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There’s a new lawsuit attacking Obamacare — and it’s a serious threat

The legal arguments in Kelley v. Becerra aren’t exactly good arguments, but five justices have signaled that they agree with them.

Justice Clarence Thomas.
Chip Somodevilla/Getty Images

Tell me if you’ve heard this one before.

A team of conservative activists filed a lawsuit last year that asks the courts to strike down several key provisions of the Affordable Care Act. The plaintiffs’ legal arguments are at odds with longstanding precedents, but the case is assigned to a very conservative Republican-appointed judge. And that judge has already signaled that he’s likely to rule in those plaintiffs’ favor.

Kelley v. Becerra is the fourth round of litigation attacking major provisions of the Affordable Care Act. It seeks to take out several provisions of Obamacare governing which forms of preventive care — things like birth control or vaccinations or cancer screenings — must be covered by health insurers. And it primarily relies on the kind of legal arguments that fell out of vogue in the federal courts more than 80 years ago.

But there’s a twist. Though the primary legal argument in Kelley is tough to square with existing legal precedents, five members of the Supreme Court recently signaled that they intend to abandon longstanding legal principles in favor of the same interpretation of the Constitution proposed by the Kelley plaintiffs.

The case, which was filed in a federal court in Texas, is being heard by Judge Reed O’Connor, a former Republican Capitol Hill staffer who once ruled that the Affordable Care Act must be repealed in its entirety. (That case is now before the Supreme Court, and a majority of the Court appeared likely to reject key parts of O’Connor’s arguments when the case was argued last November.)

So the Affordable Care Act’s preventive care provisions could be in for a rough ride. Their immediate fate rests in the hands of one of the most partisan judges in the country. And a majority of the justices recently signaled that even fair-minded judges should look upon these provisions of Obamacare with extreme skepticism.

The Affordable Care Act’s preventive care provisions, briefly explained

Several provisions of the Affordable Care Act require group and individual health plans to cover various preventive treatments and to not “impose any cost sharing requirements,” such as copays, for them. When Congress wrote Obamacare, however, it did not itemize which treatments must be covered. Instead, it delegated that power to three different government bodies.

An expert panel known as the United States Preventive Services Task Force (PSTF), for example, has the power to place many health services on the list of services that insurers must cover without imposing out-of-pocket costs on patients. Another panel, the Advisory Committee on Immunization Practices (ACIP) of the Centers for Disease Control and Prevention, may add vaccines to the list. And the Health Resources and Services Administration (HRSA), a federal agency within the Department of Health and Human Services, may require insurers to cover “preventive care and screenings” for women and children.

Congress had a very good reason for writing the statute in this way. If Obamacare had itemized which health services insurers must cover when the law was written in 2010, then Congress would have needed to pass an entirely new law in order to add new items to this list. Covid-19 did not even exist in 2010, for example. So if Congress had decided to itemize which vaccines insurers must cover in 2010, it couldn’t have known to include the Covid-19 vaccine on that list. (The federal government is purchasing Covid-19 vaccines for public use, but once the initial vaccination campaign is over, it may make sense for private insurers to take over the burden of paying to vaccinate children or teenagers when they reach a certain age.)

The three federal panels and agencies have placed about 80 items on the preventive services list. That list includes things like blood screening for newborns, vision screening for children, contraceptive care, Pap smears, and screening for conditions like depression, hepatitis, HIV, and some forms of cancer.

Yet the plaintiffs’ theory in Kelley could potentially endanger patients’ access to all of these health services — although the full implications of this lawsuit are a bit nuanced. If the plaintiffs’ theory prevails, insurers could be free to refuse to cover preventive care services or, at the very least, to impose new costs on patients who seek those services.

So what are the Kelley plaintiffs’ arguments?

The plaintiffs in Kelley are an array of religious conservatives, and what Judge O’Connor labels as “Free-Market Plaintiffs,” who wish to purchase health plans that do not cover some of the preventive services that insurers are currently required to cover.

Some of these plaintiffs, for example, object to a requirement that insurers pay for pre-exposure prophylaxis (“PrEP”), drugs that are very effective in preventing the transmission of HIV, because those plaintiffs believe that PrEP “encourage[s] and facilitate[s] homosexual behavior.”

The plaintiffs raise a number of legal claims against Obamacare’s preventive care provisions, including a pair of constitutional arguments.

The first of these arguments claims that the PSTF and the ACIP, the two expert panels empowered to add items to the list of preventive services, are not composed of “officers of the United States” and therefore cannot wield regulatory power.

The Constitution provides that “officers of the United States” may only be appointed by the president, the “courts of law,” or the “heads of departments.” ACIP members — members of the panel that deals with vaccinations — are appointed by the Secretary of Health and Human Services, who unquestionably qualifies as a “head of department.” But members of the PSTF are appointed by the director of the federal Agency for Healthcare Research and Quality, and the director of this agency may not qualify as a “head of department.”

This argument about whether the members of these two panels were properly appointed, however, could prove to be a bit of a sideshow in the Kelley litigation because the plaintiffs raise a different constitutional argument that is very likely to prevail in the Supreme Court.

Under current law, Congress has broad authority to delegate regulatory power to federal agencies. As the Court held in Mistretta v. United States (1989), Congress may permit agencies to regulate private entities so long as it “lay[s] down by legislative act an intelligible principle to which the person or body authorized to [exercise the delegated authority] is directed to conform.”

Dissenting in Gundy v. United States (2019), however, Justice Neil Gorsuch proposed replacing this longstanding rule with a vague new standard that would effectively empower the Supreme Court to veto any regulation promulgated by a federal agency. And while Gorsuch wrote that opinion in dissent, five justices have since signed on to the general framework that Gorsuch laid out in Gundy.

The framework laid out in Gorsuch’s Gundy opinion is complicated, and important parts of that opinion are so vague that it’s not possible to predict its full implications. But the heart of Gorsuch’s approach is that there should be strict constitutional limits on Congress’s power to delegate regulatory authority to agencies.

A federal law permitting agencies to regulate, Gorsuch wrote in Gundy, must be “‘sufficiently definite and precise to enable Congress, the courts, and the public to ascertain whether Congress’s guidance has been followed.”

And that brings us to the Supreme Court’s decision in Little Sisters v. Pennsylvania (2020). Little Sisters involved a Trump administration regulation that permitted employers with religious or moral objections to birth control to refuse to cover contraceptive care in their employee’s health plans. But, in his majority opinion upholding this Trump-era regulation, Justice Clarence Thomas also strongly suggested that the provision of Obamacare governing women’s preventive care is unconstitutional.

That provision, which permits HRSA to lay out “comprehensive guidelines” regarding which “preventive care and screenings” for women should be covered by insurers, gives HRSA “virtually unbridled discretion,” according to Thomas — a clear sign that Thomas and the four other justices who joined Thomas’s opinion believe that this provision is unconstitutional under the framework Gorsuch laid out in Gundy. (Thomas elected not to strike down the provision because “no party has pressed a constitutional challenge to the breadth of the delegation involved here.”)

The other preventive care provisions of the Affordable Care Act — the ones dealing with vaccinations, pediatric care, and other preventive care services — are similar to the provision dealing with women’s health care. And thus they are also potentially vulnerable under the approach that Gorsuch laid out in Gundy and that Thomas laid out in Little Sisters.

So what happens if the Kelley plaintiffs win?

In the short term, it is exceedingly likely that O’Connor will strike down the challenged provisions of the Affordable Care Act. O’Connor hears an unusually large diet of Obamacare-related cases, including the case where he ruled that the entire law must be repealed, because conservative litigants often intentionally file challenges to Obamacare in O’Connor’s court in the hope that the case will be assigned to him.

Yet, because O’Connor so frequently hands down orders benefiting anti-Obamacare litigants, his opinions sometimes reveal the limits of the judiciary’s power to diminish access to health care.

In 2018, for example, O’Connor issued an injunction forbidding the federal government from enforcing the requirement that health insurers cover birth control, at least with respect to individuals who “object to the Contraceptive Mandate for sincere religious reasons.” But, as O’Connor lamented in a more recent opinion, this injunction had little effect “because few, if any, insurance companies are currently offering contraceptive-free policies.”

So, even though O’Connor issued an order that permits insurers to offer contraceptive-free policies to people who object to birth control on religious grounds, the insurers themselves have elected not to do so.

A likely reason for this decision by health insurers is fairly straightforward. The cost of birth control is much less than the cost of a pregnancy. Indeed, one of the Obama administration’s arguments for requiring insurers to cover contraceptive care is that insurers would break even or even save money if they provide free contraceptive coverage to their customers.

For similar reasons, many insurers may still choose to cover many preventive treatments even if they are no longer required to do so. It may be cheaper, for example, for an insurer to pay for vaccines rather than to pay to treat the disease prevented by that vaccine.

But not all preventive treatments are likely to be cost-effective from the perspective of an insurance company driven solely by a profit motive. According to the National Cancer Institute, for example, the median age when a cancer patient is diagnosed with that disease is 66 years old — which means that the majority of cancer patients are over the age of 65 and therefore are eligible for Medicare.

For this reason, health insurers may not be willing to offer free cancer screenings to their patients, on the theory that the cost of paying for cancer treatments is likely to be picked up by the federal government.

The biggest victims of the Kelley litigation, in other words, could be patients who put off being screened for deadly diseases until after those patients are eligible for free care under Medicare — thereby risking that, by the time the disease is discovered, it may be too advanced to treat it successfully.

And yet, given the Supreme Court’s opinion in Little Sisters, there is a very good chance that this fate will await cancer patients and other people whose lives could be saved by preventive care.