of waiving out-of-pocket cost for those ages 45-49 is small as they are recommended only once a decade, and these individuals would probably have had colonoscopies around age 50 anyway.

3. Preventive services are used by many, and coverage is popular  

About 100 million people on private insurance (60% of those insured) used preventive services in 2018; use of preventive services was most common among women and children. Nearly a quarter (23%) say that preventive services and chronic disease management are the most important service covered by health plans. Sixty-two percent of respondents in a 2019 KFF survey said it was “very important” to require that insurance cover the full cost of preventive care, and this was among the most highly rated elements of the ACA across the political spectrum.

4. The most current scientific evidence remains the most instructive guide to design plan benefits

The Braidwood district court ruling could require employers to provide coverage with no out-of-pocket cost based on guidance from 2010 or earlier that excludes more recent evidence. This would decrease the total benefit gained from preventive care. For instance, colon cancer rates are increasing in those under 50, so moving to a starting age of 45 for colon cancer screening saves additional lives at a modest cost. Similarly, additional years of real-world experience with heart disease prevention since 2010 informed the USPSTF’s recommendation to offer statin medications without cost sharing for those over age 40 at elevated risk.

Designing medical benefit coverage without considering evidence published after 2010 could lead to providing too much or too little care in some instances. For example, the 2003 USPSTF guidelines recommended annual cervical cancer screening, whereas we know now that screening every three to five years is enough for most women at average risk. On the other hand, the 2007 USPSTF guidelines recommend screening sexually active women for only chlamydia and not gonorrhea, which has become more common and is screened with the same urine sample. Benefit design should be based on the latest evidence. 

How to protect PrEP coverage, no matter what happens in Braidwood v. Becerra

5. State requirements for preventive care coverage are applicable to only fully insured state-regulated plans

Fifteen states require that state-regulated health insurance plans include coverage without cost sharing for preventive services that generally mirror the ACA. These laws do not apply to self-funded plans, which cover almost two-thirds of those with employer-sponsored health insurance. Maintaining full coverage for preventive care will preserve equivalence across fully insured and self-insured health plans when employers offer both.

6. Internal Revenue Service regulations allow pre-deductible coverage for preventive care without cost sharing for health plans with a tax-advantaged Health Savings Account

The Internal Revenue Code allows employer-sponsored health plans to provide preventive care without out-of-pocket costs for members of high-deductible health plans without jeopardizing the tax-advantaged status of health care savings accounts. These rules would not change as the result of Braidwood, so the tax deductibility of health savings accounts should not be adversely impacted by continuing to provide coverage with no out-of-pocket costs for these services. The Internal Revenue Service will be called on to address this more formally if the Braidwood decision is upheld.

Over the past decade, employees have grown to expect that their employer-sponsored health insurance will provide full coverage for preventive care. Maintaining this coverage, even if it is no longer legally required, demonstrates employer commitment to employee well-being. Employees who believe their employer genuinely cares for their health and welfare are less likely to seek a new job, and report less absence and higher productivity.

The Supreme Court Braidwood decision, expected in late spring or early summer, could inject uncertainty into employer-sponsored health plan design. Companies pay a modest price to provide coverage without cost sharing for preventive services as recommended by all three of the evidence-based federal panels. By continuing to provide this coverage, employers will improve member health and demonstrate tangible support for their employees.

Jeff Levin-Scherz, M.D., M.B.A., is a managing director and population health leader of the North American Health and Benefits practice at WTW. He is an assistant professor at Harvard Medical School and the Harvard T.H. Chan School of Public Health.

No Byline Policy

Editorial Guidelines

Corrections Policy

Source