A Comparative Analysis of Private
Health Insurance Provisions of H.R. 3962
and S.Amdt. 2786 to H.R. 3590
Chris L. Peterson, Coordinator
Specialist in Health Care Financing
December 16, 2009
Congressional Research Service
7-5700
www.crs.gov
R40981
CRS Report for Congress
P
repared for Members and Committees of Congress
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Summary
On November 7, 2009, the U.S. House of Representatives approved health insurance reform
legislation, H.R. 3962, the Affordable Health Care for America Act. The “Senate Amendment”
(S.Amdt. 2786 to H.R. 3590, the Patient Protection and Affordable Care Act) was offered by
Senate Majority Leader Harry Reid on November 21, 2009. This report compares the private
health insurance provisions of H.R. 3962 and the Senate Amendment.
Individuals currently receiving health insurance through a large employer would likely see the
least direct impact from the bills. The largest changes would occur in the private health insurance
market for small businesses and for nongroup coverage (currently, insurance obtained directly
from an insurance company, broker or agent). The most substantial of these reforms would not
take effect until 2013 under H.R. 3962, and in 2014 under the Senate Amendment. At full
implementation, the required private health insurance market reforms should be fully in place,
along with subsidies to certain low- and moderate-income individuals ineligible for Medicaid. At
full implementation, the bills would require most individuals to obtain and, in the House bill, for
larger employers to offer and contribute toward health insurance. Although the Senate
Amendment does not have an explicit “employer mandate,” employers who do not offer coverage
could face substantial penalties.
Shortly after enactment of either of the bills, all private health insurance would be subject to some
new requirements. For example, health insurers could not offer coverage with unreasonable
annual or lifetime limits on benefit payouts, and they could not cancel (“rescind”) policies unless
the policyholder had committed fraud. Many other provisions are detailed in the report.
After full implementation, although prior coverage could generally continue without meeting new
requirements (at least for a period of time), new coverage would have to meet federal standards
stipulated in the bills—and different requirements may apply depending, for example, on whether
the coverage is nongroup or employment-based. The bills also call for an exchange available in
each state, through which individuals not enrolled in (or, primarily in the Senate Amendment, not
eligible for) other coverage, as well as small businesses, could choose from private health
insurance plans. In addition, under both bills, individuals obtaining coverage through an exchange
could also choose a “public option” established by the Secretary of Health and Human Services
(HHS). The public option would be appropriated start-up funding, but would ultimately have to
be self-sustaining through the premiums charged. Under both bills, payments to providers
(doctors, hospitals) would be established through negotiations with the Secretary. Unlike the
House bill, the Senate Amendment would allow states to prohibit a public option in their
exchange. Both bills also provide start-up funding for cooperatives, which would be new,
member-run, nonprofit entities that could offer health insurance through exchanges.
Under the Senate bill, any participation in the exchange requires verifying citizenship or legal
residence status. Under H.R. 3962, such verification is only required for premium and cost-
sharing subsidies. Under both bills, such subsidies would only be available through an exchange,
for qualifying low- to moderate-income individuals. Both bills would prohibit the subsidies from
paying any part of elective abortions. The House bill would also prohibit subsidies from going to
a plan that covers elective abortions. Besides the subsidies to individuals, small businesses would
be eligible for tax credits to help them pay toward their employees’ coverage. The Congressional
Budget Office (CBO) estimated the bills’ costs would be fully offset in both the 5- and 10-year
budget windows by increased excise taxes and other revenues and decreased spending.
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Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Contents
Introduction ................................................................................................................................ 1
Reforms Prior to Full Implementation ......................................................................................... 4
Private Health Insurance Market Reforms at Full Implementation Date ....................................... 5
Essential Benefits........................................................................................................................ 6
Individual Mandate ..................................................................................................................... 7
Employer Mandate...................................................................................................................... 8
Small Business Tax Credit........................................................................................................... 9
Health Insurance Exchanges...................................................................................................... 11
Premium and Cost-Sharing Subsidies ........................................................................................ 12
Public Health Insurance Option................................................................................................. 15
Consumer Operated and Oriented Plan (CO-OP) Program ......................................................... 16
Selected Revenue Provisions..................................................................................................... 18
Abortion ................................................................................................................................... 19
Verification of Immigration Status and Treatment of Noncitizens for Exchange Coverage
and Subsidies ......................................................................................................................... 20
Figures
Figure 1. Two Examples of Employer Penalties for Not Offering Coverage ............................... 10
Figure 2. Maximum Out-of-Pocket Premiums for Eligible Individuals, by Federal
Poverty Level......................................................................................................................... 14
Figure 3. Actuarial Values Reflective of Cost-Sharing Subsidies, by Federal Poverty
Level ..................................................................................................................................... 15
Tables
Table 1. Reforms Prior to Full Implementation .......................................................................... 23
Table 2. Private Health Insurance Market Reforms at Full Implementation Date ........................ 31
Table 3.Essential Benefits ......................................................................................................... 44
Table 4. Individual Mandate...................................................................................................... 46
Table 5. Employer Mandate....................................................................................................... 48
Table 6. Small Business Tax Credit ........................................................................................... 51
Table 7. Health Insurance Exchanges ........................................................................................ 52
Table 8. Premium and Cost-Sharing Subsidies........................................................................... 57
Table 9. Public Health Insurance Option.................................................................................... 60
Table 10.Consumer Operated and Oriented Plan (CO-OP) Program........................................... 64
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Table 11. Selected Revenue Provisions...................................................................................... 66
Table 12. Abortion .................................................................................................................... 71
Table 13. Verification of Immigration Status and Treatment of Noncitizens for Exchange
Coverage and Subsidies ......................................................................................................... 73
Table 14. Other Provisions ........................................................................................................ 74
Contacts
Author Contact Information ...................................................................................................... 79
Acknowledgments .................................................................................................................... 79
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Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Introduction
On November 7, 2009, the U.S. House of Representatives approved health insurance reform
legislation, H.R. 3962, the Affordable Health Care for America Act.1
Two Senate committees of jurisdiction also approved major health insurance reform legislation.
The Senate Health, Education, Labor and Pensions (HELP) Committee reported S. 1679,2 and the
Senate Finance Committee reported S. 1796.3 These bills were consolidated in the form of an
amendment (S.Amdt. 2786, hereafter referred to as the “Senate Amendment”) to H.R. 3590, the
Patient Protection and Affordable Care Act, offered by Senate Majority Leader Harry Reid on
November 21, 2009.4
This report compares many of the private health insurance provisions of H.R. 3962 and the
Senate Amendment.5 For each of the major private health insurance reforms, the report first gives
a narrative description of the context and current law, then describes where H.R. 3962 and the
Senate Amendment make similar reforms and how their approaches differ. The narrative is then
followed by more detailed tables comparing these provisions under the following major topics,
with the primary CRS contact listed for each:
• Table 1. Reforms prior to full implementation. Mark Newsom, 7-1686.
• Table 2. Private health insurance market reforms at full implementation date.
Bernadette Fernandez, 7-0322.
• Table 3. Essential benefits. Bernadette Fernandez, 7-0322.
• Table 4. Individual mandate: the requirement on individuals to maintain
health insurance, with penalties and taxes for noncompliance. Hinda
Chaikind, 7-7569.
• Table 5. Employer requirements to provide health insurance or potentially
pay penalties. Hinda Chaikind, 7-7569.
• Table 6. Small business tax credit. Hinda Chaikind, 7-7569.
• Table 7. Health insurance exchanges [Chris Peterson, 7-4681], through
which the following two items can only be offered:
• Table 8. Premium and cost-sharing subsidies. Chris Peterson, 7-4681.
• Table 9. Public health insurance option. Paulette Morgan, 7-7317.
• Table 10. Cooperatives. Mark Newsom, 7-1686.
• Table 11. Selected revenue provisions. Janemarie Mulvey, 7-6928.
1 CRS Report R40885, Private Health Insurance Provisions of H.R. 3962.
2 CRS Report R40861, Private Health Insurance Provisions of S. 1679.
3 CRS Report R40918, Private Health Insurance Provisions of S. 1796, America’s Healthy Future Act of 2009.
4 CRS Report R40942, Private Health Insurance Provisions in the Senate Amendment in the Nature of a Substitute to
H.R. 3590, The Patient Protection and Affordable Care Act .
5 Later versions of this report will provide more detail and cover additional provisions not discussed in this version.
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• Table 12. Abortion. Jon Shimabukuro, 7-7990.
• Table 13. Verification of immigration status and treatment of noncitizens for
exchange coverage and subsidies. Ruth Wasem, 7-7342.
• Table 14. Other provisions.
When possible, the tables were formatted to make comparisons easier between the bills and thus
may not follow the order of the legislative language. However, at the end of nearly every cell is
the specific bill reference of the provision described and, if applicable, the portion of current law
that is amended.
The first two tables (reforms prior to full implementation and private health insurance market
reforms) and the last table contain columns describing current law. However, the other tables do
not contain a current law column because little or no relevant current law exists. To the extent
some context or current law exists for these other topics, it is provided in the narrative.
In this report, “the Secretary” refers to the Secretary of Health and Human Services (HHS),
unless specified otherwise. Under H.R. 3962, “the Commissioner” refers to the Senate-confirmed
Commissioner of the Health Choices Administration, a new executive branch agency
(independent, similar to the Social Security Administration, SSA) who would establish standards
for certain health insurance plans, establish and operate the federal health insurance exchange
(though states would be permitted to create their own), and administer premium and cost-sharing
subsidies for qualifying individuals. Other terms and acronyms used throughout this report are the
following, with a description of how each applies to health insurance and financing under current
law:
• ERISA: The Employee Retirement Income Security Act of 1974 provides for the
federal regulation of private-sector employee benefit plans. 6 Besides the
regulation of pension plans, ERISA also regulates welfare benefit plans that may
provide, among other things, medical, surgical and other health benefits. ERISA
applies to health benefit coverage offered through health insurance or other
arrangements (e.g., self-funded plans). In general, while ERISA regulates private-
sector employee benefit plans and health insurance issuers providing group
health coverage, it does not cover governmental plans, church plans, or plans
with less than two participants.
• IRC: The Internal Revenue Code of 1986 is the primary source of U.S. tax law,
pertaining to individuals, employers and others. The IRC regulates group health
plans, including church plans, but does not regulate health insurers.
• PHSA: The Public Health Service Act includes many health related federal grant
programs, but it also regulates group health plans, health insurance issuers
providing group health coverage, coverage in the individual market, as well as
some governmental plans.
• HIPAA: The Health Insurance Portability and Accountability Act of 1996 has
numerous provisions affecting private health insurance, insurers, and employer-
provided plans. HIPAA was the first major federal law to make numerous
requirements specific to health insurance (e.g., restrictions on pre-existing
6 CRS Report RL34443, Summary of the Employee Retirement Income Security Act (ERISA).
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condition exclusions, guaranteed availability and renewability of plans for certain
employers and individuals). HIPAA instituted its changes by amending ERISA,
the PHSA, and the IRC to create analogous requirements pertaining to pre-
existing conditions, for example, across the broadest spectrum of private health
coverage.
• SSA: The Social Security Act contains the statutory requirements for certain
federal domestic social programs, including Medicare (Title XVIII), Medicaid
(Title XIX) and the Children’s Health Insurance Program (CHIP, Title XXI).
• Group health insurance: Health insurance obtained by a group of people drawn
together by an employer or other organization, such as a trade union. To affect
group health insurance, federal law is typically amended in ERISA, the PHSA,
and the IRC.
• Nongroup health insurance: Health insurance that individuals purchase not
through a group, but directly from an insurer or through an insurance broker or
agent. Sometimes referred to as “individual” or “individual market” insurance.
To affect nongroup health insurance, federal law is typically amended in the
PHSA.
• Small group health insurance: Group health insurance typically obtained by firms
with between 2 and 50 workers, although some self-employed individuals are
considered “groups of one” for health insurance purposes in some states. To
affect small group health insurance, federal law is typically amended in ERISA,
the PHSA, and the IRC.
• Self-insured health plans: A self-insured health plan is an employee benefit plan
under which an employer provides health benefits directly to plan participants, as
opposed to offering benefits through health insurance. Because self-insured plans
do not provide benefits though an insurer, they cannot be regulated by the states
(due to ERISA preemption). These plans are sometimes referred to as “self-
funded plans.” (Many employers with self-funded plans use insurers, for a fee,
solely to assist with the administration of the health plan benefits—for example,
to pay doctors and hospitals the insurer’s negotiated rates—but the employer
bears the financial risk.) To affect self-insured plans, federal law is typically
amended in ERISA, the PHSA, and the IRC.
• Health insurance issuer: Under ERISA and the PHSA, a health insurance issuer is
an insurance company, service, or organization that is licensed to engage in the
business of insurance in a state and is subject to state laws that regulate
insurance. This term does not include self-insured plans.
• Group health plans: A term general enough to include self-insured plans.
• NAIC: The National Association of [state] Insurance Commissioners.
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Reforms Prior to Full Implementation
Health insurance reform is a major issue in the 111th Congress, driven predominantly by long-
term and growing concerns around access, cost, and quality of care.7 The practices of some health
insurance companies have been cited as meriting immediate reform, such as unreasonable annual
or lifetime limits,8 rescissions,9 and discrimination against individuals with pre-existing
conditions. The cost, reflected in rising health insurance premiums, and the quality of care have
also been noted as significant concerns requiring immediate attention.10 These issues and other
items are featured in the immediate reform sections of both bills.
Some Common Features Between the Bills
As detailed in Table 1, both bills have provisions for immediate reforms that are either intended
to be permanent (e.g., prohibition on rescissions) or are temporary programs before the main
reforms take effect (e.g., high-risk pool program run by the Secretary). Both bills deal with the
aforementioned concerns around abusive health insurance practices and would include:
• Prohibiting unreasonable annual or lifetime limits on benefits for group or
individual health plans.
• Prohibiting the practice of rescissions unless the member or policyholder has
committed fraud.
• Creating a high-risk pool program for individuals with pre-existing conditions.
Both bills would also attempt to address cost issues involving health insurance premiums by
requiring rebates when non-claims costs exceed a defined percentage. Health insurers would also
have to publicly report financial data around their usage of premiums for coverage of services
versus administrative costs, and would have to provide justification for premium rate increases.
Other provisions would extend coverage in the group and individual markets to certain currently
ineligible dependents, and would create a reinsurance program to assist employer plans with the
cost of providing benefits to retirees who are 55 and older.
Some Differences
In general, the implementation dates prior to full implementation differ between the bills—with
most of the House provisions taking effect for plan years beginning with 2010, and in the Senate
Amendment for plan years beginning on or after the date that is six months after enactment. As
detailed in Table 1, there are also several provisions in one bill, but not in the other. Only H.R.
3962 has immediate provisions that would reduce the look-back and exclusions periods for pre-
7 For an in-depth review health reform issues see CRS Report R40517, Health Care Reform: An Introduction.
8 Annual or lifetime limits refer to the maximum dollar amount that a health plan will pay toward individuals’ covered
health care expenses.
9 Rescission refers to the practice of health insurance companies dropping coverage, sometimes after a member or
policyholder has become very sick and has filed claims for a substantive amount. Generally, in these cases the insurer
has carefully reviewed the member or policyholder’s application for coverage and uncovered a discrepancy that permits
canceling the contract.
10 “American’s Health Future Act of 2009,” S.Rept. 111-89, Committee on Finance.
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existing conditions, define domestic violence as not being considered a pre-existing condition,
prohibit plans from denying or delaying treatment for children with deformities, establish
wellness program grants, and extend coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA) until the exchange is operational in 2013. Only the Senate
Amendment would, for example, do the following:
• Require group health plans and health insurance issuers to provide coverage for
preventive health services,11
• Prohibit sponsors of group health plans (other than a self-insured plan) from
establishing eligibility rules based on the salary of the employee,
• Require the Secretary to develop regulations for the group and individual markets
governing acceptable provider reimbursement structures that improve quality of
care,
• Require hospitals to establish a list of standard charges for items and services in
accordance with guidelines published by the Secretary,
• Require group and individual plans to have an effective appeals process,
• Provide grants to states to establish supports to assist consumers with filing
complaints and appeals regarding enrollment, and to resolve problems with
obtaining premium credits, and
• Establish an Internet website to assist consumers in making informed decisions
about which coverage to choose.
Private Health Insurance Market Reforms at Full
Implementation Date
States are the primary regulators of the private health insurance market, though some federal
regulation applies, mostly affecting employer-sponsored health insurance.
Both bills would establish new federal standards and requirements applicable to the private
market, with the aim of increasing consumer access to health insurance, especially for persons
with pre-existing health conditions and for other higher-risk groups. These standards and
requirements relate to the offer, issuance, and renewal of insurance, applicable consumer
protections, and costs borne by consumers, employers, and health plans. The effective date of
these provisions is considered the “full implementation date,” when exchanges must be available,
premium subsidies are available to certain individuals, and mandatory Medicaid expansions must
be instituted—under H.R. 3962, January 1, 2013, and under the Senate Amendment, January 1,
2014.
11 Note this provision exists in H.R. 3962, but it is not immediate.
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Some Common Features Between the Bills
As detailed in Table 2, both bills would establish federal market reforms, including a prohibition
on coverage exclusions for pre-existing health conditions, guaranteed issue and renewability of
insurance, rating restrictions, nondiscrimination based on health factors, and other issues.
Nonetheless, both bills would allow for the application of state law to the private market, as long
as such laws do not interfere with the application of the federal reforms. Both bills would
establish consumer protections that impact the adequacy of provider networks, marketing
practices of health insurers, grievance and appeals processes, and disclosure of plan information.
Both bills would allow states to form compacts to facilitate the sale and purchase of health plans
across state lines.
Some Differences
Under H.R. 3962, the effective date of these provisions would be January 1, 2013; under the
Senate Amendment, the effective date would be January 1, 2014. Many of the market reforms
specified in the Senate Amendment would amend Title XXVII of the Public Health Service Act.
H.R. 3962 would not amend an existing statute for purposes of reforming the private market.
While each bill would establish a type of qualified plan that meets new federal standards, H.R.
3962 would require more plans to meet the qualified plan requirements than the Senate
Amendment (see Table 2). Under H.R. 3962, all private health plans would eventually be subject
to the qualified plan rules, except for grandfathered individual health insurance plans. The Senate
Amendment only would require plans offered through the exchange to be qualified plans. The
Senate Amendment would also provide an innovation waiver for states with respect to
requirements relating to qualified health plans (QHPs), exchanges, cost-sharing reductions, tax
credits, the individual responsibility requirement, and shared responsibility for employers.
While both bills include consumer protections (e.g., establishing processes to appeal coverage
determinations, and providing consumers with plan information and assistance), most such
protections under the Senate Amendment would become effective prior to full implementation of
the private market provisions. In contrast, H.R. 3962 would make effective its consumer
protections at full implementation.
The Senate Amendment would establish a few programs to address the distribution of risk borne
by health plans: reinsurance, risk corridors, and risk adjustment. In general, these programs
would provide higher or extra payments to plans that experience greater claims relative to other
plans, in order to encourage the offer to and enrollment of high-risk individuals. H.R. 3962
would establish a reinsurance program specifically for retiree coverage. The Senate Amendment
would also establish an option for states to contract to private plans to provide a basic health plan
for low-income individuals not eligible for Medicaid.
Essential Benefits
While there are a handful of federal benefit mandates for health insurance that apply to group
coverage, there are more than 2,000 cumulative benefit mandates imposed by the states. For
example, federal law requires that group health plans and insurers that cover maternity care also
cover minimum hospital stays for the maternity care, and if plans cover mastectomies they also
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must offer reconstructive breast surgery. States have adopted mandates requiring coverage of
certain benefits (e.g., mammograms), health care providers (e.g., pharmacists), and populations
(e.g., adopted children).
Each bill specifies categories of benefits that must be covered under qualified plans, including
exchange plans. Also, each bill imposes cost-sharing limits, out-of-pocket spending limits, and
special rules regarding annual and lifetime limits that are applicable to essential benefits.
Some Common Features Between the Bills
As detailed in Table 3, both bills would define benefit packages that would be provided by
qualified plans. Such benefit packages would specify coverage for certain categories of essential
benefits, and impose rules regarding cost-sharing, benefit limits, and actuarial values based on
essential benefits.
Both bills would require the Secretary to adopt or specify essential benefits, based on broad
categories of benefits listed in the bills. Most of the categories listed are the same in both bills:
hospitalizations, outpatient/ambulatory services, prescription drugs, rehabilitation, mental health
care, substance use disorder services, preventive services, maternity care, and pediatric care.
Both bills would prohibit the application of lifetime limits on essential benefits.
Some Differences
The Senate Amendment would specify maximum deductible amounts applicable to the essential
health benefits package and would prohibit application of a deductible on preventive services (see
Table 3). In contrast, H.R. 3962 would prohibit any cost-sharing on certain preventive services
and vaccines recommended by specified federal entities.
While both bills would impose out-of-pocket spending limits, they specify the limits using
different methods. H.R. 3962 would establish out-of-pocket limits for individual and family
coverage during the first year of full implementation, then adjust them annually for inflation. The
Senate Amendment, in contrast, would use the amounts specified in the tax code applicable to
certain high-deductible health plans in those years.
H.R. 3962 would prohibit the application of an annual limit on essential benefits. The Senate
Amendment would prohibit “unreasonable” annual limits from applying to essential benefits.
Individual Mandate
Currently federal law does not require individuals to have health insurance. Massachusetts, for
example, requires certain individuals to have health insurance. The state imposes a penalty for
each month individuals are without insurance, equal to 50% of the lowest premium for which
they would have qualified, to be collected through withholding of state income tax refunds (with
some exemptions allowed).
Most people in the United States have employer-sponsored health insurance. In 2008, 60% of the
U.S. population had employment-based health insurance. Other individuals may choose to obtain
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coverage on their own in the nongroup market. Still others qualify for health coverage through
Medicare, Medicaid and other government programs.
Some Common Features Between the Bills
As detailed in Table 4, both bills would mandate most individuals to have health insurance, with
penalties for noncompliance for the first year of full implementation. Both bills would provide
qualified low-income individuals with subsidies to help pay for the costs of their premiums and
cost-sharing, while exempting other individuals such as non-resident aliens, individuals living
and working outside of the United States, individuals residing in possessions of the United States,
those with qualified religious exemptions, and others granted an exemption by the Secretary.
Some Differences
As detailed in Table 4, the penalty for non-compliance is different in the bills. The House bill
would impose a potentially larger penalty, tied to the lesser of (1) 2.5% of the taxpayer’s modified
adjusted gross income (MAGI) over the amount of income required to file a tax return, and (2)
the national average premium for applicable single or family coverage. The Senate bill would
impose a penalty, when fully phased in (2016), of no more than $750 for the year for each
individual, or up to 300% of the individual amount for the total for a family, indexed for inflation.
Employer Mandate
There is currently no federal requirement that employers offer health benefits. However, as noted
above, many employers choose to provide health insurance as part of the total compensation
package for their employees and, in many cases, their dependents. While ERISA does not require
an employer to offer health benefits, it does mandate compliance with certain requirements if an
employer chooses to offer health benefits, such as compliance with plan fiduciary standards,
reporting and disclosure requirements, and procedures for appealing denied benefit claims.
Some Common Features Between the Bills
As detailed in Table 5, both bills impose requirements on employers who offer health insurance
and on those who choose not to, effective in the first year of full implementation. Some
businesses would be exempt from the requirements, based on payroll or number of employees.
Some Differences
As detailed in Table 5, the House bill would mandate employers to provide health insurance, with
penalties for non-compliance. Employers with aggregate wages under $500,000 that chose not to
offer coverage would not be subject to penalties. The penalty would be phased in so that a firm
with aggregate wages above $750,000 would pay 8% of its average wages. While the Senate bill
would not specifically impose a mandate, it would create an employer responsibility that could
also result in penalties for non-compliance. Only firms with more than 50 full-time employees
could be subject to a penalty—but only if at least one of its full-time employees enrolled in an
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exchange plan and received a premium subsidy. The penalty imposed on an employer that did not
offer coverage would be $750 per employee for all the full-time employees in 2014.
Figure 1 provides simplified examples for the first year of full implementation of how the bills’
penalties could differ for an employer that did not offer health insurance. The top portion
assumes that all the employer’s workers are full time with annual wages of $50,000. The bottom
portion is the same, but assumes annual wages of $14,872, which is the annual wage of an
individual working 40 hours per week at $7.15 an hour, the current federal minimum wage.
Given those wage levels, the figure illustrates how the penalty for not offering coverage would
differ, depending on firm size. (Not illustrated in the figure is that under the Senate Amendment,
an employer that did not offer coverage would not be subject to a penalty if none of its employees
obtained federally subsidized exchange coverage. Thus, the figure assumes at least one employee
obtains exchange subsidies.) While the example assumes a 40-hour workweek for employees in
each bill, under the Senate bill, “full time” is defined as working on average at least 30 hours per
week, and under the House bill “full time” would be determined by the Commissioner.
Even employers offering health insurance could be subject to penalties or fees under each bill. In
the Senate bill, a firm offering health insurance with more than 50 full-time employees could pay
a penalty if any of its full-time employees received a premium credit in the exchange (which
could only occur in limited circumstances, described below in the section on premium and cost-
sharing subsidies). In 2014, the annual penalty assessed to the employer for each such employee
would be $3,000 ($250 per month). However, the total annual penalty for an employer would be
limited to the total number of the firm’s full-time employees times $750 ($62.50 per month). In
the House bill, beginning in second full year of implementation, those employers with aggregate
wages above $750,000 would be assessed 8% of average wages for the number of employees who
decline the employer’s health insurance and obtain exchange coverage, regardless of whether or
not they receive a premium credit, with adjustments for small employers.
Small Business Tax Credit
Small businesses that choose to provide health insurance could be eligible for a credit toward
their cost of health insurance. Depending on the bill, these businesses may be exempt from any
employer responsibility to provide health insurance or any penalties for non-compliance. The
bills would offer an incentive to small businesses by helping pay for their employees’ coverage,
by offering a credit toward the purchase of health insurance.
Some Common Features Between the Bills
As detailed in Table 6, in the first year of full implementation, both bills would offer their full
credit to small businesses with 10 or fewer full-time employees and with average taxable wages
of $20,000 or less. Both bills would phase out the tax credit as average employee compensation
increased from $20,000 to $40,000 and as number of employees increased from 10 to 25.
Some Differences
As detailed in Table 6, the amount and duration of the credits are different in the two bills.
Additionally, only the Senate bill would also provide credits to non-profit organizations. Only the
House bill would allow self-employed individuals to receive a credit.
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Figure 1. Two Examples of Employer Penalties for Not Offering Coverage
$5,000
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100
Number of employees,
assuming all are full time with $14,872 annual wages
Notes: Potential penalties shown are for 2013 under H.R. 3962 and for 2014 under S.Amdt. 2786.
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Health Insurance Exchanges
In addition to federalizing private health insurance standards, both bills would create health
insurance exchanges, similar in many respects to existing entities like the Massachusetts
Connector and eHealthInsurance, to facilitate the purchase of health insurance by certain
individuals and small businesses.
Some Common Features Between the Bills
An exchange would not be an insurer; it would provide eligible individuals and small businesses
with access to insurers’ plans in a comparable way (in the same way, for example, that
Travelocity or Expedia are not airlines but provide access to available flights and fares in a
comparable way). As detailed in Table 7, exchanges would have additional responsibilities as
well, such as negotiating with plans and determining eligibility for and administering premium
and cost-sharing subsidies.
Available exchange plans would be required to cover essential benefits and to limit cost-
sharing/benefit-package options to a few standardized benefit tiers, designed for easier
comparison (though the bills differ in the specific levels). States could establish their own
exchanges or the federal government could establish exchanges in the states. In both bills,
multiple states could form a single exchange. Exchanges could work with other entities,
including state Medicaid agencies, to handle certain tasks, such as outreach, enrollment, and
eligibility determinations.
Similar criteria between the bills for individuals’ eligibility to enroll in an exchange plan are that
individuals would have to reside in the state and not be eligible for Medicaid. Certain small
employers could make coverage available to their workers through an exchange. Individuals
eligible for coverage offered directly by an employer (that is, not through an exchange plan)
could not apply their employer’s contribution toward coverage in an exchange plan, which would
deter people from dropping employer-sponsored insurance for exchange coverage.
Premium and cost-sharing credits for low- and moderate-income individuals (described in Table
8) would only be available through an exchange.
Some Differences
As detailed in Table 7, under the Senate Amendment, grants toward state exchanges would be
awarded within one year of enactment (even though federal premium subsidies, fully
implemented market reforms, and mandatory Medicaid expansions would not be in place until
2014); under H.R. 3962, exchanges with fully implemented market reforms and premium
subsidies would be functioning in 2013. Under the Senate Amendment, after some start-up
funding, exchanges would ultimately have to be self-sustaining through assessments on
participating plans or premiums; under H.R. 3962, the exchanges would have permanent federal
funding. After the exchange is fully operational, H.R. 3962 would require that new nongroup
insurance be offered only through an exchange; the Senate Amendment permits nongroup plans
to be offered outside an exchange.
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Unlike the House bill, the Senate Amendment would require individuals seeking to obtain
exchange coverage to prove they were lawful residents, even for individuals paying the entirety
of their insurance premiums.
The Senate Amendment would permit states to initially define “small employers” eligible to
obtain exchange coverage as those with 100 or fewer employees, or with 50 or fewer employees;
H.R. 3962 would initially permit employers with up to 25 employees to be exchange-eligible.
When eligible small employers opt for exchange coverage, employers could not limit workers’
choice of plans under the House bill, but could limit plan selection to a particular benefit tier
(e.g., silver) under the Senate Amendment.
Premium and Cost-Sharing Subsidies
Under current law, direct federal subsidies toward the purchase of private health insurance are
often narrow in scope—for a limited group of individuals (usually based on some hardship, such
as unemployment, or financial need) and/or for a particular amount of time. For example, the
Health Coverage Tax Credit (HCTC) is for certain workers displaced by international trade and
for retirees whose private pension plans were taken over by the Pension Benefit Guaranty
Corporation.12 The American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5)
included provisions to provide premium subsidies of 65% for health insurance coverage through
COBRA for the unemployed; the subsidy is available for up to 9 months to certain unemployed
individuals involuntarily terminated between September 1, 2008, and December 31, 2009. Both
the HCTC and the COBRA subsidies are paid to individuals as tax credits.
Particularly under health insurance reform proposals where individuals may be required to obtain
coverage, some individuals may need premium subsidies to help pay for coverage. However,
even when individuals have health insurance, they may be unable to afford the cost-sharing
(deductible and copayments) required to obtain health care. Thus subsidies may also be necessary
to lower the cost-sharing.
Some Common Features Between the Bills
As detailed in Table 8, both H.R. 3962 and the Senate Amendment would make certain
individuals eligible for premium and cost-sharing subsidies. Common eligibility criteria between
the bills are that individuals must have income below 400% of the federal poverty level (FPL),13
be enrolled in an exchange plan (not through a qualifying employer), and be citizens or lawful
residents14 who are not eligible for Medicaid.15 Under both bills, when the premium and cost-
sharing credits are first made available, they would only be available to individuals enrolled in the
12 CRS Report RL32620, Health Coverage Tax Credit.
13 For a family of three in the 48 contiguous states in 2009, 400% FPL is $73,240. CRS computation based on “Annual
Update of the HHS Poverty Guidelines,” 74 Federal Register 4200, January 23, 2009, http://aspe.hhs.gov/poverty/
09fedreg.pdf.
14 See Table 13 for more information about the citizenship, lawful residence, and verification requirements.
15 Under H.R. 3962, citizens and qualifying aliens would be eligible for Medicaid up to 133% FPL in 2013, when the
premium credits would be available. Under the Senate Amendment, citizens and qualifying aliens would be eligible for
Medicaid up to 150% FPL by 2014, when the Amendment’s premium credits would be available.
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Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
benefit tier with an actuarial value of approximately 70% (a “basic” plan in the House bill and a
“silver” plan in the Senate).
Premium credits would be calculated to ensure that qualifying individuals pay no more than a
certain percentage of their income toward one of the less expensive basic or silver exchange
plans. If individuals choose a plan with a more expensive premium, they would be responsible
for paying the difference.
Individuals eligible for premium subsidies would also be eligible for cost-sharing subsidies.
Some Differences
As detailed in Table 8, like the required exchange, market reform and exchange provisions, the
premium and cost-sharing subsidies would be made available in 2013 under H.R. 3962 and in
2014 under the Senate Amendment. Under H.R. 3962, premium subsidies would be made
directly from the federal government to insurers, while the Senate Amendment provides the
premium subsidies in the form of an advanceable, refundable tax credits to individuals.
Under H.R. 3962, individuals are not eligible for subsidies if they are eligible for employer-
sponsored coverage as a full-time employee, or if they are enrolled in Medicare, Medicaid,
coverage related to military service, an employer-sponsored plan, a grandfathered plan, or other
coverage recognized by the Commissioner. Under the Senate Amendment, individuals are not
eligible for subsidies if they are eligible for that coverage—Medicare, Medicaid, CHIP, coverage
related to military service, an employer-sponsored plan, a grandfathered plan, or other coverage
recognized by the Secretary. An exception to the exclusion for those eligible for employer-
sponsored coverage in 2014 and after exists in H.R. 3962, if the employee’s contribution would
exceed 12% of income in 2014, and in the Senate Amendment, if the employee’s contribution
would exceed 9.8% of income or if the plan pays for less than 60% of covered expenses.
The percentage of income that credit-eligible individuals would have to pay toward premiums
differs between the bills. Below about 250% FPL, H.R. 3962 requires a smaller contribution (and
thus larger credits) than under the Senate Amendment; however, between roughly 250% and
400% FPL, the Senate Amendment requires a smaller contribution by qualifying individuals
toward premiums, as illustrated in Figure 2.
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Figure 2. Maximum Out-of-Pocket Premiums for Eligible Individuals,
by Federal Poverty Level
For first year credits are in effect—2013 for H.R. 3962, 2014 for H.R. 3590
12%
11%
10%
s 9%
m
iu
e
8%
m
em
o
c
r pr 7%
f in
o
f
o
6%
m %
pocket 5%
imu
x
of
a
4%
M
out
H.R. 3962: Passed by
d
House
3%
pai
H.R. 3590: Senate
Amendment 2786
2%
1%
0%
100%
150%
200%
250%
300%
350%
400%
Federal Poverty Level
Source: CRS analysis.
Notes: Under the Senate Amendment, citizens and qualifying legal residents at or below 133% FPL would be
eligible for Medicaid rather than premium credits. H.R. 3962 would extend Medicaid coverage to 150% FPL.
Compared to the Senate Amendment, H.R. 3962 would generally provide greater cost-sharing
subsidies, as illustrated in Figure 3, which shows the percentage of covered expenses to be paid
by the plan (i.e., actuarial value) after the cost-sharing subsidies are taken into account.
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Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Figure 3. Actuarial Values Reflective of Cost-Sharing Subsidies,
by Federal Poverty Level
For first year credits are in effect—2013 for H.R. 3962, 2014 for H.R. 3590
100%
H.R. 3962: Passed by House
90%
H.R. 3590: S.Amdt. 2786
80%
70%
e
lu
60%
l va
a
50%
ari
tu
40%
Ac
30%
20%
10%
0%
Up to 150%
151% -
201% -
251% -
301% -
351% -
200%
250%
300%
350%
400%
Federal Poverty Level
Source: CRS analysis.
Public Health Insurance Option
One issue that has received congressional attention is whether a publicly sponsored health
insurance plan should be offered as part of the insurance market reform, and if so, to what extent
should it be required to follow the same rules as private insurers.
Currently, Medicare is an example of a federal public health insurance program for the aged and
disabled. Under Medicare, Congress and the Department of Health and Human Services (HHS)
Centers for Medicare and Medicaid Services (CMS) determine many parameters of the program.
These include eligibility rules, financing (including determination of payroll taxes and
premiums), required benefits, payments to health care providers, and cost-sharing amounts.
However, even within this public plan, CMS subcontracts with private companies to carry out
much of the administration of the program.
Some Common Features Between the Bills
As detailed in Table 9, both bills would require the Secretary to establish a public health
insurance option (referred to in the Senate Amendment as the Community Health Insurance
Option) available only to individuals eligible to purchase insurance through an exchange. In both
bills, the Secretary would be given start-up funding and the authority to enter into contracts for
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Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
the establishment and administration of the public option. Premiums for the public option would
be set according to new market reform rules at a level sufficient to cover the cost of medical
claims, administration, a contingency margin, and repayment of the start-up funding. Payment
rates for providers would be established through negotiations with the Secretary.
Some Differences
As detailed in Table 9, the Senate Amendment would allow each state the option to enact laws to
prohibit the public option from being offered in its exchange; H.R. 3962 would not allow states to
opt out of the public option. The Senate Amendment would also allow states to require the public
option to include additional benefits, a provision not included in H.R. 3962. In short, under the
Senate Amendment, individuals purchasing insurance in an exchange may not have access to a
public option, and if they had access to a public option, the benefits might differ from state to
state; under the House bill, the exchange would always include a public option with standardized
benefit levels.
Another difference between the bills pertains to the establishment of provider networks. Under
H.R. 3962, the provider network for the public option would be established by deeming
Medicare-participating providers to also be providers under the public option, unless the
providers opted out in a process established by the Secretary; the Senate Amendment specifies
that provider participation would be voluntary, leaving open the question of whether a provider
network would be established through an opt-in process. H.R. 3962 further allows providers to
participate in the public option either as preferred or non-preferred providers, which would allow
non-preferred providers to bill for amounts above the established payment rates in a manner
similar to physician participation rules under Medicare; the Senate Amendment does not include a
comparable provision.
Consumer Operated and Oriented Plan (CO-OP)
Program
Non-profit health insurance cooperatives have been promoted as entities that could help address
concerns around health care cost, quality, and consumer focus.16 The incentives of a cooperative
are assumed to align with members’ interests around lower cost and higher quality. However,
according to the National Cooperative Business Alliance (NCBA), there are very few health
insurance cooperatives currently operating.17 There is no current law incentivizing or funding the
creation of new health insurance cooperatives.
Advocates of the CO-OP program argue that cooperatives would address the three categories of
concern by returning retained earnings18 directly to its members, or by investing in plan members
16 Health insurance cooperatives can either be collectively owned or governed. The former being a mutual insurance
company, and the latter being a non-profit health insurance company with a member controlled board of directors that
cooperatively governs the organization, but is neither compensated nor holds an equity stake in the firm.
17 August 5, 2009, NCBA letter to Senator Rockefeller
http://commerce.senate.gov/public/_files/NCBACoopResponseLetter080509.pdf.
18 Retained earnings are the net earnings not paid out as dividends, but retained by the company to be reinvested in its
core business or to pay debt.
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Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
via lower premiums, lower cost-sharing, expanded benefits, and innovations such as wellness
programs, chronic disease management, and integrated care.19 This model of health insurance has
shown some promise with respect to quality in case studies of Group Health Cooperative of
Seattle and HealthPartners of Minnesota.20
Opponents assert that cooperatives have not been successful in most of the country and that
evidence is lacking that cooperatives would make health insurance more affordable.21 Citing the
recent management issues at Blue Cross Blue Shield of North Dakota (BCBS-ND), which is a
cooperative (in particular, a mutual insurer), some consumer advocates have noted that
cooperatives do not always work in the interests of consumers.22 North Dakota Insurance
Commissioner Adam Hamm, after a recent investigation of BCBS-ND, stated that “[t]he bottom
line is that health care premiums are for health care, they are not for expensive retirement parties,
corporate jets, risky hotel investments or a compensation structure that rewards senior
management regardless of BCBS's financial performance.”23
Some Common Features Between the Bills
Both the Amendment and H.R. 3962 propose establishing the CO-OP program to encourage the
creation of new health insurance cooperatives. As detailed in Table 10, both the Senate
Amendment and H.R. 3962 would appropriate funding, $6 billion and $5 billion respectively, to
assist with cooperatives’ start-up costs and to meet solvency requirements. Ultimately, the goal of
the program would be to foster the creation of new non-profit, health insurance cooperatives in
one or more states. Both bills propose that:
• Grants would only be made to qualified plans.
• Grants would only be made to cooperatives operating as a not-for-profit,
member-run insurance company.
• Cooperatives that offered insurance on or before July 16, 2009, would be
prohibited from receiving funds.
• Cooperatives would be required to incorporate ethical and conflict of interest
standards designed to protect against insurance industry involvement and
interference.
• State governments would be prohibited from sponsoring a cooperative that could
receive grants under the proposed program.
19 Senator Kent Conrad, “FAQ about the Consumer-Owned and -Oriented Plan (CO-OP),” available online at
http://conrad.senate.gov/issues/statements/healthcare/090813_coop_QA.cfm.
20 D. McCarthy, K. Mueller, and I. Tillmann, “Group Health Cooperative: Reinventing Primary Care by Connecting
Patients with a Medical Home,” The Commonwealth Fund, July 2009, and D. McCarthy, K. Mueller, and I. Tillmann,
“HealthPartners: Consumer-Focused Mission and Collaborative Approach Support Ambitious Performance
Improvement Agenda,” The Commonwealth Fund, June 2009.
21 CNN, “Negotiations over health insurance co-ops at impasse,” June 23, 2009, available online at
http://www.cnn.com/2009/POLITICS/06/23/health.care/index.html.
22 “North Dakota Scandal Raises Concerns About Health Co-op Route,” Karl Vick, Washington Post, October 10,
2009, available online at http://www.washingtonpost.com/wp-dyn/content/article/2009/10/09/AR2009100904085.html.
23 “Hamm releases Blue Cross Blue Shield target exam report,” available online at
http://www.nd.gov/ndins/communications/pressreleases/detail.asp?newsID=204.
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• Cooperatives receiving grants from the CO-OP program would be required to be
governed by the majority vote of its membership.
• Cooperatives receiving grants from the program would be required to operate
with a strong consumer focus, including timeliness, responsiveness, and
accountability to its members.
Some Differences
As detailed in Table 10, the two bills differ primarily around the administrative structure and
oversight of the grant program. Under the Senate Amendment, the HHS Secretary would be
charged with administration and oversight of the program, whereas H.R. 3962 would establish the
Commissioner in that role. The Senate Amendment would also establish an Advisory Board to
assist the Secretary in making grant decisions. This provision does not exist in the House bill. The
Senate Amendment alone would also permit CO-OP grantees to establish a private collective
purchasing council to increase cost efficiencies.
There are also important differences with respect to appropriations, the tax code, and the
relationship of CO-OP plans to the exchange and the reformed market. Under the Senate
Amendment $6 billion, $1 billion more than the House bill, would be appropriated to fund the
program. In both bills, CO-OP grantees would be required to be not-for-profit plans, but under the
Senate Amendment, the IRC would be amended so that a CO-OP grantee’s tax-exempt status
would be contingent upon compliance with the regulations of the CO-OP program. Under the
Senate Amendment, insurers’ plans offered inside an exchange could also be offered outside the
exchange; thus, CO-OP plans could potentially be offered outside of an exchange. In the House
bill, however, CO-OP program grants would be specifically limited to health insurance
cooperatives that provide insurance through an exchange.
Selected Revenue Provisions
The House and Senate bills include a number of provisions to raise revenues in order to pay for
expanded health insurance coverage. Some of these provisions are directly related to current
health insurance coverage, and some are indirectly related. The bills’ revenue provisions are
similar in that they include a combination of excise taxes, high-income surcharges, and
limitations on tax-advantaged health accounts. They differ largely in how these taxes are levied
and the magnitude of tax.
Some Common Features Between the Bills
Both the House and Senate proposals modify current tax advantaged accounts used for health care
spending. As detailed in Table 11, they both limit flexible spending account (FSA) contributions
to $2,500 per account, increase penalties for non-qualified health savings account (HSA)
distributions from 10% to 20% for those under age 65, and change the definition of medical
expenses for FSAs, HSAs and health reimbursement accounts (HRAs) to exclude over-the-
counter prescriptions not prescribed by a physician.
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Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Some Differences
While both bills impose excise taxes, they vary based on who the tax is levied on and the extent
of the tax. As detailed in Table 11, the Senate Amendment imposes a 40% excise tax on insurers
of high-cost health plans (defined as those with premiums exceeding $8,500 for single coverage
and $23,000 for family coverage in 2014) as well as an additional tax on health insurers based on
their market share. The Senate bill also imposes an excise tax on pharmaceutical manufacturers,
while the House bill does not. While both proposals levy an excise tax on medical device
manufacturers, the House bill is a sales tax of 2.5% on each non-retail sale of devices; the Senate
version bases this excise tax on the size of aggregate sales tax of a company where the total
excise tax levied would sum to $2 billion a year. The House does not have this provision. Finally,
the Senate Amendment imposes a 5% excise tax on elective cosmetic procedures, this provision is
not in the House bill.
Further, while both impose tax surcharges on high-income taxpayers, they vary in whether tax is
through the federal income tax or through payroll taxes. As detailed in Table 11, the House bill
imposes a 5% surcharge on individuals with modified gross income over $500,000 for singles and
$1 million for families. The Senate Amendment increases the Hospital Insurance portion of the
payroll tax by 0.5% on wages in excess of $200,000 for singles and $250,000 for joint filers.
Abortion
H.R. 3962 and the Senate Amendment include provisions that address the coverage of abortion by
health benefits plans that would be available through an exchange, as well as coverage by a
government-run health insurance option. Both measures distinguish between two types of
abortions: abortions for which federal funds appropriated for HHS may be used, based on the law
in effect six months prior to a plan year; and abortions for which such funds may not be used,
based on the law in effect six months prior to a plan year. The distinction between the two types
of abortions is premised on an existing funding restriction commonly referred to as the “Hyde
Amendment.” In 1976, Representative Henry J. Hyde offered an amendment to the Departments
of Labor and Health, Education, and Welfare Appropriation Act, 1977, that restricted the use of
appropriated funds to pay for abortions provided through the Medicaid program. 24 Since 1976,
similarly restrictive provisions have been included annually in the appropriations measures for the
Departments of Labor, HHS, and Education.
Section 507 of the Omnibus Appropriations Act, 2009, restricts the use of FY2009 funds
appropriated for HHS. Section 507(a) states: “None of the funds appropriated in this Act, and
none of the funds in any trust fund to which funds are appropriated in this Act, shall be expended
for any abortion.”25 An exception to the general prohibition on using appropriated funds for
abortions is included in section 508(a) of the omnibus measure:
The limitations established in the preceding section shall not apply to an abortion –
(1) if the pregnancy is the result of an act of rape or incest; or
24 P.L. 94-439, § 209, 90 Stat. 1418, 1434 (1976) (“None of the funds contained in this Act shall be used to perform
abortions except where the life of the mother would be endangered if the fetus were carried to term.”).
25 P.L. 111-8, § 507(a), 123 Stat. 524, 802 (2009).
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(2) in the case where a woman suffers from a physical disorder, physical injury, or physical
illness, including a life-endangering physical condition caused by or arising from the
pregnancy itself, that would, as certified by a physician, place the woman in danger of death
unless an abortion is performed.26
In other words, FY2009 funds appropriated for HHS could be used to pay for an abortion if a
pregnancy is the result of an act of rape or incest, or if a woman’s life would be endangered if an
abortion were not performed. Such funds are unavailable, however, for elective abortions.
Some Common Features Between the Bills
As detailed in Table 12, H.R. 3962 and the Senate Amendment would restrict the use of federal
funds to pay for elective abortion services. Federal funds could be used, however, for abortions
for which the expenditure of federal funds appropriated for HHS is permitted. Both measures
include provisions to prohibit discrimination against health care providers and health care entities
that refuse to provide, pay for, provide coverage of, or refer for abortions. In addition, both
measures would preserve state laws regarding the prohibition or requirement of coverage or
funding for abortions, and state laws involving abortion-related procedural requirements. Federal
conscience protection and abortion-related antidiscrimination laws, including Title VII of the
Civil Rights Act of 1964, would not be affected by either measure.
Some Differences
As detailed in Table 12, H.R. 3962 would restrict coverage for elective abortions by a qualified
health benefits plan. If a plan includes such coverage, the entity that offers the plan would be
required to offer another plan that is identical in every respect, except that it does not cover
elective abortions. Under H.R. 3962, individuals would be permitted to purchase separate
supplemental coverage for elective abortions, but such coverage would have to be paid for
entirely with funds not authorized or appropriated by the measure. Because H.R. 3962 does not
permit any federal funds, including exchange premium subsidies, to be used to purchase either a
plan that includes coverage for elective abortions or supplemental coverage for elective abortions,
the measure does not include fund segregation requirements. The Senate Amendment, which
would allow coverage of elective abortions by exchange plans, including the public health
insurance option if specified requirements are met, would require the segregation of funds
attributable to premium and cost-sharing subsidies from other premium amounts.
Verification of Immigration Status and Treatment of
Noncitizens for Exchange Coverage and Subsidies
Among the many difficult issues in health reform are those surrounding noncitizen eligibility and
verification provisions.27 A noncitizen is anyone who is not a citizen or national of the United
States and is synonymous with the terms alien and foreign national. Noncitizens include those in
26 P.L. 111-8, § 508(a), 123 Stat. 524, 803 (2009).
27 CRS Report R40889, Noncitizen Eligibility and Verification Issues in the Health Care Reform Legislation, by Ruth
Ellen Wasem.
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the United States permanently (e.g., legal permanent residents, refugees), those in the country
temporarily (e.g., students, temporary workers), and those who are in the country without
authorization.28 The Immigration and Nationality Act (INA) defines which noncitizens are legally
present in the United States.29
Some Common Features Between the Bills
As detailed in Table 13, legal permanent residents (LPRs) are treated similarly to U.S. citizens
under both bills. LPRs are mandated to obtain health insurance, are eligible to purchase insurance
through the exchange, and are eligible for the premium and cost-sharing subsidies if they meet the
other eligibility requirements. This consistency of treatment holds regardless of when they
entered the United States or whether they came initially as refugees or asylees.
Unauthorized aliens would not be eligible for the federal premium and cost-sharing subsidies in
either of the bills.
Both bills would use the individual’s name, social security number, and date of birth and would
rely on the Social Security Administration and the Department of Homeland Security to verify
citizenship and immigration status. The actual mechanics of the verification would differ as
discussed below.
Some Differences
As detailed in Table 13, H.R. 3962 would expressly require the Commissioner to verify
citizenship and immigration status of individuals seeking premium and cost-sharing subsidies.
(Under the House bill, such verification would not be required of exchange-participating
individuals who are not seeking federal subsidies.) The House bill would extend, with
modifications, the citizenship verification procedures as well as the noncitizen verification
procedures that currently apply to Medicaid and other federal means-tested programs to the
citizenship and immigration determination for the proposed premium and cost-sharing
subsidies.30 Among the modifications would be to enable the Commissioner to make the
eligibility determination. The Senate Amendment would rely on procedures currently used by
Medicaid (§1902(e) of the SSA) for individuals whose claims of citizenship or immigration status
are not verified with federal data.31 (The Senate Amendment would require such verification of
all individuals seeking exchange coverage, regardless of whether they would be federally
subsidized or would pay premiums entirely on their own.)
H.R. 3962 would exempt nonresident aliens from the individual mandate to obtain health
insurance; however, H.R. 3962 would require all noncitizens who meet the IRC definition of
resident alien (i.e., nonimmigrants, and unauthorized aliens who meet the substantial presence
28 The three main components of the unauthorized resident alien population are (1) aliens who overstay their
nonimmigrant visas, (2) aliens who enter the country surreptitiously without inspection, and (3) aliens who are admitted
on the basis of fraudulent documents.
29 8 U.S.C. §1101 et seq.
30 §1137(d) of the SSA. For further discussion of current law on Medicaid citizenship verification, see CRS Report
RS22629, Medicaid Citizenship Documentation, by Ruth Ellen Wasem.
31 Section 1411 of the Amendment.
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test) to obtain health insurance. The House bill contains no express restrictions on noncitzens—
whether legally or illegally present, or in the United States temporarily or permanently—
accessing and paying for coverage available through an exchange. The Senate Amendment to
H.R. 3590 expressly exempts unauthorized aliens from the mandate to have health coverage and
bars them from the health insurance exchange.
The proposed policies toward nonimmigrants (those admitted temporarily for a limited purposes,
such as students, visitors, or temporary workers) are more nuanced, in large part because some
classes of nonimmigrants reside legally in the United States for extended periods of time, some
are employed and taxed as a result of those earnings, and some are on a track to become LPRs.
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Table 1. Reforms Prior to Full Implementation
Topics for Table 1
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Primary location in bill
Sections 101-115
Sections 1001-1105
Laws amended
ERISA, IRC, PHSA, SSA
PHSA
Effective date, unless
For plan years beginning on or after January For plan years beginning on or after the
otherwise specified
1, 2010
date that is 6 months after enactment.
No lifetime or annual limits
States have the primary responsibility of
A group health plan and a health insurance
Group health plans and a health insurance
regulating the business of insurance and
issuer providing health insurance coverage
issuers offering group or individual plans
may define state benefit mandates.
in connection with a group health plan
could not have for essential health benefits
However, federal law requires that private
could not have an aggregate dollar lifetime
any lifetime or unreasonable annual limits
health insurance include certain benefits
limit with respect to essential benefits
on the value of benefits. §1001: PHS §2711
and protections, for services covered by a
payable under the plan or coverage.
plan. HIPAA requires, for example, that
§109(a): ERISA §716, §109(b): IRC §9815
group health plans and insurers provide
and §109(c): PHS §2709 and 2756
parity in annual and lifetime limits for any
offered mental health benefits. However,
there are no specific prohibitions on
unreasonable lifetime or annual limits.
Prohibition on rescissions
Current federal law does not have a broad
No later than 90 days after enactment, the
The Amendment would generally prohibit
prohibition on rescissions.
Secretary would issue guidance
rescissions for a group health plan and a
implementing the prohibition on rescission
health insurance issuer offering group or
in the group and individual markets. This
individual health insurance coverage.
guidance would limit the situations in which Rescissions would still be permitted in
an insurer may rescind, or cancel, a
cases where the covered individual
person’s health insurance policy.
committed fraud or made an intentional
Rescissions would still be permitted in
misrepresentation of material fact as
cases where the covered individual
prohibited by the terms of the plan or
committed fraud. §103: PHS §2712 and
coverage. A cancel ation of coverage in this
2742
case would require prior notice to the
enrollee. §1001: PHS §2712
Coverage of preventive
Mandated benefits regulation of the private
This provision is not immediate. See Table
Group health plans and health insurance
health services
health insurance market is primarily done
3- Categories of essential benefits.
issuers in the group and individual markets
at the state level. State regulatory authority
would be required to provide coverage for
is broad in scope and can include
preventive health services. These
requirements involving preventive health
preventive services would include
services. Such rules vary from state to
● items or services that have in effect a
state.
rating of ‘A’ or ‘B’ from the United States
Preventive Services Task Force (USPSTF);
CRS-23
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 1
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
● immunizations that have in effect a
recommendation from the Advisory
Committee on Immunization Practices of
the Centers for Disease Control and
Prevention (CDC); and
● for infants, children, and adolescents,
evidence-informed preventive care and
screenings provided for in the
comprehensive guidelines supported by the
Health Resources and Services
Administration (HRSA). §1001: PHS §2713
Extension of dependent
Federal law does not define who qualifies
A group health plan and a health insurance
A group health plan and a health insurance
coverage
for dependent coverage under employer
issuer offering coverage in the group or
issuer offering coverage in the group or
sponsored insurance or individual health
individual markets that provided dependent individual markets that provided dependent
insurance policies. Under federal law, fully
coverage would extend that coverage until
coverage would extend that coverage to
insured and self-insured group plans can
the individual is 27 years of age. §105: PHS
unmarried adult children until the individual
define dependency in the group health plan. §2703
is 26 years of age. §1001: PHS §2714
However, some states have defined who is
eligible for dependent coverage under fully
insured group health plans, as well as
individual health insurance policies.
Development of uniform
States may regulate the summary of
No later than 12 months after enactment,
explanation of coverage
benefits documents that plans send to their
the Secretary would develop standards for
documents
members. Federal law regulates these
plans in the group and individual markets
documents for federal programs such as
for providing their enrollees with a
Medicare Advantage, but there are no
summary of benefits and coverage. These
broad federal standards for private plans in
standards would preempt state law. Each
the group and individual markets.
plan would provide the summary to an
applicant at the time of application, to an
enrollee prior to the time of enrollment or
re-enrollment, and to a policyholder or
certificate holder at the time of issuance of
the policy or delivery of the certificate.
§1001: PHS §2715
Prohibition of
The sponsor of a group health plan (other
discrimination based on
than a self-insured plan) would be
salary
prohibited from establishing rules relating
to health insurance eligibility of any full-
time employee that are based on the total
hourly or annual salary of the employee. In
CRS-24
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 1
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
no way would eligibility rules be permitted
to discriminate in favor of higher wage
employees. §1001: PHS §2716
Ensuring the quality of care
Not later than 2 years after enactment, the
Secretary would develop and implement
reporting requirements for use by plans in
the group and individual markets including
regulations governing acceptable provider
reimbursement structures that:
● improve health outcomes through use of
quality reporting, case management, care
coordination and chronic disease
management;
● implement activities to prevent
hospitalization readmissions;
● implement activities to improve patient
safety and reduce medical errors through
the use of best clinical practices, evidence
based medicine, and health information
technology; and
● implement wellness and health
promotion activities. §1001: PHS §2717
Reducing health insurance
Many states require public reporting of
Each health insurance issuer that offers
Issuers in the group and individual markets
premiums and increasing
health insurance financial data such as
health insurance coverage in the small or
would be required to publicly report the
value
medical loss ratios (MLR), and require
large group market would provide a rebate
percentage of total premium revenue
approval of premium rate increases and
if the coverage has a medical loss ratio
expended on clinical services, for health
public release of the justification for the
below a level specified by the Secretary
care quality activities, and on al other non-
requested increase. Medical loss ratios
(but not less than 85%). The provision
claims costs. Issuers in the group and
generally refer to the percentage of
sunsets once plans are offered via the
individual markets would also be required
premium dollars that are spent on medical
exchange. This provision would also apply
to provide an annual rebate for the amount
care as opposed to administrative costs
to the individual market unless the
that non-claims costs exceed 20% in the
including profit. State regulations around
Secretary determines that the application
group market and 25% in the individual
accounting procedures for calculating MLRs of this policy may destabilize the existing
market. States would be permitted to
vary.
individual market. §102: PHS §2714 and
lower the percentages by regulation except
2754
that for the individual market the
percentage would be adjusted by the
Secretary if it were determined that the
percentage may destabilize the existing
individual market in a state. These
provisions have a December 31, 2013,
sunset date. §1001: PHS §2718
CRS-25
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 1
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
The Secretary would also, in conjunction
with the states, establish a process for the
Health insurance issuers would also have to annual review of unreasonable increases in
submit a justification for any premium
premiums for health insurance coverage.
increases prior to implementation of the
Health insurance issuers would be required
increase to the Secretary and the states.
to submit to the Secretary and the relevant
State insurance commissioners would
state a justification for an unreasonable
provide data to the Commissioner of the
premium increase prior to implementation
Health Choices Administration
of the premium. §1003
(“Commissioner”) on premium increases
and trends. (The Commissioner would
head the new Health Choices
Administration, a new executive branch
agency, and would establish standards for
certain health insurance plans and operate
the federal health insurance exchange.)
From 2010-2014 the Secretary would
provide grants to the states for premium
monitoring activities. The Secretary would
also make these premium data publicly
available. §104
Reducing other health costs
Each hospital would for each year establish
and increasing value
and update a list of the hospital’s standard
charges for items and services provided in
accordance with guidelines developed by
the Secretary. The list of charges would be
made public. §1001: PHS §2718
Appeals process
Federal regulation of appeals processes are
This provision is not immediate. See Table
An issuer offering coverage in the group or
limited to private plans operating in the
2-Grievance and appeals.
individual markets would be required to
context of federal programs like Medicare
implement an effective appeals process for
Advantage. Regulation of the private health
coverage determinations and claims. The
insurance market is primarily done at the
appeals process would, at a minimum, have
state level. State regulatory authority is
an internal claims appeals process, provide
broad in scope and can include
notice to enrollees of the availability of the
requirements involving an appeal process.
appeals process, allow enrollees to review
Such rules vary from state to state.
their file and present evidence for the
appeal, and provide an external review
process based on consumer protections set
forth by the NAIC. §1001: PHS §2719
CRS-26
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 1
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Health insurance consumer
This provision is not immediate. See Table
Authority is granted upon enactment, and
information
2-Information transparency and plan
applicable to FY2010, for the Secretary to
disclosure.
award grants to states to establish, expand,
or provide support to states that choose
either to implement an Office of Health
Insurance Consumer Assistance or Health
Insurance Ombudsman. There would be
$30 million appropriated for the first fiscal
year of the program and an authorization
for appropriations, in such sums as
necessary. The Secretary would establish
criteria for the grant, and the Office of
Health Insurance Consumer Assistance or
Health Insurance Ombudsman would:
● assist with the filing of complaints and
appeals;
● collect, track, and quantify problems and
inquires;
● assist consumers with enrollment in a
group health plan or health insurance
coverage; and
● resolve problems with obtaining premium
tax credits. §1002
High-risk pools for
Traditionally, the states have operated their The Secretary would establish a temporary
Not later than 90 days after enactment, the
individuals with a pre-
own high-risk pools. Federal funding, most
national high-risk pool program to provide
Secretary would establish a temporary
existing condition
recently via the Omnibus Appropriations
health benefits to eligible individuals during
high-risk pool program to provide health
Act of 2009 (P.L. 111-8), has been available, the period beginning on January 1, 2010,
insurance coverage for eligible individuals
but the operation of high-risk pools
and ending January 1, 2013. Individuals
during the period beginning on the date the
remains with the states.
would be eligible if they reside in the State
program is established and ending on
and are not covered by creditable
January 1, 2014. Appropriations would be
coverage, and who, during the 6-month
made in the amount of $5 billion for the
period ending on the date the individual
period of the program implementation to
applies for the high-risk pool coverage,
January 1, 2014 to pay claims and the
applied for individual health insurance
administrative costs of the high-risk pool.
coverage and:
Individuals would be eligible if they are a
● was denied because of a pre-existing
citizen or national, or lawfully present in
condition or health status; or
the US, have not been covered under
● was offered terms that limit the coverage
creditable coverage during the six-month
for such a pre-existing condition; or
period prior to application for coverage in
● was offered coverage at a premium rate
the high-risk pool, and have a pre-existing
that is above the premium rate for the
condition as determined following guidance
CRS-27
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 1
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
high-risk pool.
issued by the Secretary. The Secretary
would establish criteria to prevent issuers
Appropriations would be made in the
and plans from dumping members into the
amount of $5 billion for fiscal years during
high-risk pool. §1101
the period of January 1, 2010 until the date
on which the Exchange is established to pay
claims and the administrative costs of the
high-risk pool. The Secretary would
establish criteria for determining whether
health insurance issuers and employment-
based health plans discouraged an individual
from remaining enrolled in prior coverage
based on that individual’s health status.
§101
Limitations on pre-existing
Under HIPAA, a plan is allowed to “look
Would reduce the look-back period from
This provision is not immediate. See Table
conditions exclusions
back” six months for a condition that was
six months to a 30-day period. §106: ERISA 2-Coverage for pre-existing health
present before the start of coverage in a
§701(a)(1), IRC §9801(a)(1), and PHS
conditions.
group health plan. Coverage may be
§2701(a)(1)
excluded for pre-existing conditions found
via this look-back process for a period.
Would reduce the pre-existing exclusion
HIPAA limits the pre-existing condition
period from 12 to three months for timely
exclusion period for most people to 12
enrollments, and 18 to nine months for late
months (18 months for late enrol ment).
enrollments. §106: ERISA §701(a)(2), IRC
§9801(a)(2), and PHS §2701(a)(2)
The immediate provisions sunset at the full
implementation date. See Table 2-
Coverage for pre-existing health
conditions.
Prohibition against post-
ERISA does not restrict an employer’s right H.R. 3962 would require that every group
retirement reductions in
to reduce, eliminate, or make changes to
health plan contain a provision that
coverage
health insurance coverage. The only
expressly bars the plan from reducing the
protections a retiree, or an employee,
benefits provided under the plan to a
might have are any contractual or union
retired participant, or beneficiary of such
agreements that specify any requirements
participant, if such reduction affects the
of health insurance.
benefits provided to the participant or
beneficiary as of the date the participant
retired, unless such reduction is also made
with respect to active participants. Nothing
in this section would prohibit a plan from
enforcing a total aggregate cap on amounts
paid for retiree health coverage that is part
CRS-28
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 1
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
of the plan at the time of retirement. §110:
ERISA §717
Reinsurance for early
The Secretary would be required to create, The Secretary would be required to create,
retirees
within 90 days after enactment, a
within 90 days after enactment, a
temporary reinsurance program to assist
temporary reinsurance program to assist
participating employment-based plans with
participating employment-based plans with
the cost of providing health benefits to
the cost of providing health benefits to
eligible retirees who are 55 and older and
eligible retirees who are 55 and older and
their dependents. A trust fund would be
their dependents. Funding would not
created and funds appropriated in an
exceed $5 billion. The Secretary would
amount requested by the Secretary as
reimburse the plan for 80% of the portion
necessary, except that the total would not
of a claim above $15,000 and below
exceed $10 billion. The Secretary would
$90,000 (adjusted annual y for inflation).
reimburse the plan for 80% of the portion
Amounts paid to the plan would be used to
of a claim above $15,000 and below
lower costs directly to participants in the
$90,000 (adjusted annual y for inflation).
form of premiums, co-payments, and other
Amounts paid to the plan would be used to out-of-pocket costs, but could be not used
lower costs directly to participants in the
to reduce the costs of an employer
form of premiums, co-payments, and other
maintaining the plan. §1102
out-of-pocket costs, but could be not used
to reduce the costs of an employer
maintaining the plan. §111
Immediate information to
The Secretary would be required, in
identify affordable coverage
consultation with the states, to establish,
not later than July 1, 2010, an Internet
portal for beneficiaries to easily access
affordable and comprehensive coverage
options. This portal would implement a
standardized format for the presentation of
information including eligibility, availability,
premium rates, cost sharing, and the
percentage of total premium revenues
spent on health care compared to
administrative costs. §1103
Domestic violence not
Acts of domestic violence would be
considered a pre-existing
prohibited from being treated as a pre-
condition
existing condition. §107
CRS-29
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 1
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Prohibiting denials and
For both the group and individual markets,
delays of necessary
plans would have to cover benefits for a
treatment for children with
dependent child’s congenital or
deformities
developmental deformity or disorder. §108
Wel ness program grants
By July 1, 2010, the Secretaries of HHS and
Senate provisions for wellness are not part
Labor would jointly award wellness
of the immediate reforms. See Table 14-
program grants to small employers in an
Employment-based wellness
amount equal to 50% of the costs paid or
programs for more details.
incurred in connection with a qualified
wellness program during the plan year.
§112
Extension of COBRA
COBRA coverage general y lasts 18
Would allow individuals to keep their
months.
COBRA coverage until exchange plans are
available, in 2013. §113
State Health Access
The Secretary would provide grant
Program Grants
program incentives for states to move
forward with a variety of health reform
initiatives prior to 2013. Grants could be
used for state insurance exchanges,
community coverage programs, reinsurance
plan programs, transparent marketplace
programs, automated enrollment programs,
innovative strategies, and purchasing
col aborative programs. §114
CRS-30
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Table 2. Private Health Insurance Market Reforms at Full Implementation Date
Topics for Table 2
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Location in bill
Sections 201, 202, 211-217, 231-237, 239,
Sections 1201, 1251, 1253, 1301, 1311,
251, 309
1321, 1324,1333, 1341-1343
Law amended
Public Health Service Act (amends Title
XXVII)
Effective date of market
Beginning January 1, 2013. §201(b)
Plan years beginning on or after January 1,
reforms (“ful
2014. §1253
implementation”), unless
specified otherwise)
Qualified plans
Beginning 2013, a qualified health benefits
A qualified health plan (QHP) would be a
plan (QHBP) would be a health plan that
health plan that has been certified by each
meets the new federal requirements
exchange through which such plan is
regarding private health insurance
offered as meeting a specified list of
standards, essential benefits (including cost-
requirements related to marketing, choice
sharing), as detailed in Table 3. Essential
of providers, plan networks, and other
Benefits, and consumer protections. Only features, and provides the essential health
QHBPs may be offered in an exchange, but
benefits package, detailed in Table 3.
may be offered outside of an exchange.
Essential Benefits. A QHP issuer would
Existing employment-based plans must
be licensed and in good standing with each
meet the QHBP standards by 2018, except
state in which it would offer coverage;
for limited benefit plans. QHBPs include
would offer at least one QHP each
qualified health benefits plans offered
providing silver and gold levels of coverage;
through the CO-OP program or the Public
would charge the same premium for a plan
Health Insurance Option. §§201(b), 202(b), regardless if it was offered in or out of the
303, 310, 321
exchange (including through an insurance
agent); and would comply with regulations
applicable to exchanges. QHPs include
qualified health plans offered through the
CO-OP program or the Community Health
Insurance Option. §1301
CRS-31
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Consumer choice and
Individuals would be allowed to enroll in
employer offer of qualified
any QHP available to them.
plans
Employers who are qualified to offer
Employers who are qualified to offer
coverage through the exchange may
coverage through an exchange would be
comply with the employer mandate by
allowed to offer any level of coverage
offering any QHBP offered through the
(bronze, silver, gold, or platinum).
exchange. Employees of such employers
Employees of such employers would be
would be able to choose any QHBP
able to choose any QHP that offers the
available to them. §302(e)
level of coverage elected by such
employers. §1312(a)
Grandfathered plans
Existing individual health insurance plans
Plans could continue to offer coverage in a
would be grandfathered indefinitely, as long
grandfathered plan in both the individual
as there are no changes to the terms or
and group market. Enrollment would be
conditions of the coverage, except as
limited to those who were currently
required by law. Existing group health
enrolled, their families, or for
insurance plans would be grandfathered
grandfathered employer-sponsored
only until 2018, except for limited benefit
insurance to new employees and their
plans. §202(a), §202(b)
families. Enrollees could continue and
renew enrollment in a grandfathered plan
indefinitely. §1251
Coverage for pre-existing
The federal Health Insurance Portability
A QHBP would be prohibited from
Group health plans and issuers in the
health conditions
and Accountability Act (HIPAA) limits the
excluding coverage for pre-existing health
individual and group markets would be
period of time when coverage for pre-
conditions, or placing limits on coverage
prohibited from excluding coverage for
existing health conditions may be excluded
based on health status, medical condition,
pre-existing health conditions. §1201:
under group coverage for individuals who
claims experience, receipt of health care,
PHSA §2704
meet HIPAA eligibility criteria. HIPAA
medical history, genetic information,
prohibits such coverage exclusions for
evidence of insurability, disability, or source
HIPAA-eligible individuals with coverage in
of injury (including conditions arising out of
the individual market. Some states have
acts of domestic violence) or similar
imposed requirements regarding coverage
factors. §211
for pre-existing health conditions for
covered persons who are not eligible for
See Table 1, “Limitations on pre-
HIPAA protections.
existing conditions exclusions,” –
would sunset at implementation of Section
211, Prohibiting preexisting condition
exclusions. See Table 1, “Domestic
violence not considered a pre-existing
condition,” – would continue after full
implementation date.
CRS-32
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Guaranteed issue,
HIPAA requires that coverage sold to all
Individual and group health coverage would
Individual and group health insurance
guaranteed renewability,
smal groups (2-50 employees) must be
be offered on both a guaranteed issue and
issuers would be required to offer
and health insurance
sold on a guaranteed issue basis—that is,
guaranteed renewal basis. Health insurance coverage on a guaranteed issue and
rescissions
the issuer must accept every small
rescissions would be prohibited, except in
guaranteed renewal basis. §1201: PHSA
employer that applies for coverage. Also,
cases of fraud. §212
§2702, §2703
HIPAA guarantees the availability of a plan
to HIPAA-eligible individuals seeking
See Table I, “Prohibition on
coverage in the individual market. HIPAA
rescissions” – would continue after ful
guarantees the renewability of coverage in
implementation date.
the individual and group markets for all
enrollees. “Guaranteed renewal” in health
insurance is the requirement on an issuer
to renew group coverage at the option of
the plan sponsor (e.g., employer) or
individual coverage at the option of the
enrollee. Guaranteed issue and renewal
alone would not guarantee that the
insurance offered was affordable.
CRS-33
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Rating rules
There are no federal rating rules for the
A QHBP would be required to determine
Issuers in the individual and small group
private health insurance market. Most
premiums using adjusted community rating
markets would be required to determine
states currently impose premium rating
rules. Premiums would be allowed to vary premiums for such coverage using adjusted
rules on insurance carriers in the small
based only on age (by no more than a 2:1
community rating rules. Under the
group market, and some states have such
ratio based on age categories specified by
Amendment, premiums would vary based
rules in the individual market. The
the Commissioner), premium rating area
only on the following risk factors: self-only
spectrum of existing state rating rules
(as permitted by states or the
or family enrollment; rating area, as
ranges from pure community rating to
Commissioner), and family enrollment (so
specified by the state; age (by no more than
adjusted (or modified) community rating, to long as the ratio of family premium to
a 3:1 ratio across age rating bands
rate bands, to no restrictions. Under pure
individual premium is uniform, as specified
established by the Secretary, in
community rating, all enrollees in a plan pay under state law and consistent with
consultation with the National Association
the same premium, regardless of their
Commissioner rules). §213
of Insurance Commissioners (NAIC)), and
health, age or any other factor related to
tobacco use (by no more than 1.5:1 ratio).
insurance risk. As of December 2008, only
two states (New Jersey and New York) use
Any issuer in the individual or small group
pure community rating in their nongroup
market would be required to consider al
markets, and only New York imposes pure
enrollees in all plans offered by the issuer in
community rating rules in the smal group
the applicable market as members of a
market. Adjusted community rating
single risk pool, including enrollees not
prohibits issuers from pricing health
enrolled in such plans offered through the
insurance policies based on health factors,
exchange. §§1201: PHSA §2701, 1312(c)
but allows it for other key factors such as
age or gender. Rate bands al ow premium
variation based on health, but such
variation is limited according to a range
specified by the state. Rate bands are
typical y expressed as a percentage above
and below the index rate (i.e., the rate that
would be charged to a standard population
if the plan is prohibited from rating based
on health factors). Some states have
enacted rating rules in the individual and
smal group markets that include geography
as a characteristic on which premiums may
vary. In these cases, the state has
established rating areas. Typical y, states
use counties or zip codes to define those
areas.
CRS-34
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Non-discrimination in
HIPAA established federal rules regarding
A QHBP would be required to comply with Group health plans and issuers in the
health insurance coverage
non-discrimination based on health status-
standards established by the Commissioner
individual and group markets would be
based on health factors
related factors. It prohibits group issuers
prohibiting discrimination in health benefits
prohibited from basing eligibility for
from establishing rules for eligibility and
and benefit structures that build on existing coverage on health status-related factors.
premium contributions based on health
HIPAA nondiscrimination rules. Existing
Such factors include health status, medical
status-related factors. Those factors
rules concerning (1) no requirement on
condition (including both physical and
include health status, medical condition
group plans to provide mental health
mental illness), claims experience, receipt
(including both physical and mental
benefits, and (2) no impact of limited
of health care, medical history, genetic
illnesses), claims experience, receipt of
mental health parity on terms and
information, evidence of insurability
health care, medical history, genetic
conditions relating to the amount, duration, (including conditions arising out of acts of
information, evidence of insurability
or scope of mental health benefits, would
domestic violence), disability, and any other
(including conditions arising out of acts of
apply to QHBPs, regardless of whether
health status-related factor determined
domestic violence) and disability. In
coverage is offered in the individual or
appropriate by the Secretary. However,
addition, the Genetic Information
group market. §214
the offering of premium discounts or
Nondiscrimination Act of 2008 prohibits
rewards based on enrollee participation in
issuers in the individual health insurance
wellness programs would be permitted.
market from establishing eligibility rules
§1201: PHSA §2705
(including continued eligibility) based on an
individual’s genetic information. The Paul
See Table 1, “Prohibition of
Wel stone and Pete Domenici Mental
discrimination based on salary” –
Health Parity and Addiction Equity Act of
would continue after full implementation
2008, as amended, requires parity in
date.
coverage for large groups (more than 50
employees) by prohibiting disparities in the
coverage of physical illnesses and mental
health and substance abuse problems in
terms of annual or lifetime dol ar limits on
mental health benefits, treatment
limitations and out-of-network coverage.
Provider network adequacy
HIPAA established special rules for plans
A QHBP that uses a provider network
A QHP offered through the exchange
that establish networks of health care
would be required to comply with network would ensure a sufficient choice of health
providers. HIPAA allows small group
adequacy standards that may be established care providers and provide enrollees with
issuers to (1) limit the employers that apply by the Commissioner. Such a QHBP would information on the availability of in-
for coverage to those firms with eligible
provide a current listing of all providers in
network and out-of-network providers.
individuals who live or work in the network its network on the plan’s website and the
§1311(c)
service area, and (2) deny coverage to small exchange’s website. §215
employers if the issuer demonstrates (if
required) to the state that it has limited
provider capacity due to obligations to
existing enrol ees and is applying this
decision uniformly without regard to claims
CRS-35
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
experience or health status-related factors.
HIPAA also prohibits a small group issuer
that has denied coverage in any service
area to offer small group coverage in that
area for 180 days after the denial.
Fair marketing
States have established fair marketing
The Commissioner would establish uniform A QHP offered through the exchange
requirements
standards to prohibit insurers from
marketing standards for QHBPs. Such
would meet marketing requirements and
marketing their insurance products only to
standards would apply to QHBPs outside of not employ practices that would discourage
healthy individuals and groups.
the exchange only to the extent specified
enrollment by individuals with significant
by the Commissioner. §§231, 234
health needs. §1311(c)
Grievance and appeals
ERISA does not require an employer to
A QHBP would be required to provide
See Table 1, “Appeals process” –
offer health benefits, but does mandate
timely grievance and appeals mechanisms in would continue after full implementation
compliance to certain standards if an
compliance with standards that would be
date.
employer chooses to offer health benefits,
established by the Commissioner. Internal
such as procedures for appealing denied
claims and appeals processes would
benefit claims to the plan (“internal
incorporate the existing ERISA
appeals”). In addition, as of February 2008,
requirements. The Commissioner would
44 States and the District of Columbia
establish an external review process to
mandate the independent review of benefit
provide an independent, de novo review of
denials by an entity outside of the health
denied claims. Grievance and appeals
plan (“external review”).
standards would apply to QHBPs outside of
the exchange only to the extent specified
by the Commissioner.
The Commissioner would appoint a
See Table 1, Health insurance
Qualified Health Benefits Plan Ombudsman
consumer information – would
to receive and provide assistance with
continue after ful implementation date.
grievances. among other responsibilities.
§§232, 234, 244
CRS-36
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Information transparency
ERISA requires applicable health plans (as
A QHBP would be required to notify plan
See Table I, “Development of uniform
and plan disclosure
wel as other “welfare benefit” plans) to
enrollees of any decrease in coverage or
explanation of coverage documents”
disclose and report certain plan
increase in cost-sharing at least 90 days
– would continue after ful implementation
information to enrollees and regulators.
prior to the effective date of such changes.
date.
For example, plan administrators must
provide to enrollees a written summary
QHBPs in the exchange would be required
plan description (SPD) which contains the
to comply with disclosure standards
terms of the plan and the benefits offered,
established by the Commissioner
including any material modifications, and
concerning plan terms and conditions,
the SPD must be written in a manner that
claims payment policies, plan finances,
can be understood by the average enrollee. claims denials, and other information as
Certain plans must file an annual report
determined appropriate by the
PBMs that manage prescription drug
with the Department of Labor, containing
Commissioner. The Labor Secretary
coverage under a contract with a Medicare
information about the operation, funding,
would harmonize such disclosure standards Part D drug plan or a qualified health plan
assets, and investments of those plans.
for application to group health plans. The
offered through an exchange would be
Commissioner would require such
required to share certain financial
disclosures to be provided in plain language. information with the Secretary, the plans
QHBPs would be required to disclose cost-
the PBMs contract with through Medicare
sharing requirements to enrollees and
Part D, or the exchanges in a manner,
comply with standards established by the
form, and timeframe specified by the
Commissioner to ensure transparency
Secretary. Specifically, PBMs would be
regarding reimbursements between the
required to disclose information on: (1) the
plan and health care providers.
percent of all prescriptions that are
provided through retail pharmacies
A pharmacy benefit manager (PBM) under
compared to mail order pharmacies, and
contract with a QHBP to manage
the generic dispensing rates for each type
prescription drug coverage would be
of pharmacy that is paid by the PBM under
required to provide information to the
contract; (2) the aggregate amount and
Commissioner and QHBP: volume of
types of rebates, discounts or price
prescriptions filled, aggregate average
concessions that the PBM negotiates on
payments per prescription for mail order
behalf of the plan and the aggregate amount
and retail sales, and other information.
of these that are passed through to the
Information disclosed by a PBM would be
plan sponsor, and the total number of
considered confidential, and such
prescriptions dispensed; and (3) the
information would be prohibited from
aggregate amount of the difference
disclosure by the Commissioner or QHBP
between the amount the plan pays the PBM
except for specified purposes.
and the amount that the PBM pays the
retail and mail order pharmacy, and the
The disclosure and transparency
total number of prescriptions dispensed.
requirements would apply to QHBPs
This information would be considered
outside of the exchange only to the extent
confidential and would be protected by the
specified by the Commissioner. §§217,
Secretary. §6005
233, 234
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Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Timely payment of claims
Under Medicare Advantage (MA), private
QHBPs would be required to comply with
health plans are paid a per-person amount
the prompt pay requirements used under
to provide al Medicare-covered benefits
Medicare Advantage. §235
(except hospice) to beneficiaries who
enroll in their plan. MA plans include
health maintenance organizations (HMOs)
and private fee-for-service (PFFS) plans.
MA PFFS plans are required to pay 95% of
"clean claims" (defined as a claim that has
no defect or impropriety, and is submitted
with all the required documentation) within
30 days of receipt. The 30-day rule also
applies to claims submitted to any MA
organization by a provider who does not
have a written contract with the plan. Al
other claims from non-contracted
providers must be paid within 60 days. MA
organizations that contract with providers
(i.e., HMOs and PPOs) must include a
prompt payment provision in their
contracts.
Coordination and
While there are no federal statutes
The Commissioner would establish
subrogation of benefits
specifying primary and secondary payment
standards for the coordination of benefits
rules when individuals are covered by
and reimbursement of payments in cases
multiple insurers in the private market, the
involving individual and multiple plan
Medicare program may provide an
coverage. §236
example. The Medicare Secondary Payer
(MSP) program identifies specific conditions
under which another party pays first and
Medicare is only responsible for qualified
secondary payments. It authorizes several
methods to identify cases when an insurer
other than Medicare is the primary payer
and to facilitate recoveries when incorrect
Medicare payments have been made. Under
certain conditions, the law makes Medicare
the secondary payer to insurance plans and
programs for beneficiaries covered through
(1) a group health plan based on either
their own or a spouse's current
employment; (2) auto and other liability
CRS-38
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
insurance; (3) no-fault liability insurance;
and (4) workers' compensation situations,
including the Black Lung program.
Dependent coverage
Many states currently require carriers to
A QHBP would be required to provide to
See Table I, “Extension of dependent
extend dependent coverage under a family
the policyholder the option of keeping
coverage,” – would continue after ful
policy to young adults until those
qualified dependent children on the family’s
implementation date.
individuals reach a certain age or no longer
health insurance policy, as long as the child
satisfy other eligibility criteria, e.g., full-time
is under 27 years of age and is not enrolled
col ege enrollment. As of January 2009, 30
in any other health plan. The QHBP may
states had coverage rules for dependent
increase premiums to provide coverage to
adults in either the group market or
such dependents, as long as the premiums
individual market or both. Michelle’s Law
are consistent with the rating rules
(P.L. 110-381) ensures that dependent
specified in Sec. 213. §216
students enrolled in post-secondary
education who take a medically necessary
leave of absence do not lose health
insurance coverage. The federal law
provides that a group health plan may not
terminate a college student's health
coverage because the student takes a leave
of absence from school or changes to part-
time status due to health conditions. The
leave of absence must be medically
necessary, begin while the student is
suffering from a serious illness or injury,
and would otherwise result in a loss of
coverage.
Interstate compacts
The federal McCarran-Ferguson Act affirms Beginning on January 1, 2015, states would
Not later than July 1, 2013, the Secretary,
that states are the primary regulators of
be al owed to form health care choice
in consultation with NAIC, would
insurance, including health insurance. Laws
compacts for the purpose of facilitating the
promulgate regulations for interstate health
regulating health insurance vary by state
sale and purchase of individual health
care choice compacts, which could be
and cover a wide spectrum of issues,
insurance plans across state lines. The
entered into beginning in 2016. Under such
including licensure, solvency, benefit
Secretary would request the NAIC to
compacts, QHPs would be offered in all
mandates, rating rules, and consumer
develop model guidelines by January 1,
participating states, but insurers would still
protections.
2014 for the creation of such compacts,
be subject to the consumer protection laws
which would subject coverage sold in
of the purchaser’s state. Insurers would be
multiple states participating in the compact
required to be licensed in all participating
to the laws and regulations of one primary
states and to clearly notify consumers that
state, but preserve the authority of each
a policy may not be subject to all the laws
secondary state to enforce specific rules
and regulations of the purchaser’s state.
(e.g., consumer protection standards). By
The Amendment would also require that
CRS-39
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
January 1, 2015, the Secretary would make
states enact a law to enter into compacts
grants available to states for activities
and to obtain approval of the Secretary, but
related to regulating health insurance
only if the Secretary determines that the
coverage sold in secondary states. H.R.
compact will provide coverage that is at
3962 would authorize for appropriations
least as comprehensive and affordable, to at
such sums as necessary to implement the
least a comparable number of residents, as
compact provisions from FY2015 through
would otherwise be provided. Moreover,
FY2020. §309
the Amendment would require that the
compact would not increase the federal
deficit or weaken enforcement of state
consumer protection laws. §1333
State flexibility to establish a There is no existing federal law providing
The Amendment would require the
Basic Health Program
direct ongoing program financing to the
Secretary to create a state option for
states for health insurance coverage of low-
individuals who are not eligible for
income individuals not eligible for Medicaid
Medicaid, have not reached the age of 65,
either under standard criteria or via
and whose household income exceeds
waivers. The Washington State Basic
133%, but does not exceed 200% of the
Health (BH) Plan program administered and
poverty line for the size of the family
financed by the Washington State Health
involved. A standard heath plan would be
Care Authority (HCA) started as a pilot
defined as a health benefits plan that the
program established by the Washington
state contracts with that:
State Health Care Access Act of 1987.
● would not be open for enrollment to a
broad group of individuals, but only to
individuals eligible for the program;
● provides at least the essential health
benefits defined by the Amendment; and
● in the case of a plan that provides health
insurance coverage offered by a health
insurance issuer, has a medical loss ratio of
at least 85%. §1331
CRS-40
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Waiver for state innovation
Beginning in 2017, the Amendment permits
states to apply for a waiver for up to five
years of requirements relating to QHPs,
exchanges, cost-sharing reductions, tax
credits, the individual responsibility
requirement, and shared responsibility for
employers. The state applying for the
waiver would be required to enact a law,
provide a 10-year budget plan ensuring
budget neutrality for the federal
government, and to comply with
regulations that ensure transparency. The
Secretary would be required to provide to
a state the aggregate amount of tax credits
and cost sharing reductions that would
have been paid to residents of the state in
the absence of a waiver. §1332
Reinsurance
Some states have established reinsurance
See Table 1, “Reinsurance for early
Each state would be required to establish a
policies to encourage the offer of private
retirees,” – would sunset when
reinsurance program no later than January
health insurance to individuals and groups
appropriations are expended.
1, 2014. §1341
of higher risk. Reinsurance typical y is
thought of as insurance for insurers. When
See Table I, “Reinsurance for early
issuing policies, an insurer faces the risk
retirees,” – would sunset on January 1,
that the premiums it collects will not be
2014.
sufficient to cover its expenses and
generate profit. For a health insurer,
unusual y high health care claims could lead
to significant financial loss. Reinsurance
shifts the risk of covering such high
expenses from the primary insurer to a
reinsurer.
CRS-41
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Risk corridors
Risk corridor rules are used in a program
The Secretary would be required to
for regional participating provider
establish and administer temporary risk
organizations under Part D of the Medicare
corridors, under which payments to QHPs
program. Risk corridors refer to a
in the individual and small group markets
mechanism which adjusts payments to plans
would be made according to applicable risk
according to a formula based on each plan’s
corridor rules, based on the Medicare Part
actual, allowed expenses in relation to a
D program for regional participating
target amount. If a plan’s expenses exceed
provider organizations. §1342
a certain percentage above the target, the
plan’s payment is increased. Likewise, if a
plan’s expenses exceed a certain
percentage below the target, the plan’s
payment is decreased.
Risk adjustment
In general, plan payments under Medicare
Each state would be required to adopt a
Advantage are risk-adjusted to account for
risk-adjustment model, established by the
the variation in the cost of providing care.
Secretary, to apply risk adjustment to
Risk adjustment is designed to compensate
health plans and issuers in the individual
plans for the increased cost of treating
and small group markets. Plans with
older and sicker beneficiaries, and thus
enrollment of less than average risk would
discourage plans from preferential
pay an assessment to the state. States
enrollment of healthier individuals. The
would provide payments to plans with
Medicare risk adjustment models take into
higher than average risk. §1343
account the variation in expected medical
expenditures of the Medicare population
associated with demographic characteristics
(age, sex, current Medicaid eligibility,
original Medicare eligibility due to a
disability), as well as medical diagnoses.
CRS-42
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Relation to other
For coverage not offered through the
The private health insurance provisions
requirements
exchange and employment-based plans, the
would not preempt state law, as long as
new requirements under Title II of this bill
such laws do not prevent the application of
(relating to QHBPs) would not supersede
such provisions. §1321(d)
specified federal and state laws, as long as
such laws do not prevent implementation
of provisions related to the private health
insurance market, as determined by the
Commissioner.
For coverage offered through the
The Amendment would require that QHPs
exchange, the new requirements under
in the CO-OP program, under the
Title II of this bill (relating to QHBPs)
Community Health Insurance Option, or as
would not supersede any requirements
a nationwide plan, be subject to certain
relating to genetic information non-
federal and state laws applicable to private
discrimination and mental health parity, as
health insurers. Such laws include:
long as such requirements do not prevent
guaranteed renewal, rating, pre-existing
implementation of provisions related to the conditions, nondiscrimination, quality
private health insurance market, as
improvement and reporting, fraud and
determined by the Commissioner.
abuse, solvency and financial requirements,
Individual rights and remedies under State
market conduct, prompt payment, appeals
laws would apply. §251
and grievances, privacy and confidentiality,
licensure, and benefit plan material or
information. §1324
CRS-43
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Table 3.Essential Benefits
Topics for Table 3
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Primary location in bill
Sections 221-224
Sections 1201,1302
Law amended
PHSA (amends title XXVII)
Effective date
Beginning January 1, 2013 for al new private health plans. By
Plan years beginning on or after January 1, 2014. §1253
2018 for existing group health plans. §§201(b), 202(b)
Benefits package
QHBPs would be required to provide the essential benefits
QHPs and plans offered in the individual and small group markets
package. The essential benefits package would cover specified
would be required to provide the essential health benefits package.
items and services, prohibit cost-sharing on preventive services,
The essential health benefits package would refer to a health plan that
limit annual out-of-pocket spending, prohibit annual and lifetime
would provide coverage for “essential health benefits,” would not
benefit limits on covered health care items and services, comply
exceed out-of-pocket and deductible limits specified in the
with network adequacy standards, and be equivalent in its scope
Amendment, and would not impose a deductible on preventive
of benefits to the average employer health plan in 2013 (as
services. §1201: PHSA § 2707, §1302
certified by CMS’s Office of the Actuary). §221, 222
Categories of essential benefits
Minimum categories of benefits to be included in the essential
The Secretary would specify the essential health benefits that QHPs
benefits package:
would be required to cover. Essential health benefits would include
at least the following general categories:
● hospitalization;
● hospitalization;
● outpatient hospital and clinic services, including emergency
● ambulatory patient services;
department services;
● emergency services;
● services of physicians and other health professionals;
● services, equipment, and supplies incident to the services of a
physician or health professional in clinical y appropriate settings;
● prescription drugs;
● prescription drugs;
● rehabilitative and habilitative services;
● rehabilitative and habilitative services and devices;
● mental health and substance use disorder services;
● mental health and substance use disorder services, including
behavioral health treatment;
● certain preventive services (no cost-sharing permitted) and
● preventive and wellness and chronic disease management;
vaccines;
● maternity care;
● maternity and newborn care;
● well baby and well child care and oral health, vision, and hearing ● pediatric services, including oral and vision care; and
services, equipment, and supplies for those under age 21; and
● durable medical equipment, prosthetics, orthotics, and related
supplies. §222(b)
● laboratory services. §1302(b)
See Table 1, “Prohibiting denials and delays of necessary
See Table 1, “Coverage of preventive services,” – would
treatment for children with deformities,” – would continue continue after ful implementation date.
after ful implementation date.
CRS-44
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 3
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Cost-sharing for essential health
The essential benefits package would not include cost-sharing for
Plans providing the essential health benefits package would be
benefits
preventive items and services recommended (with a grade A or
prohibited from applying a deductible to preventive health services.
B) by the Task Force on Clinical Preventive Services, and vaccines
recommended by the Centers for Disease Control and
Small group health plans providing the essential health benefits package
Prevention. §222(c)
would be prohibited from imposing a deductible greater than $2,000
for self-only coverage, or $4,000 for any other coverage in 2014;
deductible limits would be annual y adjusted thereafter. §1302(c)
Out-of-pocket spending limit
The annual out-of-pocket limit in 2013 for the essential benefits
A health plan providing the essential health benefits package would be
package would be no more than $5,000 for an individual and
prohibited from imposing an annual out-of-pocket limit that exceeds
$10,000 for a family, adjusted annual y for inflation.
the maximum thresholds permissible for high deductible health plans
(HDHPs) that qualify for Health Savings Accounts (HSAs). (For 2009,
the out-of-pocket maximum for health savings account-qualified
HDHPs is $5,800 for single coverage and $11,600 for family
To the extent possible, the Secretary would establish cost-sharing coverage.) §1302(c)
levels using copayments (a flat dollar fee) and not coinsurance (a
percentage fee). §222(c)(2)
Annual/lifetime benefit limits
The essential benefits package would be prohibited from including
any annual or lifetime limits on covered health care items and
services. §222(a)(3)
See Table I, “No lifetime or annual limits” – would continue See Table 1, “No lifetime or annual limits” – would continue
after ful implementation date.
after ful implementation date.
Authority for determining
The Health Benefits Advisory Committee would recommend
The Secretary would define and periodical y update coverage that
essential benefits
benefit standards and periodic updates to the Secretary. The
provides essential health benefits. The Secretary would ensure that
Advisory Committee would recommend initial benefit standards
the scope of the essential health benefits is equal to the scope of
no later than one year after enactment. The Secretary would
benefits under a typical employer-provided health plan, as certified by
adopt an initial set of benefit standards, through the rulemaking
the Chief Actuary of the Centers for Medicare and Medicaid Services.
process, no later than 18 months after enactment.
§1302(b)
The Commissioner would specify the variation allowed for cost-
sharing levels in basic, enhanced, and premium plus plans, based
on the essential benefits package. Cost-sharing may vary up to
10% for each benefit category specified.
The essential benefits package would cover an average of 70% of
covered health care claims, based on benefit standards
recommendations by the Advisory Committee and adoption by
the Secretary. §§222(c)(3), 223, 224, 303(c)
Actuarial value based on essential
See Table 7. Health Insurance Exchanges, “Standardized
See Table 7. Health Insurance Exchanges, “Standardized
benefits
benefit tiers for exchange plans.”
benefit tiers for exchange plans.”
CRS-45
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Table 4. Individual Mandate
Topics for Table 4
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Primary location in bill
Section 501
Section 1501
Law amended
Creates new Section 59B in IRC
Creates new Section 5000A in IRC
Effective date
1/1/13 §501 1/1/14
§1501
Is there an individual mandate to
Yes, most individuals would be required to maintain acceptable
Yes, most individuals would be required to maintain minimum
have health insurance
coverage, defined as coverage under a qualified health benefits
essential coverage for themselves and their dependents, defined as
plan (QHBP), an employment-based plan, a grandfathered
coverage under Medicare part A, Medicaid, the Children's Health
nongroup plan, part A of Medicare, Medicaid, military coverage
Insurance Program (CHIP), the TRICARE for Life program, the
(including Tricare), veteran's health care program, services for
veteran's health care program, the Peace Corps program, a
members of Indian tribes (through the Indian Health Service, a
government plan (local, state, federal) including the Federal
tribal organization or an urban Indian organization), and coverage
Employees Health Benefits Program (FEHBP), any plan established by
as determined by the Secretary in coordination with the
an Indian tribal government, any plan offered in the individual, small
Commissioner. §501: IRC §59B(d)
group or large group market, a grandfathered health plan, and any
other health benefits coverage, such as a state health benefits risk
pool, as recognized by the Secretary in coordination with the
Treasury Secretary. §1501: IRC Ch.48 §5000A(a) and (f)
Penalty for non-compliance
Yes, individuals who did not meet mandate for themselves and
Yes, individuals who did not meet mandate would be required to pay
their children could be required to pay a tax, prorated for the
a penalty for each month they were in non-compliance. The per-
time the individual (or family) does not have coverage during the
person, annual dol ar penalty would be phased in—$95 in 2014, $350
year, equal to the lesser of (1) 2.5% of the taxpayer's modified
in 2015, reaching $750 in 2016 (adjusted for inflation thereafter),
adjusted gross income (MAGI) over the amount of income
reduced by one-half for any dependents under the age of 18. In any
required to file a tax return, or (2) the national average premium
given year, there would be a limit of no more than 300% of the per-
for applicable single or family coverage. §501: IRC §59B(a) and (b)
person penalty in total for the taxpayer and any dependents.
Taxpayers who did not pay a required penalty would not be subject
to any criminal prosecution or penalty. The Secretary could not file
notice of lien or levy on any property,
§1501: IRC §5000A(b),(c) and (g)
CRS-46
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 4
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Exemptions to individual mandate
Exempted individuals would include nonresident aliens, individuals Exempted individuals would include individuals with qualifying
who live and work outside of the United States, individuals
religious exemptions, those in a health care sharing ministry,
residing in possessions of the United States, those with qualified
individuals not lawful y present in the United States, and incarcerated
religious exemptions, those al owed to be a dependent for tax-
individuals. No penalty would be imposed on those without coverage
filing purposes, and others granted an exemption by the
for less than 90 days (with only one period of 90 days allowed in a
Secretary. §501: IRC §59B(c)
year), members of Indian tribes, individuals whose household income
did not exceed 100% of the federal poverty level (FPL), or any
individual who the Secretary of HHS determines to have suffered a
hardship with respect to the capability to obtain coverage under a
QHP.
Individuals whose required contribution for a calendar year exceeds
8% of household income would be exempt from the penalty. For tax
years after 2014, the 8% would be adjusted to reflect the excess rate
of premium growth and the rate of income growth for the period.
Certain individuals who would otherwise be subject to the mandate,
but are residing outside of the United States, as well as bona fide
residents of any possession of the United States, would be considered
to have minimum essential coverage and therefore not subject to the
penalty. §1501: IRC §5000A(d) and (e)
Congressional Findings
Not included
Includes Congressional findings that address the constitutionality of an
individual mandate to obtain health insurance. §1501
CRS-47
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Table 5. Employer Mandate
Topics for Table 5
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Primary location in bill
Sections 411, 412, 421, 423, 511 and 512
Sections 1502, 1511, 1512, and 1513
Laws amended
IRC, PHSA, ERISA
IRC, Fair Labor Standards Act
Effective date
January 1, 2013. §421, §423, §511, §512 January
1,
2014.
§1502, §1513
Is there an employer mandate?
Yes, the bill would require certain employers either to offer
No, but the bill would impose certain requirements and potential
individual and family coverage under a QHBP (or continue
penalties on employers who do not offer coverage. Al employers
current employment-based plans) to their employees or to pay a
with more than 50 full-time employees (defined as employees
set amount into an exchange, with some exceptions. Employers
working on average at least 30 hours per week and excluding
would include private-sector employers, churches, and federal,
seasonal workers) who did not provide coverage could be required
state, local and tribal governments. §411, §412, §421, §423, §
to pay a penalty for certain employees, as wel as employers who
511and §512
provide access to coverage, but fail to meet certain requirements.
§1513
General penalty for not offering
Employers with aggregate wages over $750,000 that chose not to
A firm with more than 50 employees that chose not to offer health
health insurance
offer coverage would be subject to an excise tax equal to 8% of
insurance could be subject to a penalty if any of its ful -time
the average wages paid by the employer (exceptions discussed
employees were enrolled in an exchange plan for which a premium
below). §412 and §512
credit is paid. In 2014, the penalty assessed to the employer would be
equal to the number of ful -time employees times 1/12 of $750, for
any applicable month. After 2014, the applicable payment amount
would be indexed. §1513
Potential penalty or other action
Beginning in 2014, for employees who decline the employer’s
An employer that offers its employees coverage could be subject to
even if an employer offers some
qualifying coverage, those employers with aggregate wages above
penalties, if one or more of its full-time employees were enrolled in a
health insurance
$750,000 would be assessed 8% of average wages for the number
QHP for which a premium credit is paid, for that employee. In 2014,
of employees who decline and obtain exchange coverage, with
the annual penalty assessed to the employer for each such employee
adjustments for smal employers as described below. The
would be $3,000 ($250 per month). However, the total annual
employer's excise tax for these individuals would go into the
penalty for an employer would be limited to the total number of the
Exchange but would not apply toward their premiums.
firm's ful -time employees times $750 ($62.50 per month). The
penalties would be calculated on a monthly basis, and the dol ar
The Secretary, in coordination with the Commissioner, could
amounts would be indexed after 2014.
terminate an employer's election to provide health insurance if
the employer was in substantial non-compliance with the health
Thus, for example, an employer with 100 ful -time employees of
coverage participation requirements. If an employer fails to
whom 30 received credits for the year would be subject to a penalty.
satisfy the health coverage participation requirements for any
For 2014, the penalty amount would be $3,000 for each of the 30
employee, their would be a tax for each such failure of $100 per
credit-receiving employees, or $90,000. However, because the
day, other than failures corrected within 30 days and non-
limitation on an employer penalty is equal to the total number of full-
intentional failures. Total annual penalty could not exceed the
time employees (100) multiplied by $750, which in this case is
lesser of 10% of the amount the employer spent on health plans
$75,000, the employer would pay only $75,000 (the lesser of $75,000
or $500,000. §411, §421, §423, § 511and §512
and the $90,000 calculated penalty). §1513
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Topics for Table 5
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Exemptions or special rules for
The required level of excise tax for smaller employers that chose
The requirements only apply to firms with more than 50 ful -time
small employers
not to offer coverage would depend on a firm’s aggregate wages
employees (defined as employees working on average at least 30
(AW) for the preceding calendar year:
hours per week and excluding seasonal workers). §1513
● 0% if AW does not exceed $500,000
● 2%, if AW exceeds $500,000 but does not exceed $585,000
● 4% if AW exceeds $585,000 but does not exceed $670,000
● 6% if AW exceeds $670,000 but does not exceed $750,000
● 8%, if AW exceeds $750,000
§411, §413, §512
Requirements for employers
For employers offering health insurance, the following rules
For employers offering health insurance, the following rules would
offering health insurance
would apply:
apply:
● Employers could offer employment-based coverage or, for
● Large employers could offer full-time employees the opportunity to
certain smal businesses, they could offer coverage through an
enroll in a group health plan. Small employers could offer full-time
exchange.
employees and their dependents coverage in a group plan or in an
● Current employment-based health plans grandfathered for 5
exchange plan.
years, after which time any plan offered by an employer would
● Current employment-based plans would be grandfathered.
have to meet (and could exceed) the requirements of the
● An employer would not be treated as meeting the employer
essential benefits package.
requirements, if at least one full-time employee is enrolled in an
● Employers would have to contribute at least 72.5% of the
exchange plan and is receiving a premium credit because the
lowest-cost QHBP or current employment-based plan they
employee's required contribution exceeds 9.8% of the employee's
offered (65% for those electing family coverage), prorated for
household income. §1513
part-time employees.
●
Salary reductions used to offset required employer
contributions would not count as amounts paid by the employer.
§411, §412
Auto-enrollment
Employers would automatically enroll their employees into the
Firms with more than 200 full-time employees that offer coverage
plan for individual coverage with the lowest associated employee
would automatically enroll new full-time employees in a plan (and
premium, unless the employee selected a different plan or opted
continue enrollment of current employees). Automatic enrollment
out of employer coverage. Employers would be required to
programs would be required to include adequate notice and the
provide written notice detailing the employee's rights and
opportunity for an employee to opt out. §1511
obligations relating to auto enrollment. §412
Information requirements
Employers would be required to provide certain information to
Employers would be required to file certain information to the IRS
the IRS and to employees to show compliance with health
and to employees, regardless of whether or not they provided health
participation requirements. §412
insurance. Employers would also be required to provide notice to
employees about the existence of the exchange, including a
description of the services provided by the exchange. §1502, §1512
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Topics for Table 5
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Waiting periods
A fee would be imposed on employers that required extended
waiting periods (over 30 days) before employees could enroll in a
plan. For waiting periods that exceeded 30 days, but not 60 days, the
fee would be $400 per applicable employee, and for waiting periods
exceeding 60 days, the fee would be $600. After 2014, these amounts
would be indexed by a premium adjustment percentage for the
calendar year. §1513
Affiliated groups and other special
Under regulations prescribed by the Secretary (for certain
employer groups
employers who are part of a group of employers treated as a
single employer under the IRC), separate elections to offer health
insurance could be made with respect to (1) separate lines of
business and (2) full-time employees and employees who are not
full-time. §421, §511
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Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Table 6. Small Business Tax Credit
Topics for Table 6
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Location in bill
Section 521
Section 1421
Law amended
Creates new Section 45R in IRC
Creates new Section 45R in IRC
Effective Date
January 1, 2013. §521 January
1,
2011.
§1421
Maximum amount and duration of
50% credit toward the employer share of the cost of qualified
35% credit (2011-2013) and 50% credit (beginning in 2014 for no
credit
employee health coverage, for no more than two taxable years.
more than two consecutive taxable years) of the lesser of (1) the
§521(a): IRC §45R(a)and(b)
employer premium contribution toward plans offered by the
employer through an exchange, or (2) the contribution the employer
would have made if each of those same employees had enrolled in a
QHP with a premium equal to the average (determined by the
Secretary) for the small group market in the rating area in which the
employee enrolls for coverage. §1421(a): IRC §45R(b) and (g)
Employer eligibility
Certain small businesses with a tax liability. Small businesses with
Certain small businesses, not restricted to those with a tax liability.
10 or fewer ful -time employees and with average taxable wages
Smal employers would have to contribute at least 50% of the cost of
of $20,000 or less could claim the full credit amount. §521(a): IRC
premiums towards a qualified health plan. Smal businesses with 10 or
§45R(a) and (b)
fewer ful -time employees and with average taxable wages of $20,000
or less could claim the full credit amount. §1421(a): IRC §45R(a) and
(d)
Phase-out of credit
Phased out as average employee compensation increases from
Phased out as average employee compensation increases from
$20,000 to $40,000 and as number of employees increases from
$20,000 to $40,000 and as the number of ful -time employees
10 to 25. Employees would be counted if they received at least
increases from 10 to 25. Full-time employees would be calculated by
$5,000 in compensation, but the credit could not apply toward
dividing the total hours worked by al employees during the tax year
insurance for employees whose compensation exceeds $80,000
by 2,080 (with a maximum of 2,080 hours for any one employee).
(highly compensated employees). After 2013, adjustments for
Seasonal workers would be exempt from this calculation. §1421(a):
inflation would be applied to the average employee compensation
IRC §45R(c) and (d)
and to the limit on highly compensated employees. §521(a): IRC
§45R(b),(c)and (e)
Special rules, if any, for non-
Non-profit organizations would be ineligible. §521(b)
Non-profit organizations would be eligible. Credit amount would be
profits organizations
the lesser of (1) a 25% credit (2011–2013) and a 35% credit
(beginning in 2014), or (2) the amount of employer-paid payroll taxes
for the relevant calendar year. §1421(a): IRC §45R(f)and (g)
Special rules for self-employed
Could be eligible. §521(a): IRC §45R(f) Not
eligible.
§1421(a): IRC §45R(e)
individuals
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Table 7. Health Insurance Exchanges
Topics for Table 7
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Primary location in bill
Sections 241-244, 301-308
Sections 1311-1321
Law amended
Earliest possible date of exchange
January 1, 2013, when federal private health insurance market
Within one year of enactment (or as soon as possible thereafter),
establishment
reforms, premium subsidies, and Medicaid expansions must be in
Secretary must provide grant awards to states for establishing their
effect. §302(c)
exchange. Exchanges must be established in states by January 1, 2014,
when federal private health insurance market reforms, premium
subsidies, and Medicaid expansions must be in effect. §1311
Who has primary responsibility
The Commissioner. §241
States, if they adopt the private market reforms. States already
(or opportunity) to establish and
operating an exchange prior to 1/1/10 that insures a percentage of the
operate exchanges
population projected to be covered national y by the Amendment
would be presumed to meet the standards, unless the Secretary
determines otherwise. §1311, §1321(e)
Who may also establish or
States, with Commissioner’s approval. States already operating
The Secretary, if state so chooses, or automatical y by 1/1/2014 as a
operate an exchange
an exchange prior to 1/1/10 would be presumed to meet the
federal fallback. §1321
standards, unless the Commissioner determines otherwise. §308
Startup funding for exchanges
Federal funds (in the case of a state-based exchange, federal
Federal funds, available until 1/1/2015. §1311(a)
funds via matching grants). §§307, 308
Operating funding for exchanges
Federal funds (in the case of a state-based exchange, federal
Assessments or user fees on participating plans. Exchanges to be self-
funds via matching grants). §§307, 308
sustaining by 1/1/2015. §1311(d)(5)
Exchange functions
The following tasks are generally for the Commissioner (or
The exchange would be a government or nonprofit entity that would
usually states, when a state operates an exchange):
make qualified health plans (and stand-alone dental plans) available to
qualified individuals and employers and that would do the following:
● Certify, recertify, decertify plans as offering qualifying
● Certify, recertify, decertify plans as offering qualifying coverage,
coverage.
based on criteria set by the Secretary in regulation.
● Accept bids and negotiate and enter into contracts with
insurers (including denying “excessive premiums and premium
increases”).
● Facilitate outreach to and enrollment of eligible individuals and
● Establish open enrollment periods based on criteria set by the
employers (including establishing open enrollment period
Secretary.
general y sometime during September to November).
● Provide information for comparing plan benefits and assist
● Provide standardized information for comparing plan benefits and
consumer with their choices regarding premiums and out-of-
plan ratings (based on criteria set by the Secretary).
pocket cost-sharing.
● Establish and make available an online calculator for individuals to
estimate their premium and cost-sharing subsidies, if any.
● Establish a toll-free hotline and a website.
● Establish a toll-free hotline and a website.
● Establish a risk-pooling mechanism.
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H.R. 3962
S.Amdt. 2786 to H.R. 3590
● In coordination with state insurance regulators, establish
oversight and enforcement of plans.
● Provide process to automatically enroll subsidy-eligible
applicants in a plan if none is chosen.
§301(b), §§303-6
● Certify exemptions from the individual mandate and transfer the list
of such individuals to the Treasury Secretary (see also §1401: IRC
§36B(c)(2)(C)).
● Publish average costs of licensing, regulatory fees, and any other
payments required by the exchange (as well as administrative costs
and monies lost to waste, fraud and abuse) on a website.
● Keep an accurate accounting of all activities, receipts and
expenditures and annual y submit a report to the Secretary.
● Establish and fund Navigators (i.e., entities that can conduct public
education on qualified health plans, distribute information about
enrollment and subsidies, facilitate enrollment in plans, provide
referrals for certain enrollees—all in a culturally and linguistically
appropriate manner to the needs of those served by exchanges),
based on standards set by the Secretary.
§1311(c)(4), (c)(5), (d), (i), §1313(a)(1)
Medicaid “screen and enroll” (i.e.,
The Commissioner “shall provided for the enrollment of the
Exchanges would inform individuals of eligibility requirements for
individuals determined to be
individual under the State Medicaid” program if the individual
Medicaid, the Children’s Health Insurance Program (CHIP), or any
eligible for Medicaid must be
applies for a subsidy in the exchange but is determined to be
other state or local health insurance program and “enroll such
enrolled in Medicaid)
eligible for Medicaid. §305(e)
individuals in such program.” §1311(d)(4)(F)
Authority to contract with other
In consultation with the Secretary, the Commissioner would
States could permit exchange to contract with an “eligible entity” to
entities to perform exchange
enter into a memorandum of understanding with every state to
carry out exchange functions. An “eligible entity” would be a state
functions
coordinating enrollment of individuals in exchange plans or
Medicaid agency or an entity incorporated or subject to the laws of a
Medicaid. §305(e)(2)
state(s) with demonstrated experience in individual and small group
health insurance markets and benefits, but not a health insurer or a
member of the same control ed group of corporations as a health
insurer. §1311(f)(3)
Additional or specific
● Be licensed in the state.
● Be licensed and in good standing to offer health insurance in the
requirements of qualifying plans
state.
seeking to offer coverage through
● Provide for affordable premiums.
● Justify any premium increase prior to its implementation, which the
an exchange (beyond applicable
exchange could consider to determine whether it would be offered
requirements in Table 1 and
through the exchange.
Table 2)
● Implement and coordinate with plans on premium and cost-
sharing credits.
● Generally accept all enrollment.
● Generally accept all enrollment and not market or design benefits to
discourage enrollment by those with significant health needs.
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Topics for Table 7
H.R. 3962
S.Amdt. 2786 to H.R. 3590
● Participate in risk-pooling arrangement.
● Include essential community providers and culturally and
● Include essential community providers that served predominantly
linguistically appropriate services and communications.
low-income medically underserved individuals.
● Implement special rules for Indian enrollees and health care
providers.
● Implement program integrity standards established by the
Commissioner.
● Offer adequate provider network.
● Offer adequate provider network.
§304(b)
● Report on, be accredited by, and participate in various quality
initiatives.
● Beginning 1/1/2015, when contracting with a hospital with more
than 50 beds, contract with only those using a patient safety evaluation
system and a mechanism to ensure discharged patients receive
patient-centered education and counseling, comprehensive discharge
planning, and post-discharge reinforcement by an appropriate health
care professional. When contracting with other providers, contract
only with those implementing health care quality improvements
required by the Secretary through regulation. The Secretary may
adjust the number of hospital beds or establish other “reasonable
exceptions” to these requirements.
§1301(a)(1), §1311(c)(1), §1311(e),(g),(h)
Exchange-eligible individuals
State residents not offered coverage directly by an employer as a Lawfully residing state residents not eligible for Medicaid or CHIP, and
full-time employee, and not eligible for Medicare, Medicaid or, in
who are not incarcerated (except individuals pending disposition of
2013, CHIP.
charges). §1312(f)(1), §1311(d)(4)(F)
Once individuals qualify for and enroll in an exchange plan, they
could continue enrol ment in that plan—unless they became
eligible for Medicare or Medicaid (in which case the
Commissioner would have some transition flexibility), or other
circumstances as the Commissioner may provide. §302
The only plans the federal government would make available to
Members of Congress (i.e., any member of the House or Senate) or
congressional staff (i.e., all full-time and part-time employees employed
by the official office of a Member of Congress, whether in or outside
of Washington, DC) would be health plans created by this legislation
or offered through an exchange. §1312(d)(3)(D)
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Topics for Table 7
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Exchange-eligible employers, for
In 2013, up to 25 employees.
Before 2016, state choose: up to 50 or up to 100 employees.
enrollment of employees in
In 2014, up to 50 employees.
In 2016, up to 100 employees.
exchange plans
In 2015, up to 100 employees, though the Commissioner could
In 2017, states could al ow large employers to obtain coverage
permit even larger employers.
through an exchange (but could not be required to do so).
Once employers qualify for and enroll employees in an exchange
plans, the employer would continue to be considered exchange
eligible—unless the employer offered direct coverage not
through an exchange.
Exchange-participating employers would have to make al full-time
Exchange-participating employers would have to make al
employees eligible for exchange coverage.
employees eligible for exchange coverage. §302
§1312(f)(2), §1304
Choice of plans for individuals in
Employees could choose any plan in any benefit tier, though
Employees could choose any plan in the benefit tier (e.g., silver)
exchange through an employer
individual could be responsible for any additional premiums.
specified by the employer. §1312(a)(2)
§302(e)(6)(B)
Required employer contribution
For full-time employees (prorated for part-time employees),
for employers offering coverage
72½% for single coverage (65% for family coverage) of the
through exchange
“reference premium” (generally the three basic plans with the
lowest premiums in the area). §302(e)(6)(A)
Standardized benefit tiers for
In an area, insurers must offer only one basic plan, which must
In an area, insurers must offer at least one silver plan (actuarial value
exchange plans
meet essential benefits package (e.g., actuarial value of
of approximately 70%) and at least one gold plan (actuarial value of
approximately 70%).
approximately 80%).
Insurers then may offer one enhanced plan (i.e., actuarial value of Insurers then may offer bronze plans (actuarial value of approximately
approximately 85%), then may offer one premium plan (i.e.,
60%) and platinum plans (actuarial value of approximately 90%).
actuarial value of approximately 95%), then may offer one or
more premium-plus plans, which also provide additional benefits,
Dental-only would also be permitted, if the plan provides required
such as adult oral health and vision care.
pediatric dental benefits.
Cost-sharing levels would be specified by the Secretary for each
Plans would determine their specific cost-sharing levels, subject to the
benefit category, although plans would be permitted to vary the
requirements regarding actuarial value, essential benefits, etc.
cost-sharing from the specified levels by up to 10%. §303
§1301(a)(1)(C)(ii), §1311(b)(2)(B)(ii)
Payment of premiums
Individuals would submit premium payments directly to their
Individuals could submit premium payments directly to their insurer or
insurer, not to the Commissioner or the exchange. §305(b)(4)
to the exchange. §1312(b)
Other varying treatment of
States could establish a separate exchange for qualifying small
individuals vs. smal businesses
employers (a “SHOP” exchange), to which the Secretary would
provide technical assistance to states to encourage smal business
participation. A state could create a single exchange if resources were
adequate for both groups. §1311(a)(5), (b)
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Topics for Table 7
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Permissible exchange geography
The Commissioner could permit multi-state exchanges.
The Secretary could permit multi-state exchanges.
besides state level
No more than one exchange could operate in any state. §308
Multiple exchanges could operate in a state (“subsidiary exchanges”) if
each exchange served a distinct geographic area that was adequately
large. §1311(f)(1), (2)
Treatment of plans in the
Except for grandfathered plans, beginning in 2013, new nongroup Plans offered in the exchange could also be offered outside the
nongroup and smal -group
plans must be offered only through an exchange. §202(c)(1)
exchange if the exact same premium was charged. §1301(a)(1),
markets outside the exchange
§1312(d)
Treatment of health insurance
Exchange plans would be available for purchase from agents and
A state could allow agents and brokers to enroll individuals in
agents and brokers
brokers. §100(c)(9), §305(g)
exchange plans and to assist individuals apply for premium and cost-
sharing subsidies. §1312(e)
Oversight of exchanges
Inspector General for the Health Choices Administration. §1647 The
Secretary.
§1313
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Table 8. Premium and Cost-Sharing Subsidies
Topics for Table 8
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Primary location in bill
Sections 341-347
Sections 1401-1415
Law amended
IRC, for providing premium subsidies as tax credits.
First year premium and cost-
2013 2014
sharing credits are available
Individuals’ eligibility for premium
To qualify for premium and cost-sharing subsidies, individuals must:
To qualify for premium and cost-sharing subsidies, individuals must:
and cost-sharing subsidies
● Be citizens or certain other lawfully present individuals,
● Be citizens or certain other lawful y present individuals who file tax
returns,
(For more detail on requirements
● Be enrolled in an exchange basic plan (actuarial value of 70%) not
● Be enrolled in an exchange silver plan (actuarial value of 70%) not
and verification of citizenship or
through an employer, and
through an employer, and
legal presence, see Table 13)
● Have income below 400% FPL.
● Have income below 400% FPL.
To qualify, individuals must not be enrolled in any of the following:
To qualify, individuals must not be eligible for any of the following:
● Medicare,
● Medicare,
● Medicaid,
● Medicaid (or CHIP),
● Coverage related to military service,
● Coverage related to military or Peace Corps service,
● An employer-sponsored plan,
● An employer-sponsored plan,
● A grandfathered plan, or
● A grandfathered plan, or
● Other coverage recognized by the Commissioner.
● Other coverage recognized by the Secretary.
To qualify, individuals must not be eligible for the following:
● Employer-sponsored coverage for which the ful -time employee
would receive an adequate employer contribution, or
● Medicaid.
Beginning in the second year of premium credits (2014), an
Beginning in the first year of premium credits (2014), an exception for
exception for those full-time employees eligible for employer-
those employees eligible for employer-sponsored coverage would
sponsored coverage would exist if individuals’ payment toward
exist if individuals’ payment toward premiums would exceed 9.8% of
premiums would exceed 12% of their income.
their income or if the plan pays for less than 60% of covered
expenses.
Beginning in 2015, individuals could receive premium subsidies for
plans in tiers besides basic, but they would then have to pay any
§1401: IRC§36B
additional premiums and would also be ineligible for cost-sharing
subsidies.
§342, §341(c)
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Topics for Table 8
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Calculation of premium credit
Premium credits would be calculated to ensure that qualifying
Premium credits would be calculated to ensure that qualifying
amount
individuals pay no more than a certain percentage of their income
individuals pay no more than a certain percentage of their income
toward the “reference premium” (average premium of the three
toward the second lowest cost silver exchange plans available in the
lowest-cost basic exchange plans available in the area, potentially
area. Individuals choosing a plan with a more expensive premium
excluding plans with extremely limited enrollment). Individuals
would be responsible for the difference.
choosing a plan with a more expensive premium would be
responsible for the difference.
The bill specifies the maximum out-of-pocket premium as a percent
of income in a formula for those between 133%-300% FPL so that
The bill specifies the maximum out-of-pocket premium as a percent following amounts would result:
of income as follows:
● Up to 133% FPL—2% of income,
● Up to 133% FPL—1.5% of income,
● 133.01% FPL—4% of income,
● 150% FPL—3% of income,
● 150% FPL—4.6% of income,
● 200% FPL—5.5% of income,
● 200% FPL—6.3% of income,
● 250% FPL—8% of income,
● 250% FPL—8.1% of income,
● 300% FPL—10% of income,
● 300% FPL—9.8% of income,
● 350% FPL—11% of income,
● 350% FPL—9.8% of income,
● 400% FPL—12% of income.
● 400% FPL—9.8% of income.
The Commissioner would establish the percentages on a linear
The exact percentage would be calculated as part of individuals’ tax
scale between the points specified above.
returns.
After 2013, the maximum-income percentages would be indexed to After 2014, the maximum-income percentages would be indexed by
ensure the government’s share of premiums paid does not increase.
how much premiums grew faster than incomes.
§343.
§1401: IRC§36B
Payment of premium subsidies
By the exchange Commissioner directly to insurers on behalf of
Directly to individuals through advanceable, refundable tax credits.
qualified individuals. §341(a)(1)(2)
§1401: IRC§36B
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Topics for Table 8
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Calculation of cost-sharing
Cost-sharing subsidies would be based on basic plans (actuarial
Cost-sharing subsidies would be based on silver plans (actuarial value
subsidies
value of 70%) reducing out-of-pocket maximums for cost-sharing
of 70%) reducing out-of-pocket maximums for cost-sharing (e.g.,
(e.g., deductibles and copays) and increasing their actuarial values to deductibles and copays) and potentially increasing their actuarial
specified levels for qualified individuals.
values to specified levels for qualified individuals.
The bill specifies out-of-pocket maximums for cost-sharing in 2013
The bill specifies out-of-pocket maximums for cost-sharing in 2014
for single coverage as follows:
based on the highest out-of-pocket maximum permitted for high-
● Up to 150% FPL—$500,
deductible health plans that qualify for Health Savings Accounts
● 151% - 200% FPL—$1,000,
(HSAs). (For 2009, the out-of-pocket maximum for HSA-qualified
● 201% - 250% FPL—$2,000,
HDHPs is $5,800 for single coverage and $11,600 for family
● 251% - 300% FPL—$4,000,
coverage.) The cost-sharing subsidies would reduce those amounts
● 301% - 350% FPL—$4,500,
for 2014 as fol ows:
● 351% - 400% FPL—$5,000.
● Up to 200% FPL—reduction of two-thirds,
● 201% - 300% FPL—reduction of one-half,
Family coverage out-of-pocket maximums would be double these
● 301% - 400% FPL—reduction of one-third.
amounts.
Additional cost-sharing subsidies, if necessary, would be provided to
The bill specifies the actuarial values as follows:
ensure the plan cost-sharing was as follows:
● Up to 150% FPL—actuarial value of 97%,
● 151% - 200% FPL—actuarial value of 93%,
● Up to 150% FPL—actuarial value of 90%, and
● 201% - 250% FPL—actuarial value of 85%,
● 151% - 200% FPL—actuarial value of 80%.
● 251% - 300% FPL—actuarial value of 78%,
● 301% - 350% FPL—actuarial value of 72%,
If the HSA-related reductions caused the actuarial values to exceed
● 351% - 400% FPL—actuarial value of 70%.
the levels above, or for those between 201%-400% FPL to exceed
70%, then the out-of-pocket maximums would be raised accordingly.
The Commissioner would specify the cost-sharing for each income
§1402
range that plans would have to implement to meet the criteria
above. §§343-344
Payment of cost-sharing subsidies
By exchange Commissioner directly to insurers on behalf of
By the Secretary directly to insurers on behalf of qualified individuals.
qualified individuals. §341(a)(1)(2), §344(d)
§1402(c)(3)
CRS-59
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Table 9. Public Health Insurance Option
Topics for Table 9
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Primary location in bill
Sections 321-331
Section 1323
Law amended
Who establishes the public option The Secretary. §321(a) The
Secretary. §1323(b)(1)
Availability
The public option would only be available through an exchange.
The community health insurance option (“public option” hereafter)
§321(b)
would only be available through an exchange. However, states would
be permitted to enact a law to opt out of offering the public option.
§1323(a)(3)
Individual eligibility
Any individual eligible to purchase insurance through the
Any individual eligible to purchase insurance through the Exchange
exchange may enroll in the public option. Enrollment would be
may enroll in the public option. Enrollment would be voluntary.
voluntary. In general, any employee, including a Member of
§1323(a)(2)
Congress, could forgo employment-based health insurance and
choose instead to enroll in health insurance through any
Exchange plan, including both public and private plans. §329, §330
Application of exchange rules
The public option would be required to meet the requirements
The public option would have to meet the requirements that apply to
that apply to all exchange plans, including those related to
all plans participating in an exchange unless otherwise excluded. The
benefits, provider networks, consumer protection and cost-
requirements would include federal and state laws related to
sharing. With respect to the offer of the public option through
guaranteed renewal, rating, pre-existing conditions and
the exchange, the Secretary would be treated as the entity
nondiscrimination. §1323(b)(2)
offering exchange-participating plans (QHBPs). §321
Benefit levels
The public option would offer basic, enhanced, and premium
The public option would offer bronze, silver, gold and platinum plans.
plans, and may offer premium-plus plans. §321(b)
§1323(b)(4)
The public option would provide coverage only for the essential
health benefits, unless required by the state to include additional
benefits. If states require additional benefits, the cost of the benefits
would not affect the amount of any possible premium tax credit, and
the state would be required to defray the cost of the additional
benefits. §1323(b)(3)
Establishment of Treasury
An account for receipts and disbursements for operation of the
An account, the “Health Benefit Start-Up Fund” would be established
Account
public option would be established in the U.S. Treasury. §322(b)
in the U.S. Treasury to provide loans for the initial operation of the
public option. §1323(c)
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Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 9
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Establishment of premiums
The Secretary would establish geographically adjusted premiums
The Secretary would establish geographically adjusted premiums that
that comply with premium rules established by the Commissioner comply with market reform provisions and are sufficient to cover
at levels sufficient to cover medical claims, administration, a
medical claims, administration, a contingency margin (see below), and
contingency margin (see below), and repayment of start-up funds.
repayment of start-up funds. §1323(b)(5)
§322
The Secretary would col ect data necessary to establish premiums.
The Secretary would col ect data necessary to establish
§1323(b)(5)(C)
premiums, and other purposes. §321(e)
The Secretary could treat all enrollees in the public option as
members of a single pool. §1323(b)(5)(D)
Contingency margin
Premiums established before 2015 would be required to take into The establishment of premiums would be required to include an
account a contingency margin of not less than 90 days of
appropriate amount for a contingency margin. §1323(b)(5)(E)
estimated claims. For premiums starting in 2015, the Secretary
would solicit recommendations from the American Academy of
Actuaries on the amount of a contingency fund. §322(a)
Start-up funds
$2 billion would be appropriated to the Secretary for the
An amount requested by the Secretary would be appropriated
establishment of the public option. An additional appropriation
sufficient to pay (a) the start-up costs associated with the public
would be transferred to the fund to cover 90 days worth of
option and (b) payments on claims submitted during a period not
claims based on estimated enrollment. The amounts would be
more than the first 90 days during which the plan is offered. The
repaid within 10 years. §322(b)
amounts would be repaid within 9 years. §1323(c)
Solvency provisions
The public option would be prohibited from receiving federal
The Secretary would establish a federal solvency standard for the
funds if it became insolvent. §322(b)
public option. The public option would also be required to follow
state solvency standards. The Secretary would be required to
establish a reserve fund equal to at least the dol ar value of incurred
but not reported claims. §1323(b)(7)
Annual y, the Secretary would study the solvency of the option and
submit a report to Congress. If the community option was found to
be insolvent, the President would be required to submit proposed
legislation to address the insolvency. Congress would be required to
consider the legislation. §1323(f)
Establishment of payment rates
The Secretary would be required to negotiate payments for
The Secretary would be required to negotiate with medical providers
providers, items, and services, including prescription drugs.
to set payment rates. The payment rates in aggregate would not be
Payment rates in aggregate would not be allowed to be lower
al owed to be higher than the average rates paid by other qualified
than rates under Medicare, and not higher than average rates paid health plans offered in an exchange. Subject to the rate negotiations, a
by other qualified health benefit offering entities. The Secretary
State Advisory Council established by each state that did not prohibit
would be required to implement payment and delivery system
the public option, would be allowed to develop and encourage the
reforms under the public option that had been determined
use of innovative payment policies. §1323(b)(6)
successful under other parts of this Act. §323 and §324
CRS-61
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 9
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Provider networks
Medicare-participating providers would be providers for the
Provider participation in the public option would be voluntary.
public option, unless they chose to opt out in a process
§1323(a)(1)
established by the Secretary through a rule-making process that
included a public notice and comment period. §323(b)
Physicians who are licensed, certified, or otherwise permitted to
practice under state law would be able to participate in the public
option as preferred or non-preferred providers; preferred
physicians would be prohibited from balance-billing (that is, billing
for amounts above the established rates), while non-preferred
physicians could balance-bill up to 115% of a reduced payment
rate. Non-physician providers would be prohibited from balance-
billing. §325
Authority to contract
The Secretary would be al owed to enter no-risk contracts for
The Secretary would be al owed to enter no-risk contracts for the
the administration of the public option, in the same way the
administration of the public option, in the same way the Secretary
Secretary enters into contracts for the administration of
enters into contracts for the administration of Medicare. Functions
Medicare. Functions would include, subject to restrictions:
would include, subject to restrictions:
● Determination of payment amounts.
● Determination of payment amounts.
● Making payments.
● Making payments.
● Beneficiary education and assistance.
● Beneficiary education and assistance.
● Provider consultative services.
● Provider consultative services.
● Communication with providers.
● Communication with providers.
● Provider education and technical assistance. §321(c)
● Provider education and technical assistance.
The contract administrator would be required to meet specified
criteria including being a nonprofit entity. Contracts would last at
least 5 but not more than 10 years, and would be competitively bid.
The fee paid to the contractor could vary based on its performance
on specified quality and savings measures. §1323(e) If it was
determined that the contract administrator is a for-profit entity, the
entity would be liable to the Secretary for any payments received
from the start-up fund, and the entity would be permanently ineligible
to offer a QHP. §1323(c)(4)
Ombudsman
The Secretary would create an office of the ombudsman, which
would have duties similar to those of the Medicare Beneficiary
Ombudsman. §321(d)
Consumer protections
Enrollees would have access to federal courts for the
The consumer protection laws of each state would apply to the public
enforcement of rights in the same manner that Medicare
option. §1323(b)(7)
beneficiaries have with respect to the Medicare program. §321(g)
CRS-62
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 9
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Fraud and abuse
Provisions of civil law identified by the Secretary (in consultation
with the Inspector General) that impose sanctions with respect
to fraud, waste and abuse under Medicare would apply to the
public option. §326
HIPAA requirements and health
HIPAA’s administrative simplification standards for electronic
information privacy and security
transactions, and health information privacy and security would
apply to the public option. §327, §328
Veterans Affairs
The Secretary would be required to enter into a memorandum of
understanding with the Secretary of Veterans Affairs for the
col ection of costs associated with nonservice-connected care
provided in VA facilities to public health insurance enrollees. §331
Partnership with insurance
The Secretary, in collaboration with the NAIC would be allowed to
commissioners
promulgate regulations to establish additional requirements for the
public option. §1323(b)(8)
State advisory council
A state that does not opt out of the public option would be required
to establish or designate a State Advisory Council to provide
recommendations to the Secretary on the operation and policies of
the option in the state. §1323(d)
CRS-63
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Table 10.Consumer Operated and Oriented Plan (CO-OP) Program
Topics for Table 10
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Primary location in bill
Section 310
Section 1322
Law amended
None for the program administration. The tax provision amends
section 501(c) of the IRC. §1322(h)
Effective date
Not later than 6 months after enactment. §310(a)
An Advisory Board formed not later than three months after
enactment. §1322(b)(3)
Date when grant awards are made Not later than 36 months after enactment. §310(b)
The Secretary would award not later than July 1, 2013. §1322(b)(2)(D)
Who has primary responsibility to The Commissioner. §310(a) The
Secretary.
§1322(a)
establish and operate the CO-OPs
Specific limits on responsible
The Secretary would not be permitted to:
authority
● participate in any negotiations between qualified health insurance
issuers and any health care providers or drug manufacturers;
● establish or maintain a price structure for any benefits; and
● interfere with the competitive nature of providing health benefits.
§1322(f)
Advisors to program
Secretary of the Treasury. §310(a)
A 15-member Advisory Board appointed by the Comptroller
General. §1322(b)(3)(A)
Appropriations $5
billion.
§310(b)(7) $6
billion.
§1322(g)
Use of loans and grants
Would provide loans for assistance in meeting start-up costs and
Would provide loans for assistance in meeting start-up costs and
grants to provide assistance in meeting solvency requirements of
grants to provide assistance in meeting solvency requirements of the
the States. §310(b)(1)
states. §1322(b)
Conditions for participation
A grant or loan would not be awarded unless the following
A grant or loan would not be awarded unless the following conditions
conditions are met:
are met to be a qualified health insurance issuer:
● The cooperative would be a not-for-profit, member
● The cooperative would be a nonprofit, member organization under
organization with the membership being made up entirely of
state law.
beneficiaries of the insurance coverage offered by the
cooperative.
● The organization or a related entity could not have been
● The organization or a related entity could not have been operating
operating on or before July 16, 2009. on or before July 16, 2009.
● The cooperative’s governing documents would incorporate
● The cooperative’s governing documents would incorporate ethics
ethics and conflict of interest standard protecting against
and conflict of interest standard protecting against insurance industry
insurance industry involvement and interference. involvement and interference.
● The cooperative would not be sponsored by a State
● The organization would not be sponsored by a state or local
government.
government or any political subdivision of either.
● Substantially all the activities of the cooperative would consist
● The substantially all of the activities of the organization would
CRS-64
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 10
H.R. 3962
S.Amdt. 2786 to H.R. 3590
of the issuance of qualified health plans through an exchange. consist of the issuance of qualified health plans in the individual and
● The cooperative would be licensed to offer insurance in each
smal group markets.
state it is offering a plan. ● The cooperative would meet al of the requirements that other
issuers of qualified health plans are required to meet in any state,
including solvency and licensure requirements, rules on payments to
providers, network adequacy rules, rate and form filing rules, and any
applicable state premium assessments.
● A majority vote of its members would govern the cooperative. ● A majority vote of its members would govern the cooperative.
● The cooperative would operate with a strong consumer focus,
● The cooperative would operate with a strong consumer focus,
including timeliness, responsiveness, and accountability to its
including timeliness, responsiveness, and accountability to its
members.
members.
● Any profits made would be used to lower premiums, improve
● Any profits made would be used to lower premiums, improve
benefits, or to otherwise improve the quality of health care
benefits, or to otherwise improve the quality of health care delivered
delivered to its members. §310(b)(2)(A)-(I)
to its members.
● The cooperative would coordinate with the implementation of
state insurance reforms required by this bill. §1322(c)(1)-(6)
Priorities in making grants and
The Commissioner would give priority to cooperatives that:
In the context of ensuring there would be sufficient funding to
loans
establish at least one CO-OP insurance issuer in each State, and
taking into account the recommendations of the Advisory Board, the
Secretary would give priority to cooperatives that:
● operate on a statewide basis;
● operate on a statewide basis;
● use an integrated delivery system; and ● use an integrated delivery system; and
● have a significant level of financial support from
● have a significant level of financial support from nongovernmental
nongovernmental sources. §310(b)(3)
sources. §1322(b)(2)(a)
Interaction with exchanges
CO-OP grants would specifically be for qualified cooperatives
CO-OP grantees would be required to be qualified health plans,
provided through an exchange. §310(a), (b)(2)(E)
which are required to be part of an exchange, but may also be offered
outside of the exchange. §1322(b), (c)
Tax exemptions
Would require a CO-OP grantees to be not-for-profit, but does
Would amend the Internal Revenue Code on 1986 to establish a new
not create a new tax exemption or amend tax code. §310(a),
category in the list of exemptions under Section 501(c). Would
(b)(2)
require compliance with program requirements as a condition of the
tax exemption. §1322(h): IRC § 501(c)(29)
Restrictions on use of funds
CO-OP grantees would be restricted from using grant and loans for
attempting to influence legislation or for marketing. §1322(b)(2)(c)
Collaboration with other
CO-OP participants would be permitted to establish a private
cooperatives
purchasing council for collective purchasing arrangements for items
and services that increase administrative and other cost efficiencies
including claims administration, health information technology, and
actuarial services. This council could not set payment rates to
providers and would not preempt applicable antitrust law. §1322(d)
CRS-65
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Table 11. Selected Revenue Provisions
Topics for Table 11
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Primary location in the bill
Sections 531-534, 551-555
Sections 9001-9017
Law amended
IRC
IRC
Surcharge on high income
Current federal tax rates increase with
The bill would impose a tax equal to 5.4%
The Senate Amendment would impose an
individuals
income. The marginal tax rates vary from
on modified adjusted gross income (AGI)
additional tax of 0.5% on high-income
10% of taxable income for very low income that exceeds $500,000 for single filers and
workers with wages over $200,000 for
taxpayers to 35% for high-income
$1 million for joint filers.
single filers and $250,000 for joint filers
taxpayers.
Since employers will not know the wages
Effective date: Date of enactment of this
of a spouse, they are directed to collect
Among higher income taxpayers in 2009:
Act. §551
these revenues from all workers with
Married filers with adjusted gross income
Raises $460.5 billion over 10 years.
wages exceeding $200,000. Excess
over $372,950 pay $100,894.50 plus 35% of
withholding among joint filers would be
the excess over $372,950 in federal taxes.
reconciled on tax returns.
Single filers with adjusted gross income
The 0.5% tax would also be levied on the
over $372,950 pay $108,216 plus 35% of
self-employed if their incomes exceed the
the excess over $372,950
specified thresholds. The self-employed
would not be allowed to deduct this
In addition to federal tax rates, both
additional tax as a business expense.
employees and employers each pay a
payroll tax of 7.65%. Of which 6.2% is for
Effective for taxable years after December
Old Age Survivors and Disability Insurance
31, 2012. §9015
and 1.45% to for Hospital Insurance to
Raises $53.8 billion in revenues over 10
finance Medicare Part A.
years.
Excise Taxes
Excise tax on high-cost
The Amendment would impose an excise
plans
tax of 40% on health insurers and health
plan administrators for coverage that
exceeds certain thresholds ($8,500 single
coverage and $23,000 for family coverage
in 2013).
Effective January 1, 2013.
Thresholds indexed by growth in the
Consumer Price Index (CPI) plus 1% in
subsequent years.
Health insurance coverage subject to the
excise tax is broadly defined to include not
only the employer and employee premium
CRS-66
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 11
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
payments for health insurance (including
self-insured plans), but also premiums paid
by the employee and the employer for
dental and vision. In addition, tax-
advantaged accounts such as flexible
spending accounts (FSAs), health savings
accounts (HSAs) and health reimbursement
accounts (HRAs) are also specified as
health insurance coverage and subject to
the excise tax.
Alternative Thresholds:
Retired taxpayers (ages 55 to 64) and those
working in high-risk professions are subject
to higher thresholds ($9,850 for single
coverage and $26,000 for family coverage).
For individuals residing in high-cost states
the thresholds would be phased in between
2013 and 2016 starting from 20% higher
initial y and 5% higher by 2015. §9001
Raises $149.1 billion over 10 years.
Annual fee on health
An annual fee would be imposed on al
insurers
health insurers based on their market
share. The fee would be applied to net
premiums written. The total fee levied
across all health insurers would be $6.1
billion annually.
The fee would not apply to self-insured
plans or federal, state or government
entities. It does apply to companies or
organizations that underwrite government-
funded insurance (i.e., Medicaid managed
care plans, Federal Employees Health
Benefits Program [FEHBP]).
The effective date is January 1, 2010. §9010
Raises $60.4 billion over 10 years.
CRS-67
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 11
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Limit on executive pay of
Covered health insurance providers would
health insurance providers
not be able to deduct compensation above
$500,000 per year. This income threshold
would include deferred compensation.
This provision would be effective for
compensation paid in taxable years
beginning after 2012 with respect to
services performed after 2009. §9014
Raises less than $0.6 billion in revenues
over 10 years.
Annual fee on branded
An annual fee would be imposed on certain
prescription pharmaceutical
manufacturers and importers of branded
manufacturers and
prescription drugs (including biological
importers
products and excluding orphan drugs). The
total fee would be $2.2 billion a year and
imposed on each entity based on their
annual sales. §9008
Raises $22.2 billion in revenues over 10
years.
Annual fee on medical
A tax of 2.5% of a price determined as
An annual fee would be imposed on certain
device manufacturers
specified would be imposed on the first
manufacturers and importers of medical
taxable sale (including certain leases and
devices (that general y cost more than
uses) of a medical device. The tax would
$100 and are subject to more stringent
not apply to devices sold to (or of the type
safety and effectiveness controls by the
and quantity typical y sold to) consumers by Food and Drug Administration). The total
retail establishments. §552
fee would be $2 billion a year and would be
based on the companies annual sales of
Raises $20.0 billion over 10 years.
medical devices.
For sales of not more than $5 million, no
tax would be levied. For sales of more than
$5 million and less than $25 million, 50% of
sales would be subject to the excise tax.
For sales of more than $25 billion, 100%
would be subject to the excise tax. §9009
Raises $19.3 billion over 10 years.
CRS-68
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 11
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Excise tax on elective
Imposes a 5% tax on cosmetic surgery to
cosmetic medical
be paid by the individual on whom
procedures
procedure is performed. Effective for
procedures performed on or after January
1, 2010. §9017
Raises $5.8 billion over 10 years.
Modifications to Tax-Advantaged Accounts and Itemized Deductions for Health Care
Limitation on health flexible
Health FSAs are employer-established
H.R. 3962 would limit the amount of annual Same as H.R. 3962, except for effective
spending accounts (FSAs)
benefit plans that reimburse employees on
FSA contributions to $2,500 per person
date which would be January 1, 2010.
a pre-tax basis for specified health care
effective January 1, 2013. This threshold
§9005
expenses (e.g. deductibles, co-payments,
would be indexed to inflation in subsequent
and non-covered expenses). Under current
years. §532
law, it is at the discretion of each employer
to set limits on FSA contributions.
Raises $13.3 billion over 10 years.
Raises $14.6 billion over 10 years.
Raise penalty for non-
HSAs are also tax-advantaged accounts that H.R. 3962 would increase the penalty on
Same provision. §9004
qualified HSA distributions
al ow individuals to fund unreimbursed
non-qualified distributions from 10% to
medical expenses on a pre-tax basis. Eligible 20% of the disbursed amount for individuals
individuals establish and fund accounts
under age 65.
when they have a qualifying high deductible
health plan and no other health plan (with
Effective date: January 1, 2011. §533
some exceptions). Unlike FSAs, HSAs may
Raises $1.3 billion over 10 years
be rolled over and the funds accumulated
over time. Distributions from an HSA that
are used for qualified medical expenses are
not included in taxable income. Those not
used for qualified medical expenses are
taxable as ordinary income and are subject
to an additional 10% penalty tax for
individuals under age 65.
Modify definition of medical
Under current law, qualified medical
H.R. 3962 would not al ow over-the
Same provision. §9003
expenses for FSAs, HSAs,
expenses for FSAs, HSAs, and HRAs can
counter prescriptions to be covered by
and HRAs.
include over-the-counter medications.
these tax-advantaged accounts unless they
are prescribed by a physician.
Effective date: January 1, 2011. §531
Raises $5.0 billion over 10 years.
CRS-69
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 11
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Eliminate deductions for
Under current law, employers providing
Employers would be required to
Same provision, except different effective
retiree expenses allocable
prescription drug coverage to retirees that
coordinate the subsidy and the deduction
date: January 1, 2011. §9012
to Medicare Part D subsidy
meet federal standards are eligible for
for retiree prescription drug coverage. In
subsidy payments from the federal
this provision, the amount allowable as a
Raises $5.4 billion over 10 years.
government. These qualified retiree
deduction for retiree prescription drug
prescription drug plan subsidies are
coverage would be reduced by the amount
excludible from the employer’s gross
of the federal subsidy received.
income for the purposes of regular income
tax and alternative minimum tax
Effective date: January 1, 2013. §534
calculations. The employer is also allowed
Raises $2.2 billion over 10 years.
to claim a business deduction for retiree
prescription drug expenses even though
they also receive the federal subsidy to
cover a portion of those expenses.
Raise threshold for itemized Taxpayers who itemize their deductions
Would increase the threshold from 7.5% to
medical expenses
may deduct unreimbursed medical
10% of AGI for taxpayers who are under
expenses that exceed 7.5% of adjusted
age 65.
gross income (AGI). Medical expenses
include health insurance premiums paid by
Effective date: January 1, 2013.
the taxpayer, but also can include certain
Taxpayers over age 65 would be
transportation and lodging expenses related
temporarily excluded from this provision
to medical care as well as qualified long-
and still be subject to the 7.5% limit for the
term care costs, as well as long-term care
time period 2013 and 2016. §9013
premiums that do not exceed a certain
amount.
Raises $15.2 billion over 10 years.
Note: Revenue estimates are from the Joint Committee on Taxation JCX-53-09 and JCX-5509.
CRS-70
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Table 12. Abortion
Topics for Table 12
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Primary location in bill
Sections 222(e), 258, 259, 265, 304(d)
Section 1303
Law amended
Coverage of abortion services by
The issuer of a qualified health benefits plan would determine
The issuer of a qualified health plan would determine whether the
qualified health plans
whether the plan provides coverage for either elective abortions
plan provides coverage for either elective abortions or abortions for
or abortions for which the expenditure of federal funds
which the expenditure of federal funds appropriated for HHS is
appropriated for HHS is permitted. However, if a plan includes
permitted. §1303(a)(1)(A)
coverage for elective abortions, the entity that offers the plan
must offer another plan that is identical in every respect, except
that it does not cover elective abortions. §222(e)(2), 265(c)(3)
Coverage of abortion services by
The Secretary would determine whether the public option
The public option would be required to cover abortions for which
the public option
provides coverage for either elective abortions or abortions for
the expenditure of federal funds appropriated for HHS is permitted in
which the expenditure of federal funds appropriated for HHS is
a manner consistent with Medicaid.
permitted. §222(e)(2)
The public option could cover elective abortions if the following
assurances are made by the Secretary of HHS:
● No federal funds are used for elective abortion coverage;
● The fund segregation requirements applicable to exchange plans are
similarly satisfied;
● The basic per enrol ee, per month cost for including coverage for
elective abortions is determined on an average actuarial basis; and
● The United States bears no insurance risk for elective abortion
coverage. §1303(a)(1)(C)
Assured availability of varied
The Secretary would ensure that in any exchange at least one plan
coverage through exchange
provides coverage for both elective abortions and abortions for
which the expenditure of federal funds appropriated for HHS is
permitted. The Secretary would also ensure that in any exchange at
least one plan does not provide coverage of elective abortions.
§1303(a)(1)(D)
Use of federal funds for abortion
Would prohibit federal funds from paying for an abortion or
Would prohibit federal funds attributable to a premium or cost-
services
covering any part of the costs of any health plan that includes
sharing subsidy to pay for elective abortion services that an issuer of
coverage of abortion, except in cases where a pregnancy is the
an exchange may offer. §1303(a)(2)(A)
result of an act of rape or incest, or where a woman’s life would
be endangered if an abortion were not performed. An
affordability credit could not be used to purchase coverage under
a health benefits plan or to purchase separate supplemental
coverage for elective abortions. §265(a), (b)
CRS-71
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 12
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Segregation of funds
Would require the issuer of an exchange plan that provides coverage
for elective abortions to segregate, out of amounts other than those
attributable to premium and cost-sharing subsidies, an amount equal
to the actuarial value of providing elective abortions for all enrollees,
as estimated by the Secretary. §1303(a)(2)(B)
Provider conscience protections
Would prohibit a federal agency or program, and any state or
Would prohibit discrimination against an individual health care
local government that receives federal financial assistance under
provider or health care facility because of a willingness or
H.R. 3962 from
unwillingness to provide, pay for, provide coverage of, or refer for
● subjecting any individual or institutional health care entity to
abortions, if doing so is contrary to the religious or moral beliefs of
discrimination on the basis that the health care entity does not
the provider or facility. §1303(a)(3)
provide, pay for, provide coverage of, or refer for abortions; or
● requiring any health plan created or regulated under H.R. 3962
(or any amendment made by the bill) to subject any individual or
institutional health care entity to discrimination on the basis that
the health care entity does not provide, pay for, provide coverage
of, or refer for abortions. §259
Preemption of state and federal
State laws regarding the prohibition or requirement of coverage
State laws regarding the prohibition or requirement of coverage or
laws regarding abortion
or funding for abortions, and state laws involving abortion-related funding for abortions, and state laws involving abortion-related
procedural requirements would not be preempted. Federal
procedural requirements would not be preempted. Federal
conscience protection and abortion-related antidiscrimination
conscience protection and abortion-related antidiscrimination laws, as
laws, as well as Title VII of the Civil Rights Act of 1964, would
well as Title VII of the Civil Rights Act of 1964, would not be affected
also not be affected by H.R. 3962. §258
by the Senate Amendment. §1303(b)
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Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Table 13. Verification of Immigration Status and Treatment of Noncitizens for Exchange Coverage and Subsidies
Topics for Table 13
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Primary location in bill
Sections 341, 347, 501
Sections 1312, 1401, 1411, 1412
Law amended
IRC, regarding the individual mandate
IRC, regarding the individual mandate
Individual mandate to obtain
All citizens and noncitizens who meet the IRC definition of
All citizens, nationals and individuals who are lawfully present would
health coverage
resident alien would be subject to the individual mandate.
be subject to the individual mandate. §1501(b): IRC§5000A(d)(3)
Nonresident aliens would be exempt. §501: IRC§59B(c)(2)
Access to health exchange
There is no express restrictions on noncitzens—whether legal y
Exchange eligibility would be limited to individuals who are a citizen
or illegally present, or in the United States temporarily or
or national of the United States or are lawfully present in the United
permanently—accessing and paying for coverage available through States. As a result, unauthorized aliens would be barred from the
the health insurance exchange.
health insurance exchange. §1312(f)(3)
Eligibility for premium and cost-
Those eligible would be "an individual who is lawfully present in a
Lawfully present aliens who meet the income requirements but are
sharing subsidies
State in the United States (other than as a nonimmigrant
barred from Medicaid because of alienage would be eligible for the
described in a subparagraph (excluding subparagraphs (K), (T),
premium and cost-sharing subsidies. §1401(a)
(U), and (V)) of section 101(a)(15) of the Immigration and
Nationality Act)." The only nonimmigrants who would be eligible
Unauthorized aliens would not be eligible for the premium and cost-
to obtain subsidies would be those trafficking victims, crime
sharing subsidies. §1412(d)
victims, fiancées of U.S. citizens, and certain V visaholders who
have had applications for LPR status pending for three years.
§341(b)(4)
Unauthorized aliens would not be eligible for the premium and
cost-sharing subsidies: “Nothing in this subtitle shall allow
Federal payments for affordability credits on behalf of individuals
who are not lawfully present in the United States.” §347
Verification of status
With modifications, the citizenship verification procedures as wel The Social Security Administration would verify the name, social
as the noncitizen verification procedures of §1137(d) of the SSA
security number, and date of birth of the individual. For those
that currently apply to Medicaid and other federal means-tested
claiming to be U.S. citizens, the claim will be considered substantiated
programs would apply to the citizenship and immigration
if the claim of citizenship is consistent with SSA data. For individuals
determination for the proposed premium and cost-sharing
who do not claim to be U.S. citizens but claim to be lawful y present
subsidies. §341
in the United States, the claim will be considered substantiated if the
claim of lawful presence is consistent with Department of Homeland
Security (DHS) data. It would rely on that procedures currently used
by Medicaid (i.e., §1902(e) of the SSA) for individuals whose claims of
citizenship or immigration status are not verified with federal data.
§1411
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Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Table 14. Other Provisions
Topics for Table 14
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Employment-based wel ness HIPAA clarifies that group health plans and
The Secretaries of HHS and Labor would
Would largely codify an amended version
programs
health insurance issuers offering group
be required jointly to establish a grant
of the HIPAA wellness program
health coverage may establish premium
program to help smal employers cover
regulations.
discounts or rebates or modify otherwise
50% of the costs of providing “qualified”
applicable copayments or deductibles (i.e.,
employee wellness programs.
Wellness programs that do not require an
rewards) in return for adherence to
individual to satisfy a standard related to a
wellness programs. HIPAA regulations
Allowable costs would be those
health factor as a condition for obtaining a
provide a framework for structuring these
attributable to the wel ness program
reward (or do not offer a reward) would
wellness programs and divide wellness
(excluding the cost of food), and not to the
not violate HIPAA, so long as participation
programs into two categories. First, if a
health plan or health insurance coverage
in the programs is made available to all
wellness program provides a reward based
offered in connection with such a plan.
similarly situated individuals.
solely on participation in a wellness
Wellness programs with conditions for
program, or if it does not provide a
Grants for a given plan year would be
obtaining a reward that are based on an
reward, the program complies HIPAA
capped at $150 per employee, could be
individual meeting a certain standard
without having to satisfy any additional
provided for up to three years and would
relating to a health factor, must meet
standards, as long as the program is made
be capped at $50,000, in total, for an
additional requirements. Among these
available to all similarly situated individuals.
employer.
requirements, the reward must be capped
Second, if a reward is based on an
A qualified wellness program means a
at 30% of the cost of the employee-only
individual meeting a certain standard
program that is jointly certified by the
coverage under the plan (instead of 20%
relating to a health factor, then the
Secretaries of HHS and Labor meets at
under the current regulations), but the
program must meet additional
least three out of four required
Secretaries of HHS, Labor, and the
requirements. Among these additional
components. These components pertain to
Treasury would have the discretion to
requirements, a reward offered by this type health awareness, health education,
increase the reward up to 50%.
of wellness program must not exceed 20%
periodic screenings, employee engagement,
of the cost of employee coverage under
and listed behavioral change activities
The HHS Secretary, in consultation with
the plan (i.e., the amount paid by the
(including smoking cessation and weight
the Secretaries of the Treasury and Labor,
employer and the employee for that
reduction) and having supportive work
would establish a 10-state pilot program in
employee for coverage).
policies regarding tobacco use, food
which participating states would be
choices, stress management, and physical
required to apply the wel ness program
activity.
provisions to health insurers in the
§112
individual market.
§1201: ERISA §702, PHSA §2702, IRC §9802
CRS-74
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 14
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Multiple employer welfare
ERISA defines a MEWA as an employee
Persons (in connection with MEWAs)
arrangements (MEWAs)
welfare benefit plan or other arrangement
would be prohibited from knowingly
that is established and maintained to
making false statements or representations
provide specified benefits, including health
in connection with the marketing or sale of
insurance coverage, to the employees of
the plan.
two or more employers. According to the
Department of Labor, although MEWAs
MEWAs would be required to register with
can be provided through legitimate
the Secretary of Labor before operating in
organizations, they are sometimes
a state. The Secretary would have the
marketed using attractive but actuarially
authority to adopt regulatory standards or
unsound premium structures that generate
issue orders that a person engaged in the
large administrative fees for the promoters.
business of providing insurance through a
In 1983, fol owing discovery of certain
MEWA is subject to the laws of the state in
abuses and mismanagement of MEWA
which such person operates.
funds, Congress passed a special exception
The Secretary would be authorized to
to ERISA preemption that al ows states to
issue cease and desist orders against
regulate MEWAs under state insurance
certain MEWAs if it appears that the
laws, subject to certain limitations.
alleged conduct of the MEWA is fraudulent,
However, the Department of Labor has
creates an immediate danger to the public
indicated that it continues to find instances
safety or welfare, or is causing or can be
of fraud and abuse with regard to MEWAs.
reasonably expected to cause significant,
imminent, and irreparable public injury.
§§6601-6607: ERISA
CRS-75
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 14
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Medical malpractice
Medical malpractice liability reform has
Would authorize the Secretary of Health
Includes a “Sense of the Senate” with
often been considered by Congress,
and Human Services to make incentive
respect to medical malpractice.
however it is the states that regulate or
payments to states that enact and
have implemented tort reform for medical
implement effective alternative medical
It expresses that the Senate believes:
malpractice lawsuits.
liability laws. The content of such a law
• health care reform presents an
would be one that includes provisions for
Where states have enacted tort reform,
opportunity to address issues related
either, or both, a certificate of merit or
provisions vary regarding statutes of
to medical malpractice and medical
early offer program, and that does not limit
limitation and caps on non-economic
liability insurance;
attorneys’ fees or impose caps on damages.
damages or punitive damages. Typical tort
• states should be encouraged to
reform provisions also include modifying
In determining the effectiveness of such a
develop and test litigation alternatives
common law tort doctrines such as joint
law, the Secretary must consider whether
while preserving an individual's right to
and several liability, contributory and
it (1) makes the medical liability system
seek redress in court; and
comparative negligence, periodic payments,
more reliable through the prevention of, or
and the collateral source rule.
prompt resolution of, disputes; (2)
• Congress should consider establishing
encourages the disclosure of health care
a State demonstration program to
errors; and (3) maintains access to
evaluate alternatives to the existing
affordable liability insurance.
civil litigation system with respect to
medical malpractice claims.
Nothing in the section would preempt or
modify existing state laws that limit
§6801
attorneys’ fees or cap damage awards; nor
would the provision impair a state’s
authority to establish such laws, or restrict
the eligibility of a state for an incentive
payment on the basis of such laws provided
they are not established or implemented as
part of an alternative medical liability law
that meets the requirements described
above.
The Secretary would be required to submit
to Congress an annual report on the
progress states are making in enacting and
implementing alternative medical liability
laws and the effectiveness of such laws. The
section would authorize to be appropriated
such sums as necessary for the incentive
payments, which would be used to improve
health care in the state.
§2531
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Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 14
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
End-of-life planning
QHBPs would be required to provide for
the dissemination of information related to
end-of-life planning to individuals who seek
enrollment in Exchange-participating plans.
QHBPs would also be required to present
individuals with the option to establish
advance directives and physician’s orders
for life sustaining treatment, according to
state laws, as well as present information
related to other planning tools.
QHBPs would be prohibited from
promoting suicide, assisted suicide, or the
active hastening of death.
§240
Assisted suicide
The federal government, any state or local
government, or health care provider that
receives federal financial assistance under
this Amendment or any health plan created
under this Amendment would be
prohibited from subjecting an individual or
institutional health care entity to
discrimination based on not providing a
health care items or services for the
purpose of causing, or assisting in causing,
the death of any individual, such as by
assisted suicide, euthanasia, or mercy
killing.
The HHS Office for Civil Rights would be
designated to receive complaints of
discrimination based on this section.
§1553
CRS-77
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 14
Current Law
H.R. 3962
S.Amdt. 2786 to H.R. 3590
Standards for electronic
To promote the growth of electronic
Section 115 would require the Secretary,
Section 1104 also seeks to create
billing and other
record keeping and claims processing,
within two years of enactment, to adopt an
uniformity in the use of HIPAA electronic
administrative transactions
HIPAA’s Administrative Simplification
additional set of administrative and financial
transactions standards, though it takes a
provisions (SSA Sections 1171-1179)
transactions standards to help clarify,
different approach. It would establish a
mandated the development of electronic
complete, and expand the existing HIPAA
timeline, extending through mid-2014, for
format and data standards for specified
standards. The goal would be to create
the adoption of a single set of operating
administrative and financial transactions
uniformity in the use of those standards.
rules for each HIPAA transaction for which
between providers and health plans.
Within five years of enactment, the
there is an existing standard. It also would
Updated standards to replace the versions
Secretary would have to submit to
mandate the adoption of an electronic
currently in use were recently published.
Congress a plan for implementing and
funds transfer (EFT) standard for the
The compliance deadline for the updated
enforcing the new standards. Until such
payment of health claims. By December 31,
standards is January 1, 2012. While the
time as the new standards are adopted, the
2015, health plans would have to certify
standards are intended to eliminate
Secretary would be required to adopt an
that their health information technology
variation in electronic billing and other
interim companion guide (including
systems comply with the most current
routine transactions, they include optional
operating rules) for each HIPAA
standards and operating rules. Health plans
data/content fields that can accommodate
transaction.
that failed to meet the certification
plan-specific information. Providers often
requirements would be fined.
are faced with a multiplicity of
The Secretary would be required to
implementation guides and plan-specific
establish a unique health plan identifier and
The Secretary would be required to
requirements and must customize
adopt a transaction standard for health
establish a unique health plan identifier and
transactions on a plan-by-plan basis.
claim attachments (one of the two HIPAA-
adopt a transaction standard and associated
specified transactions for which a standard
operating rules for health claim
HIPAA also mandated the development of
has yet to be adopted). The section would
attachments (one of the two HIPAA-
unique identifiers for providers, health
amend the Medicare statute to require that
specified transactions for which a standard
plans, employers, and individuals for use in
all Part A and Part B payments, with some
has yet to be adopted). The section would
standardized transactions. Unique
exceptions, be made electronically as of
amend the Medicare statute to require that
identifiers have been adopted for providers
January 1, 2015.
all Part A and Part B payments, with some
and employers, but not for health plans.
exceptions, be made electronically as of
Congress has blocked the development of a §115
January 1, 2014.
unique individual identifier.
§1104
CRS-78
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Author Contact Information
Chris L. Peterson, Coordinator
Janemarie Mulvey
Specialist in Health Care Financing
Specialist in Aging Policy
cpeterson@crs.loc.gov, 7-4681
jmulvey@crs.loc.gov, 7-6928
Hinda Chaikind
Mark Newsom
Specialist in Health Care Financing
Analyst in Health Care Financing
hchaikind@crs.loc.gov, 7-7569
mnewsom@crs.loc.gov, 7-1686
Bernadette Fernandez
Jon O. Shimabukuro
Analyst in Health Care Financing
Legislative Attorney
bfernandez@crs.loc.gov, 7-0322
jshimabukuro@crs.loc.gov, 7-7990
Paulette C. Morgan
Ruth Ellen Wasem
Specialist in Health Care Financing
Specialist in Immigration Policy
pcmorgan@crs.loc.gov, 7-7317
rwasem@crs.loc.gov, 7-7342
Acknowledgments
Jennifer Staman (7-2610) contributed the sections on MEWAs and wellness programs, and to the
definitions in the report’s introduction. Vivian Chu (7-4576) contributed the section on medical
malpractice. Kirsten Colello (7-7839) contributed the sections on end-of-life planning and assisted suicide.
Steve Redhead (7-2261) contributed the section on standards for electronic billing and other administrative
transactions.
Congressional Research Service
79