A Comparative Analysis of Private
Health Insurance Provisions of H.R. 3962
and Senate-Passed H.R. 3590
Chris L. Peterson, Coordinator
Specialist in Health Care Financing
Hinda Chaikind
Specialist in Health Care Financing
Bernadette Fernandez
Analyst in Health Care Financing
Paulette C. Morgan
Specialist in Health Care Financing
Janemarie Mulvey
Specialist in Aging Policy
Mark Newsom
Analyst in Health Care Financing
Jon O. Shimabukuro
Legislative Attorney
January 8, 2010
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. On December 24, 2009, the
U.S. Senate passed its version of health insurance reform, the Patient Protection and Affordable
Care Act, in H.R. 3590, as amended by the Senate (hereafter referred to simply as H.R. 3590).
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 bill. 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 bill 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 bill, not eligible
for) other coverage, as well as small businesses, could choose from private health insurance
plans. In addition, under the House bill, 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. Payments to providers (doctors, hospitals)
would be established through negotiations with the Secretary. The Senate bill would not include a
public option. However, the Director of the Office of Personnel Management would enter into
contracts with health insurance issuers to offer at least two multi-state qualified health plans
(MSQHPs) through each exchange in each state to provide individual, or in the case of small
employers, group coverage. 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.
Congressional Research Service
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 ....................................... 6
Essential Benefits........................................................................................................................ 7
Individual Mandate ..................................................................................................................... 8
Employer Mandate...................................................................................................................... 8
Small Business Tax Credit......................................................................................................... 10
Health Insurance Exchanges...................................................................................................... 12
Premium and Cost-Sharing Subsidies ........................................................................................ 13
Public Health Insurance Option/Multi-State Qualified Health Plans........................................... 16
Consumer Operated and Oriented Plan (CO-OP) Program ......................................................... 17
Selected Revenue Provisions..................................................................................................... 19
Abortion ................................................................................................................................... 20
Verification of Immigration Status and Treatment of Noncitizens for Exchange Coverage
and Subsidies ......................................................................................................................... 22
Figures
Figure 1. Two Examples of Employer Penalties for Not Offering Coverage ............................... 11
Figure 2. Maximum Out-of-Pocket Premiums for Eligible Individuals, by Federal
Poverty Level......................................................................................................................... 15
Figure 3. Actuarial Values Reflective of Cost-Sharing Subsidies, by Federal Poverty
Level ..................................................................................................................................... 16
Tables
Table 1. Reforms Prior to Full Implementation .......................................................................... 24
Table 2. Private Health Insurance Market Reforms at Full Implementation Date ........................ 42
Table 3.Essential Benefits ......................................................................................................... 58
Table 4. Individual Mandate...................................................................................................... 61
Table 5. Employer Mandate....................................................................................................... 64
Table 6. Small Business Tax Credit ........................................................................................... 68
Table 7. Health Insurance Exchanges ........................................................................................ 69
Table 8. Premium and Cost-Sharing Subsidies........................................................................... 74
Table 9. Public Health Insurance Option/Multi-State Qualified Health Plan ............................... 77
Table 10.Consumer Operated and Oriented Plan (CO-OP) Program........................................... 82
Congressional Research Service
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Table 11. Selected Revenue Provisions...................................................................................... 85
Table 12. Abortion .................................................................................................................... 91
Table 13. Verification of Immigration Status and Treatment of Noncitizens for Exchange
Coverage and Subsidies ......................................................................................................... 94
Table 14. Other Provisions ........................................................................................................ 95
Contacts
Author Contact Information .................................................................................................... 104
Acknowledgments .................................................................................................................. 104
Congressional Research Service
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 as S.Amdt. 2786,
further amended on the Senate floor, and passed in the Senate on December 24, 2009, as H.R.
3590, the Patient Protection and Affordable Care Act (hereafter simply referred to as H.R. 3590,
or the Senate bill).
This report compares many of the private health insurance provisions of H.R. 3962 and H.R.
3590. 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 the House and Senate bills 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;
Multi-state qualified health plans. Hinda Chaikind 7-7569.
• Table 10. Cooperatives. Mark Newsom, 7-1686.
• Table 11 Selected revenue provisions. Janemarie Mulvey, 7-6928.
• Table 12. Abortion. Jon Shimabukuro, 7-7990.
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.
Congressional Research Service
1
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. 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. 4 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
condition exclusions, guaranteed availability and renewability of plans for certain
4 CRS Report RL34443, Summary of the Employee Retirement Income Security Act (ERISA).
Congressional Research Service
2
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
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.
Congressional Research Service
3
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
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.5 The practices of some health
insurance companies have been cited as meriting immediate reform, such as unreasonable annual
or lifetime limits,6 rescissions,7 and discrimination against individuals with pre-existing
conditions.8 The cost, reflected in rising health insurance premiums, and the quality of care have
also been noted as significant concerns requiring immediate attention.9 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:
• Restrictions on 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.
5 For an in-depth review of health reform issues see CRS Report R40517, Health Care Reform: An Introduction.
6 Annual or lifetime limits refer to the maximum dollar amount that a health plan will pay toward individuals’ covered
health care expenses.
7 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 substantial amount. Generally, in these cases the insurer
carefully reviews the member or policyholder’s application for coverage, and cites a discrepancy that permits canceling
the contract. Rescission applies not only at the time of cancellation but for the entire period the policy was in effect,
leaving the previously-enrolled individual financially responsible for all medical services received as if she was never
covered.
8 U.S. Congress, House Committee on Ways and Means, hearing on Health Reform in the 21st Century, 111th
Congress, 1st Session, April 22, 2009 (Washington: GPO, 2009). U.S. Congress, House Committee on Education and
Labor, hearing on Ways to Reduce the Cost of Health Insurance for Employers, Employees, and their Families, 111th
Congress, 1st Session, April 23, 2009 (Washington: GPO, 2009).
9 “American’s Health Future Act of 2009,” S.Rept. 111-89, Committee on Finance.
Congressional Research Service
4
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
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
bill 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-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 bill would, for
example, do the following:
• Group health plans and health insurance issuers would be required to provide
coverage for preventive health services.
• The Secretary would be required to develop standards for plans in the group and
individual markets for providing their enrollees with a summary of benefits and
coverage.
• Sponsors of group health plans (other than a self-insured plan) would be
prohibited from establishing eligibility rules based on the salary of the employee.
• The Secretary would be required to develop regulations for the group and
individual markets governing acceptable provider reimbursement structures that
improve quality of care.
• Hospitals would be required to establish a list of standard charges for items and
services in accordance with guidelines published by the Secretary.
• Group and individual plans would be required to have an effective appeals
process as part of an immediate reform.
• Grants would be provided to states to establish supports to assist consumers with
filing complaints and appeals regarding enrollment, and to resolve problems with
obtaining premium credits.
• The plan or issuer would be required to permit the designation of any
participating primary care provider or pediatrician who is available to accept the
individual.
• If a group health plan or health insurance issuer covers emergency services they
would be required to cover those services without the need for any prior
authorization and without the imposition of coverage limitations irrespective of
the provider’s contractual status with the plan.
• Centers established to collect medical reimbursement data would be required to
develop, and make publicly available, fee schedules and other database tools that
fairly and accurately reflect market rates for medical services.
Congressional Research Service
5
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
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 bill, January 1, 2014.
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 for most of these provisions would be January 1, 2013; under
the Senate bill, the effective date would be January 1, 2014. Many of the market reforms
specified in the Senate bill 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 bill (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 bill would
require only plans offered through the exchange to be qualified plans. The Senate bill 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), many such
protections under the Senate bill would become effective prior to full implementation of the
Congressional Research Service
6
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
private market provisions. In contrast, H.R. 3962 would make effective its consumer protections
at full implementation.
The Senate bill 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. The Senate bill also would
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
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.
Some Differences
The Senate bill would specify maximum deductible amounts applicable to the essential health
benefits package offered by small group plans, 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 bill, in contrast, would use the amounts specified in the tax code applicable to certain
high-deductible health plans in those years.
Congressional Research Service
7
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
H.R. 3962 would prohibit the application of an annual limit on essential benefits. The Senate bill
would prohibit “restricted” 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
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.
Congressional Research Service
8
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
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
exchange plan and received a premium subsidy. A special rule would apply to those employers
whose substantial annual gross receipts were attributable to the construction industry. For these
employers, instead of using the 50 full-time employee count for the employer requirement,
employers who employed an average of at least 5 full-time employees on business days during
the preceding calendar year and whose annual payroll expenses exceeded $250,000 for such
preceding calendar year would be subject to the employer requirements. 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. (This figure does not
include the special rule for construction workers.) 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 bill, 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.
Congressional Research Service
9
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
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 for average employee compensation
over $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. The
House bill would begin to phase out the credit as average employee compensation exceeded
$20,000, while the Senate bill would begin to phase out the credit at $25,000. 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.
Congressional Research Service
10
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Figure 1. Two Examples of Employer Penalties for Not Offering Coverage
$5,000
ee
oy $4,000
pl
m
e
per $3,000
y
lt
na
e
H.R. 3962: Passed by
House
$2,000
ax p
t
H.R. 3590: Passed by
d
Senate
e
iz
al
u $1,000
n
n
A
$0
0
10
20
30
40
50
60
70
80
90
100
Number of employees,
assuming all are full time with $50,000 annual wages
$5,000
e
$4,000
oye
pl
em
$3,000
lty per
H.R. 3962: Passed by
House
pena
H.R. 3590: Passed by
x
Senate
a $2,000
ed t
iz
al
$1,000
nuu
A
$0
0
10
20
30
40
50
60
70
80
90
100
Number of employees,
assuming all are full time with $14,872 annual wages
Source: CRS analysis.
Notes: Potential penalties shown are for 2013 under H.R. 3962 and for 2014 under H.R. 3590. Additional y,
analysis of Senate bill does not include the provisions relating to construction workers.
Congressional Research Service
11
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
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 bill, 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 bill, 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
bill permits nongroup plans to be offered outside an exchange.
Congressional Research Service
12
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Unlike the House bill, the Senate bill 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 bill would initially permit states the option to either define “small employers” eligible
to obtain exchange coverage as those with 100 or fewer employees or as those 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 bill.
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.10 The American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 as
amended by the Department of Defense Appropriations Act, 2010, P.L. 111-118) included
provisions to provide premium subsidies of 65% for health insurance coverage through COBRA
for the unemployed; the subsidy is available for up to 15 months to certain unemployed
individuals involuntarily terminated between September 1, 2008, and February 28, 2010. 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 bill 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),11 be enrolled
in an exchange plan (not through a qualifying employer), and be citizens or lawful residents12
who are not eligible for Medicaid.13 Under both bills, when the premium and cost-sharing credits
are first made available, they would only be available to individuals enrolled in the benefit tier
10 CRS Report RL32620, Health Coverage Tax Credit.
11 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.
12 See Table 13 for more information about the citizenship, lawful residence, and verification requirements.
13 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 bill, citizens and qualifying aliens would be eligible for
Medicaid up to 150% FPL by 2014, when the bill’s premium credits would be available.
Congressional Research Service
13
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
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 bill. Under H.R. 3962, premium subsidies would be made directly from
the federal government to insurers, while the Senate bill provides the premium subsidies in the
form of 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 bill, 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 bill, 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 bill; however, between roughly 250% and 400% FPL,
the Senate bill requires a smaller contribution by qualifying individuals toward premiums, as
illustrated in Figure 2.
Congressional Research Service
14
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
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: Passed by
Senate
2%
1%
0%
100%
150%
200%
250%
300%
350%
400%
Federal Poverty Level
Source: CRS analysis.
Notes: Under the Senate bill, 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 bill, 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.
Congressional Research Service
15
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: Passed by Senate
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/Multi-State
Qualified Health Plans
One issue that has received congressional attention is whether or not to include either a publicly
sponsored health insurance plan or plans similar to those offered to Members of Congress and
federal employees through the Federal Employees Health Benefits Program (FEHBP), and if so,
to what extent should such offerings 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.
Under FEHPB, the Office of Personnel Management (OPM) is authorized to contract with
insurance carriers; approve qualified health benefits plans for participation in the program;
negotiate with plans about benefit and premium levels; determine the times and conditions for
Congressional Research Service
16
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
open seasons during which eligible individuals may elect coverage or change plans; make
information available to employees concerning plan options; apply administrative sanctions to
health care providers who have committed certain violations; and administer the financing of the
program. OPM is responsible for maintaining the funds that hold contingency reserves for the
plans and the fund that receives premium payments from enrollees and employing agencies, from
which premiums are disbursed to participating plans.
Some Common Features Between the Bills
The public option in the House bill and the multi-state health qualified health plans in the Senate
bill could only be offered through the exchange.
Some Differences
As detailed in Table 9, the House bill would require the Secretary to establish a public health
insurance option available only to individuals eligible to purchase insurance through an exchange.
The Secretary would be given start-up funding and the authority to enter into contracts for 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. The House bill would
not allow states to opt out of the public option. 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 House bill would allow 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 bill does not include a public option. The Director of OPM would enter into contracts
with health insurance issuers to offer at least two multi-state qualified health plans (MSQHPs)
through each exchange in each state. Such plans would provide individual, or in the case of small
employers, group coverage. A health insurance issuer would be required to agree to offer a
MSQHP that met the requirements in each exchange in each state. States could require additional
benefits, but there would be no additional premium tax credit provided for the state-only
mandated benefits. Enrollees in a MSQHP would be treated as a separate risk pool from FEHBP.
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.14 The incentives of a cooperative
14 Health insurance cooperatives can either be collectively owned or governed. The former is a mutual insurance
company, and the latter is 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.
Congressional Research Service
17
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
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.15 There are no current law incentives or funds for 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 earnings16 directly to its members, or by investing in plan members
via lower premiums, lower cost-sharing, expanded benefits, and innovations such as wellness
programs, chronic disease management, and integrated care.17 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.18
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.19 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.20 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.”21
Some Common Features Between the Bills
Both the Senate bill 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 bill 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.
15 August 5, 2009, NCBA letter to Senator Rockefeller
http://commerce.senate.gov/public/_files/NCBACoopResponseLetter080509.pdf.
16 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.
17 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.
18 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.
19 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.
20 “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.
21 “Hamm releases Blue Cross Blue Shield target exam report,” available online at
http://www.nd.gov/ndins/communications/pressreleases/detail.asp?newsID=204.
Congressional Research Service
18
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
• 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.
• Cooperatives receiving grants from the CO-OP program would be required to be
governed by the majority vote of their membership.
• Cooperatives receiving grants from the program would be required to operate
with a strong consumer focus, including timeliness, responsiveness, and
accountability to their 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 bill, 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 bill 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
bill 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 bill, $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 bill, 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 bill, 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.
Congressional Research Service
19
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
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.
Some Differences
While both bills impose excise taxes, they vary based on whom the tax is levied on and the extent
of the tax. As detailed in Table 11, the Senate bill 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 imposes a sales tax of 2.5% on each non-retail sale of devices; the
Senate version levies an excise tax of $2 billion in the first few years of implementation, and each
device manufacturer pays a share based on the size of their sales. The House does not have this
provision. Finally, the Senate bill imposes a 10% excise tax on indoor tanning services; 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 5.4% surcharge on individuals with modified gross income over $500,000 for singles
and $1 million for families. The Senate bill increases the Hospital Insurance portion of the
payroll tax by 0.9 percentage points on wages in excess of $200,000 for singles and $250,000 for
joint filers.
Abortion
H.R. 3962 and H.R. 3590 include provisions that address the coverage of abortion by health
benefits plans that would be available through an exchange. H.R. 3962 also discusses 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. 22 Since 1976,
similarly restrictive provisions have been included annually in the appropriations measures for the
Departments of Labor, HHS, and Education.
22 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.”).
Congressional Research Service
20
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Section 507 of the Consolidated Appropriations Act, 2010, restricts the use of FY2010 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.”23 An exception to the general prohibition on using appropriated funds for
abortions is included in section 508(a) of the 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
(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.24
In other words, FY2010 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 H.R. 3590 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. In contrast, H.R. 3590 would allow
coverage of elective abortions by exchange plans, but would require enrollees in plans that
include such coverage to make two separate premium payments: one payment that reflects an
amount equal to the portion of the premium for coverage of services other than elective abortions;
23 H.R. 3288, 111th Cong. § 507(a) (2009).
24 H.R. 3288, 111th Cong. § 508(a) (2009).
Congressional Research Service
21
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
and another payment that reflects an amount equal to the actuarial value of the coverage of
elective abortions.
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.25 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
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.26 The Immigration and Nationality Act (INA) defines which noncitizens are legally
present in the United States.27
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
25 CRS Report R40889, Noncitizen Eligibility and Verification Issues in the Health Care Reform Legislation, by Ruth
Ellen Wasem.
26 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.
27 8 U.S.C. §1101 et seq.
Congressional Research Service
22
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
subsidies.28 Among the modifications would be to enable the Commissioner to make the
eligibility determination. The Senate bill 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.29 (The Senate bill 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
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 bill 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 purpose,
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.
28 §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.
29 Section 1411 of H.R. 3590.
Congressional Research Service
23
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Table 1. Reforms Prior to Full Implementation
Topics for Table 1
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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
The bill would require that group or
Group health plans and health insurance
regulating the business of insurance and
individual coverage would not have an
issuers offering group or individual plans
may define state benefit mandates.
aggregate dollar lifetime limit with respect
would be prohibited from establishing
However, federal law requires that private
to essential benefits payable under the plan
lifetime or annual limits on the dol ar value
health insurance include certain benefits
or coverage.
of benefits for any participant or
and protections, for services covered by a
beneficiary.
plan. HIPAA requires, for example, that
Aggregate dollar lifetime limits would be
group health plans and insurers provide
defined as a dollar limitation on the total
With respect to plan years beginning prior
parity in annual and lifetime limits for any
amount that may be paid with respect to
to January 1, 2014, group health plans and
offered mental health benefits. However,
benefits under the plan or health insurance
health insurance issuers may only establish
there are no specific prohibitions on
coverage for an individual or other
a restricted annual limit with respect to the
unreasonable lifetime or annual limits.
coverage unit on a lifetime basis.
scope of benefits that are essential health
benefits as determined by the Secretary. In
§109: ERISA §716, IRC §9815, and PHSA
defining the restricted annual limit, the
§§2709 and 2756
Secretary would ensure that there is access
to needed services available with minimal
impact on premiums.
Nothing in this section would prohibit a
group health plan or health insurance
coverage from placing annual or lifetime
limits on specific covered benefits that are
not essential health benefits to the extent
that such limits are otherwise permitted by
federal and state law. §1001as amended by
§10101 : PHSA § 2711
CRS-24
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 1
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Prohibition on rescissions
HIPAA permits nonrenewal or
No later than 90 days after enactment, the
The bill would generally prohibit rescissions
discontinuation of coverage due to, among
Secretary would issue guidance
for a group health plan and a health
other things, fraud or intentional
implementing the prohibition on rescission
insurance issuer offering group or individual
misrepresentation. Health insurers have
in the group and individual markets. This
health insurance coverage. Rescissions
been found to use this provision to rescind
guidance would limit the situations in which would still be permitted in cases where the
coverage based on answers given in the
an insurer may rescind, or cancel, a
covered individual committed fraud or
application that are deemed to be
person’s health insurance policy.
made an intentional misrepresentation of
inaccurate. Some states regulate the
Rescissions would still be permitted in
material fact as prohibited by the terms of
application process.
cases where the covered individual
the plan or coverage.
committed fraud.
If a health insurance issuer determines to
A cancel ation of coverage in this case
rescind coverage they would be required
would require prior notice to the enrollee.
to provide the individual with notice prior
§1001: PHS §2712
to the effective date of the rescission, and
would be required to provide the
opportunity for a review by an
independent, external third party under
procedures specified by the Secretary. If
individuals request a review, their coverage
would remain in effect until the
independent reviewer determines that the
coverage may be rescinded. §103: PHSA
§§2703, 2712, 2742, and 2746
Coverage of preventive
Mandated benefits regulation of the private
The House bill contains a preventive health
Under the bill, group health plans and
health services
health insurance market is primarily done
services provision conceptually similar to
health insurance issuers in the group and
at the state level. State regulatory authority the Senate bill in terms of utilizing the
individual markets would be required to
is broad in scope and can include
evidence based recommendations of the
provide coverage for preventive health
requirements involving preventive health
United States Preventive Services Task
services and would not impose any cost
services. Such rules vary from state to
Force and the recommendations of the
sharing requirements for them. These
state.
Centers for Disease Control and
preventive services would include:
Prevention. However, the House bill would ● evidence-based items or services that
not be part of the immediate reforms,
have in effect a rating of ‘A’ or ‘B’ in the
would not include the Health Resources
current recommendations of the United
and Services Administration (HRSA), would States Preventive Services Task Force
not include the breast cancer provisions,
(USPSTF);
and would not provide specific authority to
● immunizations that have in effect a
the Secretary to promulgate guidelines
recommendation from the Advisory
allowing a group health plan and a health
Committee on Immunization Practices of
insurance issuer to utilize value-based
the Centers for Disease Control and
insurance designs. The House provision
Prevention (CDC);
would take effect beginning in plan year
● for infants, children, and adolescents,
CRS-25
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 1
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
2013. See §222 Table 3- Categories of
evidence-informed preventive care and
essential benefits.
screenings provided for in the
comprehensive guidelines supported by the
Health Resources and Services
Administration (HRSA); and
● with respect to women, such additional
preventive care and screenings not
described by the USPSTF as provided in
comprehensive guidelines supported by
HRSA.
A plan or issuer would be permitted to
cover or deny additional services not
recommended by the USPSTF. For the
purposes of this section the current
recommendations of the USPSTF regarding
breast cancer screening, mammography,
and prevention would be considered the
most current other than those issued in or
around November 2009.
The Secretary would be permitted to
develop guidelines to allow a group health
plan and a health insurance issuer offering
group or individual health insurance
coverage to utilize value-based insurance
designs. §1001, as amended by S. Amdt.
2791 and 2808 : PHSA §2713
CRS-26
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 1
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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.
unmarried adult children until the individual
define dependency in the group health plan.
is 26 years of age.
However, some states have defined who is
eligible for dependent coverage under fully
A health plan or a health insurance issuer
insured group health plans, as well as
would not be required to make coverage
individual health insurance policies.
available for a child of a child receiving
dependent coverage.
The group health plan or health insurance
The Secretary would be required to
issuer would be permitted for dependent
promulgate regulations to define the
coverage to increase premiums consistent
dependents to which coverage would be
with the standard established by the
made available.§1001: PHS §2714
Secretary for family coverage. §105: PHSA
§§2703 and 2746, ERISA §704, and IRC
§9804
Development of uniform
States may regulate the summary of
No provision.
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
Section 105 of the IRC permits certain
No provision.
Under the bill, the sponsor of a group
discrimination based on
amounts received under accident and
health plan (other than a self-insured plan)
salary
health plans to be excluded from the
would be prohibited from establishing rules
computation of taxable income. This
relating to health insurance eligibility of any
exemption is only permissible if, in general,
ful -time employee that are based on the
70% or more of all employees are eligible
total hourly or annual salary of the
to benefit under the plan, and al benefits
employee. In no way would eligibility rules
provided for participants who are highly
be permitted to discriminate in favor of
compensated individuals are also provided
higher wage employees. The rules and
CRS-27
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 1
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
for all other participants.
definitions of section 105(h) of the IRC
would similarly apply to this provision.
Certain employees may be excluded
§1001as amended by §10101: PHSA §2716
including: employees who have not
completed 3 years of service; employees
who have not attained age 25; part-time or
seasonal employees; employees not
included in the plan who are included in
unit of employees covered by an agreement
between employee representatives and one
or more employers which the Secretary
finds to be a col ective bargaining
agreement, and employees who are
nonresident aliens and who receive no
earned income from the employer which
constitutes income from sources within the
United States.
Highly compensated individuals are defined
as one of the 5 highest paid officers, a
shareholder who owns more than 10% in
value of the stock of the employer, or
among the highest paid 25% of all
employees eligible to participate.
Ensuring the quality of care
Among other federal laws intended to
No provision.
Under the bill, no later than two years after
prevent discrimination, HIPAA established
enactment, the Secretary, in consultation
certain requirements that are intended to
with certain experts, would be required to
prevent group health plans and group
develop and implement reporting
health insurance issuers from discriminating
requirements for use by plans in the group
against individual participants or
and individual markets with respect to
beneficiaries based on a health factor. In
coverage benefits and health care provider
particular, HIPAA prohibits a group health
reimbursement structures that:
plan or health insurance issuer from basing
● improve health outcomes through use of
coverage eligibility rules on health-related
quality reporting, case management, care
factors including health status (physical or
coordination and chronic disease
mental), claims experience, receipt of
management;
health care, medical history, genetic
● implement activities to prevent
information, evidence of insurability, or
hospitalization readmissions;
disability. In addition, a group health plan or
● implement activities to improve patient
health insurance issuer may not require
safety and reduce medical errors through
that an individual pay a higher premium or
the use of best clinical practices, evidence
contribution than another “similarly
based medicine, and health information
CRS-28
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 1
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
situated” participant, based on these
technology; and
health-related factors.
● implement wellness and health
promotion activities.
HIPAA also clarifies that group health plans
and health insurance issuers offering group
The Secretary would be required to
health coverage may establish premium
promulgate regulations that provide criteria
discounts or rebates or modify otherwise
for determining whether a reimbursement
applicable copayments or deductibles (i.e.,
structure meets these elements.
rewards) in return for adherence to
wellness programs. HIPAA regulations
This section also contains provisions
provide a framework for structuring these
relating to gun rights. A wellness or
wellness programs and divide wellness
promotion activity could not require
programs into two categories. First, if a
disclosure or collection of any information
wellness program provides a reward based
relating to lawfully possessed firearms or
solely on participation in a wellness
ammunition. The authority provided to the
program, or if it does not provide a
Secretary under the amendment (or an
reward, the program complies with HIPAA
amendment to the proposed legislation)
without having to satisfy any additional
could not be construed to authorize and
standards, as long as the program is made
could not be used for the col ection of
available to all similarly situated individuals.
information relating to the lawful
Second, if a reward is based on an
ownership, possession, use, or storage of a
individual meeting a certain standard
firearm or ammunition, or to maintain
relating to a health factor, then the
records of individual ownership or
program must meet additional
possession of a firearm or ammunition. A
requirements. Among these additional
health plan would be prohibited from
requirements, a reward offered by this type
increasing premium rates, denying health
of wellness program must not exceed 20%
insurance coverage, and reducing or
of the cost of employee coverage under
withholding a discount, rebate, or reward
the plan (i.e., the amount paid by the
offered for participation in a wellness
employer and the employee for that
program on the basis of or on reliance on
employee for coverage).
the lawful ownership, possession, use or
storage of a firearm or ammunition.
§1001as amended by §10101: PHSA §2717
Reducing health insurance
Many states require public reporting of
The bill would create a requirement that
Issuers in the group and individual markets
premiums and increasing
health insurance financial data such as
each health insurance issuer that offers
(including a grandfathered health plan)
value
medical loss ratios (MLR), and require
coverage in the small or large group
would be required to submit to the
approval of premium rate increases and
markets would provide a rebate to its
Secretary a report concerning the ratio of
public release of the justification for the
enrollees if the coverage has a medical loss
incurred loss (or incurred claims) plus the
requested increase. Medical loss ratios
ratio (MLR) below a level specified by the
loss adjustment expense (or change in
generally refer to the percentage of
Secretary (but not less than 85%).
contract reserves) to earned premiums.
premium dollars that are spent on medical
The report would also include the
care as opposed to administrative costs
The Secretary would establish a uniform
percentage of total premium revenue, after
definition of the MLR including a
CRS-29
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 1
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
including profit. State regulations around
methodology for calculating it. The
accounting for risk adjustment, risk
accounting procedures for calculating MLRs methodology would take into account the
corridors, and payments for reinsurance,
vary.
special circumstances of smal er plans,
that the coverage expends on:
different types of plans, and newer plans.
● reimbursement for clinical services;
The MLR would exclude state taxes and
● for activities that improve health care
licensing and regulatory fees. The method
quality; and
for calculating a MLR would be established,
● on all other non-claims costs including an
with exceptions if necessary, to ensure
explanation of the nature of such costs and
adequate participation by issuers,
excluding federal and state taxes, licensing,
competition in the health insurance market, or regulatory fees.
and value for consumers.
Beginning on January 1, 2014 , this
The provisions of this section would also
calculation would be based on the averages
apply to the individual market, except to
of the premiums expended on the costs for
the extent that the Secretary determined
each of the previous 3 years for the plan.
that the application of the MLR provision
The Secretary would make these reports
would destabilize the existing individual
available to the public.
market. The provisions would sunset once
plans are offered via the exchange. §102:
Beginning not later than January 1, 2011, a
PHSA §§2714 and 2754
health insurance issuer offering group or
individual health insurance coverage
(including grandfathered health plans)
would provide an annual rebate to each
enrol ee on a pro rata basis if the ratio of
the amount of premium revenue expended
by the issuer on clinical claims and health
quality costs, after accounting for taxes,
regulatory fees, risk adjustment, risk
corridors, and reinsurance, is less than 85%
in the large group market and 80% for the
small group and individual markets. States
would be permitted to increase the
percentages, but the Secretary may adjust
the state percentage for the individual
market if it is determined that the
application of 80% would destabilize the
market.
The Secretary would promulgate
regulations enforcing the provisions of this
section not later than January 1, 2011.
§1001 as amended by §10101: PHSA §2718
CRS-30
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 1
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Sunshine on health
States have broad authority to regulate
As an initial review process, beginning in
The Secretary would, in conjunction with
insurance premium rates
health insurance premiums and many have
2010, health insurance issuers would be
the states, establish a process for the
sunshine provisions with respect to rate
required to submit a justification for any
annual review of unreasonable increases in
increases.
premium increases prior to implementation premiums for health insurance coverage
of the increase following a process
beginning in the 2010 plan year. Health
developed by the Secretary and the states.
insurance issuers would be required to
The Secretary would ensure the public
submit to the Secretary, and the relevant
disclosure of information on premium rate
state, a justification for an unreasonable
increases and their justifications. For a
premium increase prior to implementation
continuing premium review process, state
of the premium.
insurance commissioners would provide
data to the Commissioner of the Health
Choices Administration on premium
increases and trends. States would make
recommendations to the Commissioner
concerning the exclusion of certain health
insurance issuers from participation in the
exchange based on a pattern of excessive
or unjustified premium increases.
Beginning in 2014, the Commissioner in
Beginning with plan year 2014, the
conjunction with the states would, in the
Secretary, in conjunction with the states,
place of the initial review process
would monitor premium increases of
conducted by the Secretary, monitor
health insurance coverage within and
premium increases of health insurance
outside of the exchange.
coverage inside and outside of the
additional larger employers eligible to
participate in the exchange.
From 2010-2014 the Secretary would
The Secretary would carry out a program
provide grants to the states for premium
of grants to states during the 5-year period
monitoring activities. There would be
beginning with FY 2010 for carrying out the
appropriated to the Secretary $1 billion to
premium review. There would be
be available for expenditure for these
appropriated to the Secretary $250 million
grants. §104
available for these grants. §1003: PHSA
§2794
Reducing other health costs
No provision.
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
CRS-31
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 1
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Appeals process
Section 503 of ERISA (codified at 29 CFR §
The House bill has an appeal process
The bill would require that a group health
2560.530-1) requires that employee benefit
provision similar to the Senate bill, except
plan and a health insurance issuer in the
plans provide adequate notice in writing to
that it would not build upon the
group or individual markets would
any participant or beneficiary whose claim
procedures set forth 29 CFR § 2560.530-1
implement an effective appeals process for
for benefits under the plan has been
and it would not involve the states. The
coverage determinations and claims. The
denied, setting forth the specific reasons
House provision is not part of the
process would at a minimum:
for such denial, written in a manner
immediate reforms and would take effect
● have in effect an internal claims appeals
calculated to be understood by the
beginning in the plan year 2013. See §232
process;
participant, and to afford a reasonable
Table 2-Grievance and appeals.
● provide notice to enrollees of available
opportunity to any participant whose claim
internal and external appeals processes,
for benefits has been denied for a ful and
and the availability of any applicable
fair review by the appropriate named
assistance; and
fiduciary of the decision denying the claim.
● allow an enrollee to review their file,
present evidence and testimony and to
receive continued coverage pending the
outcome.
To comply with the requirements, group
plans would be expected to initially
incorporate the claims and appeals
procedures set forth at 29 CFR § 2560.530-
1 and would update their processes in
accordance with any standards established
by the Secretary of Labor. To comply with
the requirements, issuers offering individual
health coverage would provide internal
claims and appeals procedures set forth
under applicable law and updated by the
Secretary of HHS. §1001as amended by
§10101: PHSA §2719
CRS-32
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 1
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Health insurance consumer
No provision.
Authority is granted upon enactment, and
information
applicable to FY2010, for the Secretary to
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: PHSA §2793
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-33
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 1
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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
For group coverage, the bill would reduce
The bill has a prohibition on preexisting
conditions exclusions
back” 6 months for a condition that was
the look back period for preexisting
conditions exclusions provision, but it
present before the start of coverage in a
conditions from 6 months to a 30-day
would not be part of the immediate
group health plan. Coverage may be
period. The bill would also reduce the
reforms. This provision would not involve
excluded for pre-existing conditions found
preexisting exclusion period from 12 to 3
reductions in the look back and exclusion
via this look-back process for a period.
months for timely enrol ments, and 18 to 9
periods like the House. The Senate
HIPAA limits the preexisting condition
months for late enrollments.
provision would be part of the general
exclusion period for most people to 12
reforms for plan years beginning on or after
months (18 months for late enrol ment).
The immediate provisions would take effect January 1, 2014. See §1201 Table 2-
for plan years beginning on or after January
Coverage for pre-existing health
The term ‘‘late enrollment’’ means, that a
1, 2010, but in the case of a group health
conditions.
participant or beneficiary enrolls under the
plan maintained by 1 or more collective
plan other than during the first period in
bargaining agreements, ratified before the
which the individual is eligible to enroll
date of enactment, this section would not
under the plan, or during a special
apply to plan years beginning before the
enrollment period. Special enrollment
earlier of the date on which the last of the
periods are generally afforded to an
collective bargaining agreements terminates
individual that did not enroll in coverage
or 3 years after the date of enactment.
because he/she had other coverage at the
§106: ERISA §701(a), IRC §9801(a), and
time, but has now lost that other coverage.
PHSA §2701(a)
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
No provision.
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
CRS-34
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 1
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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
of the plan at the time of retirement. §110:
ERISA §716
Reinsurance for early
The Secretary would be required to create, Same as H.R. 3962 except that there
retirees
within 90 days after enactment, a
would be appropriated $5 billion to carry
temporary reinsurance program to assist
out this program and the Secretary would
participating employment-based plans with
have the authority to stop taking
the cost of providing health benefits to
applications for participation in the
eligible retirees who are 55 and older and
program based on the availability of
their dependents. A trust fund would be
funding, but not the broader authority to
created and funds appropriated in an
take other steps in reducing expenditures
amount requested by the Secretary as
in deficit situations. §1102 as amended by
necessary, except that the total would not
§10102
exceed $10 billion. The Secretary would
reimburse the plan for 80% of the portion
of a claim above $15,000 and below
$90,000 (adjusted annual y for inflation).
Amounts paid to the plan would be used to
lower costs directly to participants in the
form of premiums, co-payments, and other
out-of-pocket costs, but could be not used
to reduce the costs of an employer
maintaining the plan.
The Secretary would have the authority to
stop taking applications for participation in
the program or take such other steps in
reducing expenditures under the
reinsurance program in order to ensure
that expenditures under the reinsurance
program do not exceed the funds
available.§111
CRS-35
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 1
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Immediate information to
Under the House bill, consumer
The Secretary would be required, in
identify affordable coverage
information to make coverage choices
consultation with the states, to establish,
would be provided by the Commissioner
not later than July 1, 2010, an Internet
under the outreach and enrollment
portal for beneficiaries to easily access
provisions for the exchange. The House
affordable and comprehensive coverage
provision would not be part of the
options. This portal would implement a
immediate reforms. See §305.
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. The Internet website
would, to the extent practicable, provide
ways for residents of, and small business in,
any state to receive information on at least
the fol owing coverage options:
● health insurance coverage offered other
than coverage that provides reimbursement
for the treatment of a single disease or
condition or an unreasonably limited set of
diseases as determined by the Secretary;
● Medicaid coverage and CHIP;
● a state high-risk pool (if applicable);
● the high-risk pool program under section
1101; and
● coverage within the small group market
for small businesses and their employees,
including reinsurance for early retirees
under section 1102, tax credits available
under section 45R of the IRC, and other
information specifically for small businesses
regarding affordable health care options.
§1103 as amended by §10101
CRS-36
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 1
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Domestic violence not
Under the PHSA, individuals cannot be
The bill would require that in the group
The Senate bill has a prohibition on
considered a pre-existing
excluded from enrolling into coverage
and individual markets, acts of domestic
preexisting conditions exclusions, including
condition
because of evidence of insurability
violence would be prohibited from being
a specific prohibition against exclusions
(including conditions arising out of acts of
treated as a preexisting condition. §107:
based on domestic violence. The Senate
domestic violence). However, the PHSA
ERISA §701(d)(3), PHSA §§2701(d)(3) and
provision however, would not be part of
permits limitations or exclusions of benefits 2754, and IRC §9801(d)(3)
the immediate reforms. The Senate
relating to a preexisting condition. There is
provision would be part of the general
no exception for acts of domestic violence
reforms for plan years beginning on or after
in the definition of a preexisting condition.
January 1, 2014. See §1201 Table 2.
Coverage for pre-existing health
conditions
Prohibiting denials and
States have broad authority to make
The bill would require for both the group
No provision.
delays of necessary
coverage mandates and requirements vary
and individual markets, coverage of any
treatment for children with
between states. There are a limited number outpatient and inpatient diagnosis and
deformities
of federal coverage mandates such as those
treatment for a minor child’s congenital or
for mental health parity at section 2705 of
developmental deformity, disease, or injury.
the PHSA.
A minor child would include any individual
who is 21 years of age or younger.
Treatment would be defined to include
surgical procedures performed to improve
function or to approximate a normal
appearance. Such a term would not include
cosmetic surgery performed to improve
appearance or self-esteem. §108: ERISA
§715, IRC §9814, and PHSA §§2708 and
2755
CRS-37
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 1
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Wellness program grants
HIPAA clarifies that group health plans and
By July 1, 2010, the Secretaries of HHS and
Would largely codify an amended version
health insurance issuers offering group
Labor would jointly award wellness
of the HIPAA wellness program
health coverage may establish premium
program grants to small employers in an
regulations.
discounts or rebates or modify otherwise
amount equal to 50% of the costs paid or
applicable copayments or deductibles (i.e.,
incurred in connection with a qualified
Wellness programs that do not require an
rewards) in return for adherence to
wellness program during the plan year.
individual to satisfy a standard related to a
wellness programs. HIPAA regulations
health factor as a condition for obtaining a
provide a framework for structuring these
Allowable costs would be those
reward (or do not offer a reward) would
wellness programs and divide wellness
attributable to the wel ness program
not violate HIPAA, so long as participation
programs into two categories. First, if a
(excluding the cost of food), and not to the
in the programs is made available to all
wellness program provides a reward based
health plan or health insurance coverage
similarly situated individuals.
solely on participation in a wellness
offered in connection with such a plan.
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, it complies with HIPAA without
capped at $150 per employee, could be
individual meeting a certain standard
having to satisfy any additional standards, as provided for up to three years and would
relating to a health factor, must meet
long as the program is made available to all
be capped at $50,000, in total, for an
additional requirements. Among these
similarly situated individuals. Second, if a
employer.
requirements, the reward must be capped
reward is based on an individual meeting a
at 30% of the cost of the employee-only
certain standard relating to a health factor,
A qualified wellness program means a
coverage under the plan (instead of 20%
then the program must meet additional
program that is jointly certified by the
under the current regulations), but the
requirements. Among these additional
Secretaries of HHS and Labor meets at
Secretaries of HHS, Labor, and the
requirements, a reward offered by this type least three out of four required
Treasury would have the discretion to
of wellness program must not exceed 20%
components. These components pertain to
increase the reward up to 50%.
of the cost of employee coverage under
health awareness, health education,
the plan (i.e., the amount paid by the
periodic screenings, employee engagement,
The HHS Secretary, in consultation with
employer and the employee for that
and listed behavioral change activities
the Secretaries of the Treasury and Labor,
employee for coverage).
(including smoking cessation and weight
would establish a 10-state pilot program in
reduction) and having supportive work
which participating states would be
policies regarding tobacco use, food
required to apply the wel ness program
choices, stress management, and physical
provisions to health insurers in the
activity. §112
individual market. §1201: PHSA §2705
CRS-38
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 1
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Extension of COBRA
COBRA provides certain former
The bill would allow individuals to keep
No provision.
employees, retirees, spouses, former
their COBRA coverage until exchange
spouses, and dependent children the right
plans are available, in 2013.
to temporary continuation of health
coverage at group rates. Group health
As soon as practicable after the date of
coverage for COBRA participants is usually
enactment, the Secretary of Labor in
more expensive than health coverage for
consultation with the Secretaries of HHS
active employees, because the employer
and Treasury, and with plan administers
usual y pays part of the premium and they
that provide or administer COBRA
do not under COBRA continuation.
continuation coverage, would establish
However, COBRA continuation is typically
rules for continued availability of COBRA
less expensive compared to insurance in
continuation coverage.
the individual market.
This provision would supersede any state
COBRA establishes required periods of
(or political subdivision) law that would
coverage for continuation health benefits.
have the effect of limiting or precluding
COBRA plans may provide longer periods
access to a state health benefits risk pool
of coverage beyond those required.
solely by reason of the extension of the
COBRA beneficiaries generally are eligible
COBRA coverage. §113
for group coverage during a maximum of
18 months for qualifying events due to
employment termination or reduction of
hours of work. Certain qualifying events, or
a second qualifying event during the initial
period of coverage, may permit a
beneficiary to receive a maximum of 36
months of coverage.
CRS-39
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 1
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
State Health Access
The State Health Access Program is a grant The Secretary would provide grant
No provision.
Program Grants
program created and funded under the
program incentives for states to move
Omnibus Appropriations Act of 2009 (P. L.
forward with a variety of health reform
111-8). The program, operated by HHS,
initiatives prior to 2013. Grants could be
awards grants to states to help them
used for state insurance exchanges,
expand access to affordable healthcare
community coverage programs, reinsurance
coverage for people who are uninsured.
plan programs, transparent marketplace
States may take a number of approaches,
programs, automated enrollment programs,
including:
innovative strategies, and purchasing
col aborative programs. §114
● shared community coverage;
● reinsurance plans that subsidize a certain
share of insurance carrier losses within a
certain risk corridor;
● subsidized high-risk insurance pools;
● health insurance premium assistance;
● insurance connector authority that
develops new, less expensive, portable
benefit packages for smal employers, part-
time, and seasonal workers;
● automated enrollment systems for public
assistance programs; and
● innovative strategies to insure low-
income childless adults.
Grants are made for 1 year and may be
extended to 4 additional years, based on
the availability of funds. Each state submits
an annual report to the Secretary, assessing
the state's use of funds and describing
progress in meeting project goals.
CRS-40
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 1
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Patient protections
Many states have laws defining network
The House bill would require that QHBPs
Under the bill, if a group health plan or
adequacy or the number and distribution of that use a provider network would meet
health insurance issuer in the group or
health care providers required to operate a the network adequacy standards
individual markets requires or provides for
health plan. States may also have “any
established by the Commissioner to ensure designation by a participant, beneficiary or
willing provider” laws that require a health
enrollee access to services. The House bill
enrollee of a participating primary care
plan to contract for the delivery of health
has no specific provisions with respect to
provider, then the plan or issuer would be
care services with any provider in the area
designation of a primary care provider,
required to permit the designation of any
who would like to provide such services to
emergency services, or obstetrical and
participating primary care provider who is
the plan's enrollees.
gynecological care as the Senate bill has.
available to accept the individual. This same
The House network adequacy provision
provision would apply for pediatric care.
Mandated benefits regulation of the private
would not be part of the immediate
health insurance market is primarily done
reforms, but would take effect for plan
If a group health plan or health insurance
at the state level. State regulatory authority years beginning in 2013. See § 215
issuer in the group or individual markets
is broad in scope and can include
covers emergency services they would be
requirements involving preventive health
required to cover those services without
services. Such rules vary from state to
the need for any prior authorization and
state.
without the imposition of coverage
limitations irrespective of the provider’s
Traditionally, health insurance plans pay
contractual status with the plan.
out-of-network providers based on their
usual and customary rate (UCR). The UCR
Patients would also have protected access
is defined generally as the usual fee for a
to obstetrical and gynecological care. A
procedure charged by the majority of
group health plan or health insurance issuer
physicians with similar training and
in the group or individual markets would be
experience within the same geographical
prohibited from requiring authorization or
area. Private companies, such as Ingenix,
referral by the plan, issuer, or any person in
generally collected and reported UCRs.
the case of a female participant, beneficiary,
However, on October 27, 2009, New York
or enrollee who seeks coverage for
Attorney General Cuomo announced a
obstetrical and gynecological care.
settlement agreement with Ingenix that
created a new not-for-profit company,
The House bill has no provision with
Centers established at academic or other
FAIR Health, Inc., and a research network
respect to academic or other non-profit
non-profit institutions to collect medical
headquartered at Syracuse University to
institutions collecting medical
reimbursement data would be required to
develop a new independent database for
reimbursement data.
develop fee schedules and other database
consumer reimbursement. There is no
tools that fairly and accurately reflect
federal law regulating these activities.
market rates for medical services and the
geographic differences in those rates. They
would also be required to make these data
and any statistical methodologies used
publicly available. §10101: PHSA §§2719A
and 2794
CRS-41
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 (House-passed)
H.R. 3590 (Senate-passed)
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. §1255, as amended (and redesignated
implementation”), unless
from §1253) by §10103(f)
specified otherwise)
CRS-42
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Qualified plans
Current law: Existing federal and state law
Beginning 2013, a qualified health benefits
A qualified health plan (QHP) would be a
and regulations concerning the private
plan (QHBP) would be a health plan that
health plan that has been certified by each
market generally distinguish between
meets the new federal requirements
exchange through which such plan is
coverage obtained from the group market
regarding private health insurance
offered as meeting a specified list of
and coverage obtained from the individual
standards, essential benefits (including cost-
requirements related to marketing, choice
market. In turn, some laws and regulations
sharing), as detailed in Table 3. Essential
of providers, plan networks, and other
distinguish between small groups and large
Benefits, and consumer protections. Only features, and provides the essential health
groups. For example, the federal Health
QHBPs may be offered in an exchange, but
benefits package (detailed in Table 3.
Insurance Portability and Accountability Act may be offered outside of an exchange.
Essential Benefits). A QHP issuer would
(HIPAA) defines small groups as those with
Existing employment-based plans must
be licensed and in good standing with each
2-50 employees; however, some states
meet the QHBP standards by 2018, except
state in which it would offer coverage;
include self-employed “groups of one” in
for limited benefit plans. QHBPs include
would offer at least one QHP each
their small group definition.
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. The
regardless if it was offered in or out of the
Commissioner would allow a QHBP to
exchange (including through an insurance
provide coverage through a qualified direct
agent); and would comply with regulations
primary care medical home plan, as long as
applicable to exchanges. QHPs include
the QHBP meets all applicable
qualified health plans offered through the
requirements and the medical home
CO-OP program or the Community Health
coordinates with the issuer offering the
Insurance Option. §1301
QHBP. §§201(b), 202(b), 303, 310, 321
An individual would not be compelled to
enroll, or not enroll, in a QHP or
participate in the exchange. A qualified
individual could enroll in any QHP, except
in the case of a catastrophic plan (described
below). A QHP, or exchange, would be
prohibited from imposing a penalty on an
individual who cancels enrollment in such a
plan because the individual becomes eligible
for minimum essential coverage (previously
defined) or minimum essential coverage
becomes affordable to that person.
§1312(d)(3)-(4)
CRS-43
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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
On date of enactment, existing individual
would be grandfathered indefinitely, as long
and group plans would be grandfathered.
as there are no changes to the terms or
Enrollees could continue and renew
conditions of the coverage, except as
enrollment in a grandfathered plan
required by law. Grandfathered individual
indefinitely. Enrollment would be limited
health insurance plans would be prohibited
to those who were currently enrolled,
from enrolling new individuals after the full
their families, or for grandfathered
implementation date, unless such
employer-sponsored insurance to new
individuals are dependents of an enrollee
employees and their families.
who had such coverage prior to that date.
Existing group health insurance plans would Grandfathered plans would still be subject
be grandfathered until 2018 at which time
to a couple of market reforms: uniform
they would be required to comply with the
explanation of coverage documents and
QHBP standards, except for limited benefit
reporting of medical loss ratio and other
plans. §202(a)-(b)
information. See Table I,
“Development of uniform
explanation of coverage documents”
and “Reducing health insurance
premiums and increasing value.”
§1001: PHSA §§2716, 2718
Existing group plans subject to one or
more col ective bargaining agreements
would be grandfathered until the date on
which the agreement terminates, at which
time the immediate reforms and private
market reforms would apply.
§1251, as amended by §10103(d)-(e)
Coverage for pre-existing
The federal Health Insurance Portability
A QHBP would be prohibited from
Group health plans and issuers in the
and Accountability Act (HIPAA) limits the
excluding coverage for pre-existing health
individual and group markets would be
CRS-44
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
health conditions
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. For
under group coverage for individuals who
claims experience, receipt of health care,
enrollees under age 19, this provision
meet HIPAA eligibility criteria. HIPAA
medical history, genetic information,
would become effective beginning 6 months
prohibits such coverage exclusions for
evidence of insurability, disability, or source after date of enactment. §1201: PHSA
HIPAA-eligible individuals with coverage in
of injury (including conditions arising out of
§2704, as amended by §10103(e)
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
A relevant provision, which would modify
HIPAA protections.
current HIPAA standards applicable to pre-
existing coverage exclusions, would be
implemented before the full
implementation date, and sunset at the
implementation of Sec. 211. See Table 1,
“Limitations on pre-existing
conditions exclusions.” §106
Another relevant provision, which would
prohibit an act of domestic violence from
being regarded as a pre-existing condition,
would be implemented before the ful
implementation date, and would not sunset.
See Table 1, “Domestic violence not
considered a pre-existing condition.”
§107
CRS-45
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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
A relevant provision, which would prohibit
coverage in the individual market. HIPAA
rescissions except in instances of fraud,
guarantees the renewability of coverage in
would be implemented before the ful
the individual and group markets for all
implementation date, and would not sunset.
enrollees. “Guaranteed renewal” in health
See Table I, “Prohibition on
insurance is the requirement on an issuer
rescissions.” §1001: PHSA §2712
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-46
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Rating rules
There are no federal rating rules for the
A QHBP would be required to determine
The Senate Amendment would impose
private health insurance market. Most
premiums using adjusted community rating
adjusted community rating rules, but only
states currently impose premium rating
rules. Premiums would be allowed to vary on issuers in the individual and small group
rules on insurance carriers in the small
based only on age (by no more than a 2:1
markets, with some exceptions. Premiums
group market, and some states have such
ratio based on age categories specified by
for those markets would vary based only
rules in the individual market. The
the Commissioner), premium rating area
on the following risk factors: self-only or
spectrum of existing state rating rules
(as permitted by states or the
family enrollment; rating area, as specified
ranges from pure community rating to
Commissioner), and family enrollment (so
by the state; age (by no more than a 3:1
adjusted (or modified) community rating, to long as the ratio of family premium to
ratio across age rating bands established by
rate bands, to no restrictions. Under pure
individual premium is uniform, as specified
the Secretary, in consultation with the
community rating, all enrollees in a plan pay under state law and consistent with
National Association of Insurance
the same premium, regardless of their
Commissioner rules). §213
Commissioners (NAIC)), and tobacco use
health, age or any other factor related to
(by no more than 1.5:1 ratio). If a state
insurance risk. As of December 2008, only
allows large group issuers to offer coverage
two states (New Jersey and New York) use
through that state’s exchange, these rating
pure community rating in their nongroup
rules apply to all coverage in that market,
markets, and only New York imposes pure
except for self-insured plans. §1201: PHSA
community rating rules in the smal group
§2701, as amended by §10103(a)
market. Adjusted community rating
prohibits issuers from pricing health
Any issuer in the individual or small group
insurance policies based on health factors,
market would be required to consider al
but allows it for other key factors such as
enrollees in all plans offered by the issuer in
age or gender. Rate bands al ow premium
the applicable market as members of a
variation based on health, but such
single risk pool, including enrollees not
variation is limited according to a range
enrolled in such plans offered through the
specified by the state. Rate bands are
exchange. §1312(c)
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-47
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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 (including
from establishing rules for eligibility and
and benefit structures that build on existing continued eligibility) for coverage on health
premium contributions based on health
HIPAA nondiscrimination rules. Existing
status-related factors. Such factors include
status-related factors. Those factors
rules concerning (1) no requirement on
health status, medical condition (including
include health status, medical condition
group plans to provide mental health
both physical and mental illness), claims
(including both physical and mental
benefits, and (2) no impact of limited
experience, receipt of health care, medical
illnesses), claims experience, receipt of
mental health parity on terms and
history, genetic information, evidence of
health care, medical history, genetic
conditions relating to the amount, duration, insurability (including conditions arising out
information, evidence of insurability
or scope of mental health benefits, would
of acts of domestic violence), disability, and
(including conditions arising out of acts of
apply to QHBPs, regardless of whether
any other health status-related factor
domestic violence) and disability. In
coverage is offered in the individual or
determined appropriate by the Secretary.
addition, the Genetic Information
group market. §214
However, the offering of premium
Nondiscrimination Act of 2008 prohibits
discounts or rewards based on enrol ee
issuers in the individual health insurance
participation in wellness programs would
market from establishing eligibility rules
be permitted, so long as the conditions for
(including continued eligibility) based on an
obtaining such reward meets standards
individual’s genetic information. The Paul
specified in the section. §1201: PHSA
Wel stone and Pete Domenici Mental
§2705
Health Parity and Addiction Equity Act of
2008, as amended, requires parity in
A related provision, which would prohibit
coverage for large groups (more than 50
insurance eligibility rules based on salary,
employees) by prohibiting disparities in the
would be implemented before the ful
coverage of physical illnesses and mental
implementation date, and would not sunset.
health and substance abuse problems in
See Table 1, “Prohibition of
terms of annual or lifetime dol ar limits on
discrimination based on salary.”
mental health benefits, treatment
§1001: PHSA §2716, as amended by §10101
limitations and out-of-network coverage.
Provider network adequacy
HIPAA established special rules for plans
A QHBP that uses a provider network
The Secretary would, by regulation,
that establish networks of health care
would be required to comply with network establish criteria for the certification of
providers. HIPAA allows small group
adequacy standards that may be established qualified health plans. A QHP would be
issuers to (1) limit the employers that apply by the Commissioner. Such a QHBP would certified if it ensured a sufficient choice of
for coverage to those firms with eligible
provide a current listing of all providers in
health care providers, and provided
individuals who live or work in the network its network on the plan’s website and the
enrollees with information on the
service area, and (2) deny coverage to small exchange’s website. §215
availability of in-network and out-of-
employers if the issuer demonstrates (if
network providers, among other
required) to the state that it has limited
requirements. §1311(c)
provider capacity due to obligations to
existing enrol ees and is applying this
decision uniformly without regard to claims
CRS-48
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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
A relevant provision, concerning internal
offer health benefits, but does mandate
timely grievance and appeals mechanisms in and external appeals processes, would be
compliance to certain standards if an
compliance with standards that would be
implemented before the full
employer chooses to offer health benefits,
established by the Commissioner. Internal
implementation date, and would not sunset.
such as procedures for appealing denied
claims and appeals processes would
See Table 1, “Appeals process.” §1001:
benefit claims to the plan (“internal
incorporate the existing ERISA
PHSA §2719
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. Nothing in this section
plan (“external review”).
would be construed as affecting the
availability of judicial review under state law
for adverse decisions. §232
Grievance and appeals standards would
apply to QHBPs outside of the exchange
only to the extent specified by the
Commissioner. §234
The Commissioner would appoint a
Another relevant provision, regarding
Qualified Health Benefits Plan Ombudsman
grants to states for the
to receive and provide assistance with
establishment/expansion of a health
grievances. among other responsibilities.
insurance ombudsman, would be
§,244
implemented before the full
implementation date; authority would be
applicable to FY 2010 only. See Table 1,
“Health insurance consumer
information.” §1002: PHSA §2793
Information transparency
ERISA requires applicable health plans (as
A QHBP would be required to notify plan
A relevant provision, concerning the
and plan disclosure
wel as other “welfare benefit” plans) to
enrollees of any decrease in coverage or
development of standards applicable to the
CRS-49
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
disclose and report certain plan
increase in cost-sharing at least 90 days
disclosure of benefit and coverage
information to enrollees and regulators.
prior to the effective date of such changes.
information, would be implemented before
For example, plan administrators must
§217
the ful implementation date, and would not
provide to enrollees a written summary
sunset. See Table I, “Development of
plan description (SPD) which contains the
QHBPs in the exchange would be required
uniform explanation of coverage
terms of the plan and the benefits offered,
to comply with disclosure standards
documents.” §1001: PHSA §2715
including any material modifications, and
established by the Commissioner
the SPD must be written in a manner that
concerning plan terms and conditions,
PBMs that manage prescription drug
can be understood by the average enrollee. claims payment policies, plan finances,
coverage under a contract with a Medicare
Certain plans must file an annual report
claims denials, and other information as
Part D drug plan or a qualified health plan
with the Department of Labor, containing
determined appropriate by the
offered through an exchange would be
information about the operation, funding,
Commissioner. The Labor Secretary
required to share certain financial
assets, and investments of those plans.
would harmonize such disclosure standards information with the Secretary, the plans
for application to group plans. The
the PBMs contract with through Medicare
Commissioner would require such
Part D, or the exchanges in a manner,
disclosures to be provided in plain language. form, and timeframe specified by the
QHBPs would be required to disclose cost-
Secretary. Specifically, PBMs would be
sharing requirements to enrollees and
required to disclose information on: (1) the
comply with standards established by the
percent of all prescriptions that are
Commissioner to ensure transparency
provided through retail pharmacies
regarding reimbursements between the
compared to mail order pharmacies, and
plan and health care providers. A
the generic dispensing rates for each type
pharmacy benefit manager (PBM), under
of pharmacy that is paid by the PBM under
contract with a QHBP, would be required
contract; (2) the aggregate amount and
to provide information to the
types of rebates, discounts or price
Commissioner and QHBP: volume of
concessions that the PBM negotiates on
prescriptions filled, aggregate average
behalf of the plan and the aggregate amount
payments per prescription for mail order
of these that are passed through to the
and retail sales, and other information.
plan sponsor, and the total number of
Information disclosed by a PBM would be
prescriptions dispensed; and (3) the
considered confidential, and disclosure of
aggregate amount of the difference
such information would be prohibited
between the amount the plan pays the PBM
except for specified purposes. On an
and the amount that the PBM pays the
annual basis, the Commissioner would
retail and mail order pharmacy, and the
develop a public report assessing the
total number of prescriptions dispensed.
overall impact of PBMs on prescription
This information would be considered
drug prices and spending. Disclosure of a
confidential and would be protected by the
specific PBM, retailer, manufacturer or
Secretary. §6005
wholesaler, or other confidential or
proprietary information would be
prohibited. A PBM that fails to provide
information required under this section or
CRS-50
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
knowingly provides false information would
be subject to penalties specified in Sec.
1927(b)(3)(C) of the Social Security Act.
§233
The disclosure and transparency
requirements would apply to QHBPs
outside of the exchange only to the extent
specified by the Commissioner. §234
Timely payment of claims
Under Medicare Advantage (MA), private
QHBPs would be required to comply with
No provision.
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
No provision.
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
CRS-51
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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
insurance; (3) no-fault liability insurance;
and (4) workers' compensation situations,
including the Black Lung program.
Dependent coverage
Michel e’s Law (P.L. 110-381) ensures that
A QHBP would be required to provide to
A relevant provision affecting health
dependent students enrol ed in post-
the policyholder the option of keeping
insurance coverage of dependent children
secondary education who take a medically
qualified dependent children on the family’s
would be implemented before the ful
necessary leave of absence do not lose
health insurance policy, as long as the child
implementation date, and would not sunset.
health insurance coverage. The federal law
is under 27 years of age and is not enrolled
See Table I, “Extension of dependent
provides that a group health plan may not
in any other health plan. The QHBP would
coverage.” §1001: PHSA §2714
terminate a college student's health
be allowed to increase premiums to
coverage because the student takes a leave
provide coverage to such dependents, as
of absence from school or changes to part-
long as the premiums are consistent with
time status due to health conditions. The
the rating rules specified in Sec. 213. §216
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. Many states currently require
carriers to extend dependent coverage
under a family policy to young adults until
those individuals reach a certain age or no
longer satisfy other eligibility criteria, e.g.,
full-time college enrollment. As of January
2009, 30 states had coverage rules for
dependent adults in either the group
market or individual market or both.
Interstate compacts
The federal McCarran-Ferguson Act affirms Beginning on January 1, 2015, states would
No later than July 1, 2013, the Secretary, in
that states are the primary regulators of
be al owed to form health care choice
consultation with NAIC, would promulgate
insurance, including health insurance. Laws
compacts for the purpose of facilitating the
regulations for interstate health care choice
regulating health insurance vary by state
sale and purchase of individual health
compacts, which could be entered into
and cover a wide spectrum of issues,
insurance plans across state lines. The
beginning January 1, 2016. Under such
including licensure, solvency, benefit
Secretary would request the NAIC to
compacts, QHPs would be offered in all
CRS-52
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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 bill would also require that states
January 1, 2015, the Secretary would make
enact a law to enter into compacts and to
grants available to states for activities
obtain approval of the Secretary, but only if
related to regulating health insurance
the Secretary determines that the compact
coverage sold in secondary states. H.R.
will provide coverage that is at least as
3962 would authorize for appropriations
comprehensive and affordable, to at least a
such sums as necessary to implement the
comparable number of residents, as would
compact provisions from FY2015 through
otherwise be provided. Moreover, the bill
FY2020. §309
would require that the compact would not
increase the federal deficit or weaken
enforcement of state consumer protection
laws. §1333
CRS-53
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
State flexibility to establish a There is no existing federal law providing
No provision.
Would require the Secretary to create a
Basic Health Program
direct ongoing program financing to the
state option for individuals who are not
states for health insurance coverage of low-
eligible for Medicaid, have not reached the
income individuals not eligible for Medicaid
age of 65, and whose household income
either under standard criteria or via
exceeds 133%, but does not exceed 200%
waivers. The Washington State Basic
of the poverty line for the size of the family
Health (BH) Plan program administered and
involved; or in the case of an alien lawfully
financed by the Washington State Health
present in the United States, whose income
Care Authority (HCA) started as a pilot
is not greater than 133 percent of the
program established by the Washington
poverty line for the size of the family
State Health Care Access Act of 1987.
involved but who is not eligible for the
Medicaid. A standard heath plan would be
defined as a health benefits plan that the
state contracts with that:
● would not be open for enrollment to
those outside of the program;
● provides at least the essential health
benefits; and
● has a medical loss ratio of at least 85%.
The Secretary would transfer to the state
an amount equal to 95% of the premium
tax credits under section 36B of the IRC of
1986, and the cost-sharing reductions
under section 1402, that would have been
provided for the fiscal year to eligible
individuals as if they were in the exchange.
§1331 as amended by §10104
CRS-54
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Waiver for state innovation
Beginning in 2017, the bill 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
No later than January 1, 2014, each state
policies to encourage the offer of private
would be required to establish a
health insurance to individuals and groups
reinsurance program for the individual
of higher risk. Reinsurance typical y is
health insurance market. §1341, as
thought of as insurance for insurers. When
amended by §10104(r)
issuing policies, an insurer faces the risk
that the premiums it collects will not be
A relevant provision, regarding
A relevant provision, regarding
sufficient to cover its expenses and
establishment of a temporary reinsurance
establishment of a temporary reinsurance
generate profit. For a health insurer,
program, would be implemented before the program, would be implemented before the
unusual y high health care claims could lead
full implementation date, and would sunset
full implementation date, and would sunset
to significant financial loss. Reinsurance
when appropriations are expended. See
on January 1, 2014. See Table I,
shifts the risk of covering such high
Table 1, “Reinsurance for early
“Reinsurance for early retirees.”
expenses from the primary insurer to a
retirees.” §111
§1102, as amended by §10102
reinsurer.
CRS-55
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Risk corridors
Risk corridor rules are used in a program
No provision.
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
No provision.
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-56
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 2
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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
A state may require a QHP to offer
of provisions related to the private health
benefits in addition to “essential health
insurance market, as determined by the
benefits.” In such instances, the state
Commissioner. The application of Section
would be required to make payments, to
514 of ERISA, regarding the federal
the enrollee or on behalf of the enrollee, to
preemption of state laws that relate to
defray the cost of the additional benefits.
employee benefit plans, would not be
§1311(d), as amended by 10104(e) (There is
affected.
a similar provision in the House bill that
only affects state mandated benefits for
For coverage offered through the
exchange plans. See Table 7, “Health
exchange, the new requirements under
Insurance Exchanges,” Standardized
Title II of this bill (relating to QHBPs)
benefit tiers for exchange plans.)
would not supersede any requirements
under HIPAA (including requirements
QHPs in the CO-OP program, under the
relating to genetic information non-
Community Health Insurance Option, or as
discrimination and mental health parity) or
a nationwide plan, would be subject to
state law, as long as such requirements do
certain federal and state laws applicable to
not prevent implementation of provisions
private health insurers. Such laws would
related to the private health insurance
include: guaranteed renewal, rating, pre-
market, as determined by the
existing conditions, nondiscrimination,
Commissioner. Individual rights and
quality improvement and reporting, fraud
remedies under State laws would apply.
and abuse, solvency and financial
§251
requirements, market conduct, prompt
payment, appeals and grievances, privacy
and confidentiality, licensure, and benefit
plan material or information. §1324
State benefit mandates would continue to
apply to coverage outside of an exchange.
§1312(d)(2)
CRS-57
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Table 3.Essential Benefits
Topics for Table 3
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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. §1255, as amended
2018 for existing group health plans. §§201(b), 202(b)
(and redesignated from §1253) by §10103(f)
Benefits package
QHBPs would be required to provide the essential benefits
QHPs and plans offered in the individual and small group markets
package. Exchange plans would be required to offer coverage
would be required to provide the essential health benefits package.
that complies with the essential benefits package standards (Sec.
The essential health benefits package would refer to a health plan that
222), and provides specified levels of coverage (Sec. 303). QHBPs would provide coverage for “essential health benefits,” would not
not offered through the exchange could offer benefits in addition
exceed out-of-pocket and deductible limits specified in the bill, and
to the essential benefits package. The essential benefits package
would not impose a deductible on preventive services. The Secretary
would cover specified items and services, prohibit cost-sharing on would ensure that the scope of essential health benefits is equal to
preventive services, limit annual out-of-pocket spending, prohibit
the scope of benefit provided under a typical employer plan, as
annual and lifetime benefit limits on covered health care items and determined by the Secretary(as certified by CMS’s Office of the
services, comply with network adequacy standards, and be
Actuary). §§1201: PHSA § 2707(a),1302(a),1302(b)(2)
equivalent in its scope of benefits to the average employer health
plan in 2013 (as certified by CMS’s Office of the Actuary). §§221,
222(a)
A relevant provision, that would prohibit lifetime limits with
A relevant provision, affecting lifetime and annual benefit limits, would
respect to essential benefits, would be implemented before the
be implemented before the ful implementation date, and would not
full implementation date, and would not sunset. See Table I,
sunset. See Table I, “No lifetime or annual limits.” §1001:
“No lifetime or annual limits.” §109
PHSA §2711, as amended by §10101
CRS-58
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 3
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Categories of essential benefits
The essential benefits package would provide coverage, at a
The essential health benefits package would provide coverage, at a
minimum, for the following categories of benefits:
minimum, for the fol owing categories of benefits:
● 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)
A relevant provision, concerning coverage for treatment for
A relevant provision, concerning coverage for preventive health
children with deformities, would be implemented before the full
services, would be implemented before the full implementation date,
implementation date, and would not sunset. See Table 1,
and would not sunset. See Table 1, “Coverage of preventive
“Prohibiting denials and delays of necessary treatment
health services.” §1001 : PHSA §2713
for children with deformities.” §108
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. To the extent possible, the Secretary would establish would be prohibited from imposing a deductible greater than $2,000
cost-sharing levels using copayments (a flat dollar fee) and not
for self-only coverage, or $4,000 for any other coverage in 2014;
coinsurance (a percentage fee). §222(c)
deductible limits would be annual y adjusted thereafter. §1302(c)
CRS-59
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 3
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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. §222(c)
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
coverage.) §1302(c)
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)
A relevant provision, that would prohibit lifetime limits with
A relevant provision, affecting lifetime and annual benefit limits, would
respect to essential benefits, would be implemented before the
be implemented before the ful implementation date, and would not
full implementation date, and would not sunset. See Table I,
sunset. See Table I, “No lifetime or annual limits.” §1001:
“No lifetime or annual limits.” §109
PHSA §2711, as amended by §10101
Authority for determining
The Health Benefits Advisory Committee, a private-public panel
The Secretary would define and periodical y update coverage that
essential benefits
of medical and other experts, would be established to
provides essential health benefits. The Secretary would ensure that
recommend benefit standards and periodic updates to the HHS
the scope of the essential health benefits is equal to the scope of
Secretary. The Advisory Committee would recommend initial
benefits under a typical employer-provided health plan, as certified by
benefit standards no later than one year after enactment. The
the Chief Actuary of the Centers for Medicare and Medicaid Services.
Secretary would adopt an initial set of benefit standards, through
§1302(b)
the rulemaking process, no later than 18 months after
enactment.
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. §§222(c)(3), 223, 224
Actuarial value based on essential
For provisions regarding benefits standardized according to
For provisions regarding benefits standardized according to actuarial
benefits
actuarial values based on essential benefits, see Table 7. Health
values based on essential benefits, see Table 7. Health Insurance
Insurance Exchanges, “Standardized benefit tiers for
Exchanges, “Standardized benefit tiers for exchange plans.”
exchange plans.” §303
§§1301(a)(1)(C)(ii),1311(b)(2)(B)(ii)
CRS-60
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Table 4. Individual Mandate
Topics for Table 4
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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 part A of Medicare, 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, an eligible
members of Indian tribes (through the Indian Health Service, a
employer sponsored plan, plans in the individual market, a
tribal organization or an urban Indian organization), and coverage
grandfathered health plan, and any other health benefits coverage,
as determined by the Secretary in coordination with the
such as a state health benefits risk pool, as recognized by the
Commissioner. §501: IRC §59B(d)
Secretary in coordination with the Secretary of Treasury. Eligible
employer sponsored plans would include local, state or federal
government plans, any other plan or coverage offered in the small or
large group market, and grandfathered plans. Minimum essential
coverage would not include coverage of excepted benefits as defined
in the Public Health Service Act (PHSA) such as coverage for only
accident or disability income, limited scope dental or vision benefits,
coverage for specific illnesses, or Medicare supplemental health
insurance. §1501: IRC Ch.48 §5000A(a) and (f)
CRS-61
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 4
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Penalty for non-compliance
Yes, individuals who did not meet mandate for themselves and
Individuals who did not meet mandate for one or more months
their children could be required to pay a tax, prorated for the
would be required to pay a penalty for themselves and their
time the individual (or family) does not have coverage during the
dependents, for each month they were in non-compliance. The
year, equal to the lesser of (1) 2.5% of the taxpayer's modified
penalty would be the lesser of (1) the sum of the monthly penalty
adjusted gross income (MAGI) over the amount of income
amount (calculated as the lesser of (a) the per person penalty amount,
required to file a tax return, or (2) the national average premium
but no more than 300% of the per person penalty in total for the
for applicable single or family coverage. §501: IRC §59B(a) and (b)
taxpayer and any dependents, or (b) 0.5% of household income for a
tax year beginning in 2014, 1.0% for a tax year beginning in 2015, and
2% thereafter);or (2) an amount equal to the national average
premium for qualified health plans which have a bronze level of
coverage, provide coverage for the applicable family size involved, and
are offered through an exchanges for plan years beginning in the
calendar year with or within which the taxable year ends. The per-
person, annual dol ar penalty would be phased in—$95 in 2014, $495
in 2015, reaching $750 in 2016 (adjusted for inflation thereafter). The
monthly penalty amount, for any dependents under the age of 18,
would be reduced by one-half.
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), as amended by §10106(b)(1)
CRS-62
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 4
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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), (e) and (f) as amended by §10106(d)
Congressional Findings
No provision.
Includes Congressional findings that address the constitutionality of an
individual mandate to obtain health insurance. §1501 as amended by
§10106
CRS-63
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Table 5. Employer Mandate
Topics for Table 5
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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.
A special rule would apply to those employers whose substantial
annual gross receipts were attributable to the construction industry.
For these employers, instead of using the 50 full-time employee count
for the employer requirement, employers who employed an average
of at least 5 ful -time employees on business days during the
preceding calendar year and whose annual payroll expenses exceeded
$250,000 for such preceding calendar year would be subject to the
employer requirements. The same exclusions would apply for the
seasonal workers of construction industry employers.
§1513 as amended by §10106(f)
General penalty for not offering
Employers with aggregate wages over $750,000 that chose not to
A firm with more than 50 employees (or an applicable construction
health insurance
offer coverage would be subject to an excise tax equal to 8% of
employer) that chose not to offer health insurance could be subject
the average wages paid by the employer (exceptions discussed
to a penalty if any of its full-time employees were enrolled in an
below). §412 and §512
exchange plan for which a premium 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. No penalty would
be imposed for any month with respect to any employee who has a
free choice voucher. §1513 as amended by §10108
Potential penalty or other action
Beginning in 2014, for employees who decline the employer’s
An employer (either an applicable large or construction employer)
even if an employer offers some
qualifying coverage, those employers with aggregate wages above
that offers its employees coverage could be subject to penalties, if
health insurance
$750,000 would be assessed 8% of average wages for the number
one or more of its full-time employees were enrolled in a QHP for
of employees who decline and obtain exchange coverage, with
which a premium credit is paid, for that employee. In 2014, the annual
adjustments for smal employers as described below. The
penalty assessed to the employer for each such employee would be
employer's excise tax for these individuals would go into the
$3,000 ($250 per month). However, the total annual penalty for an
Exchange but would not apply toward their premiums.
employer would be limited to the total number of the firm's ful -time
CRS-64
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 5
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
The Secretary, in coordination with the Commissioner, could
employees times $750 ($62.50 per month). The penalties would be
terminate an employer's election to provide health insurance if
calculated on a monthly basis, and the dol ar amounts would be
the employer was in substantial non-compliance with the health
indexed after 2014.
coverage participation requirements. If an employer fails to
Thus, for example, an employer with 100 ful -time employees of
satisfy the health coverage participation requirements for any
whom 30 received credits for the year would be subject to a penalty.
employee, their would be a tax for each such failure of $100 per
For 2014, the penalty amount would be $3,000 for each of the 30
day, other than failures corrected within 30 days and non-
credit-receiving employees, or $90,000. However, because the
intentional failures. Total annual penalty could not exceed the
limitation on an employer penalty is equal to the total number of full-
lesser of 10% of the amount the employer spent on health plans
time employees (100) multiplied by $750, which in this case is
or $500,000. §411, §421, §423, § 511and §512
$75,000, the employer would pay only $75,000 (the lesser of $75,000
and the $90,000 calculated penalty). §1513
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). An employer would
● 0% if AW does not exceed $500,000
not be considered to employ more than 50 ful -time employees if the
● 2%, if AW exceeds $500,000 but does not exceed $585,000
workforce exceeds 50 for 120 days or less during the calendars year
● 4% if AW exceeds $585,000 but does not exceed $670,000
and the employees in excess of 50 during 120 day were seasonal.
● 6% if AW exceeds $670,000 but does not exceed $750,000
§1513
● 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
CRS-65
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 5
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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
Waiting periods
No provision.
A fee of $600 (indexed after 2014) per ful -time employee would be
imposed on applicable large employers that required extended waiting
periods (over 60 days) before employees could enroll in a minimum
essential coverage under an employer-sponsored plan. §1513 as
replaced by §10106(e)
Affiliated groups and other special
Under regulations prescribed by the Secretary (for certain
No provision.
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
Free choice vouchers
No provision.
An employer who offers minimum essential coverage and pays any
portion of the costs of such plan would provide free choice vouchers
to each qualified employee. A qualified employee would be one
whose required contribution to the employer plan is greater than 8%
and less than 9.8% off the employee’s household income for the
taxable year, whose household income is not greater than 400% of
the FPL for the relevant family size, and who does not participate in
the plan offered by the employer. Beginning after 2014, the 8% and
9.8% would be indexed by the rate of premium growth.
The amount of a voucher would be equal to the monthly portion of
the cost of the employer plan which would have been paid by the
employer if the employee were covered under the plan for which the
employer pays the largest portion of plan costs, for either self or , if
elected by the employee, family coverage.
The cost of any health plan would be determined under rules similar
to section 2204 of the PHSA (relating to premiums for continuation
CRS-66
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 5
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
coverage), except that the amount would be adjusted for age and
category of enrolment, as established through regulation by the
Secretary.
An exchange would credit the amount of a voucher to the monthly
premium of a qualified health plan in which the qualified employee is
enrolled, and the employer would pay the exchange the credited
amount. If the amount of the voucher exceeded the premium, the
excess would be paid to the employee.
For employees, the amount of the voucher that did not exceed the
premium would be excluded from gross income. For employers, the
amount of the voucher would be treated as compensation for
personal services actual y rendered. The voucher would be taken
into account in determining the premium credit.
No penalty would be imposed on am employer with respect to any
employee who was provided a voucher. §10108(f): IRC §139D
CRS-67
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 (House-passed)
H.R. 3590 (Senate-passed)
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, 2010 (including carrybacks of credits). As amended by
§10105 and §1421(f)
Maximum amount and duration of
50% credit toward the employer share of the cost of qualified
35% credit (2010-2013) 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. (For 2010-2013, “average” would be
determined by the Secretary based on the average premium for the
small group market in the state, or area in the state, in which the
employer offers health insurance). §1421(a): IRC §45R(b) and (g) as
amended by §10105
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
would be eligible. Small employers would have to contribute at least
of $20,000 or less could claim the full credit amount. §521(a): IRC
50% of the cost of premiums towards a qualified health plan. Small
§45R(a) and (b)
businesses with 10 or fewer full-time employees and with average
taxable wages of $25,000 or less could claim the ful credit amount.
§1421(a): IRC §45R(a) and (d) as amended by §10105
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
$25,000 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. Average
inflation would be applied to the average employee compensation
annual wages would be determined by dividing the aggregate amount
and to the limit on highly compensated employees. §521(a): IRC
of wages paid by the employer by the number of ful -time-equivalent
§45R(b),(c)and (e)
employees, for the taxable year.§1421(a): IRC §45R(c) and (d) as
amended by §10105
CRS-68
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 6
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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 (2010–2013) and a 35% credit
(beginning in 2014), or (2) the amount of employer-paid payroll taxes
(including the Medicare contribution) for the relevant calendar year.
§1421(a): IRC §45R(f)and (g) as amended by §10105
Special rules for self-employed
Could be eligible. §521(a): IRC §45R(f) Not
eligible.
§1421(a): IRC §45R(e)
individuals
Table 7. Health Insurance Exchanges
Topics for Table 7
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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 nationally by the bill 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:
CRS-69
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 7
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
● 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.
● 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 provide 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
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
CRS-70
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 7
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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.
● 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
CRS-71
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 7
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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)
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),
No provision.
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%.
CRS-72
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 7
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
§1301(a)(1)(C)(ii), §1311(b)(2)(B)(ii)
Benefits beyond the essential benefits package that states require
insurers to include would continue to apply to exchange plans, if
the state has entered into an arrangement satisfactory to the
Commissioner to reimburse the Commissioner for the amount
of any net increase in premium credits attributable to the benefit
mandate.§303
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
No provision.
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)
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
CRS-73
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Table 8. Premium and Cost-Sharing Subsidies
Topics for Table 8
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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)
CRS-74
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 8
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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
CRS-75
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 8
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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-76
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Table 9. Public Health Insurance Option/Multi-State Qualified Health Plan
Topics for Table 9
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Primary location in bill
Sections 321-331
Section §10104: §1334(a)
Law amended
Who establishes the public
The Secretary. §321(a)
The Director of the Office of Personnel Management (OPM). As
option/ multi-state qualified health
amended by §10104: §1334(a)
plan
Availability
The public option would only be available through an exchange.
The Director would enter into contracts with health insurance
§321(b)
issuers (which could include a group of issuers affiliated either by
common ownership and control or by common use of a national y
licensed service mark) to offer at least 2 multi-state qualified health
plans (MSQHPs) through each exchange in each state (without regard
to statutes requiring competitive bidding). Such plans would provide
individual, or in the case of small employers, group coverage. As
amended by §10104: §1334(a)
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
could enroll in a MSQHP. Enrollment would be voluntary and
voluntary. In general, any employee, including a Member of
individuals could be eligible for premium credits and cost-sharing
Congress, could forgo employment-based health insurance and
assistance. As amended by §10104: §1334(c)(2)
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
A health insurance issuer would be required to agree to offer a
that apply to all exchange plans, including those related to
MSQHP that met the requirements in each exchange in each state; be
benefits, provider networks, consumer protection and cost-
licensed in each state and subject to all requirements of state law not
sharing. With respect to the offer of the public option through
inconsistent with this section (including the standards and
the exchange, the Secretary would be treated as the entity
requirements that a state imposes that do not prevent the application
offering exchange-participating plans (QHBPs). §321
of a requirement of relating to health insurance coverage in the Public
Health Service Act or a requirement of this title); comply with the
minimum standards prescribed for carriers offering health benefits
plans under FEHBP (if not in conflict with a provision of this title); and
met other requirements as determined appropriate by the Director,
in consultation with the Secretary. As amended by §10104: §1334(b)
Benefit levels
The public option would offer basic, enhanced, and premium
A MSQHP would meet the requirements of this subsection if, the
plans, and may offer premium-plus plans. §321(b)
Director determined that the plan offered a uniform benefits package
in each state consisting of the essential benefits; the plan met al
requirements of this title with respect to a qualified health plan,
including requirements relating to the offering of the bronze, silver,
and gold levels of coverage and catastrophic coverage in each state
exchange; the plan met the rating requirements of this Act (except
CRS-77
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 9
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
for certain state rating requirements); and the issuer offered the plan
in all geographic regions, and in all states that adopted adjusted
community rating before the date of enactment of this Act. As
amended by §10104: §1334(c)
Establishment of Treasury
An account for receipts and disbursements for operation of the
No provision.
Account
public option would be established in the U.S. Treasury. §322(b)
Establishment of premiums
The Secretary would establish geographically adjusted premiums
No provision.
that comply with premium rules established by the Commissioner
at levels sufficient to cover medical claims, administration, a
contingency margin (see below), and repayment of start-up funds.
§322
The Secretary would col ect data necessary to establish
premiums, and other purposes. §321(e)
Contingency margin
Premiums established before 2015 would be required to take into No provision.
account a contingency margin of not less than 90 days of
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
No provision.
establishment of the public option. An additional appropriation
would be transferred to the fund to cover 90 days worth of
claims based on estimated enrollment. The amounts would be
repaid within 10 years. §322(b)
Solvency provisions
The public option would be prohibited from receiving federal
No provision.
funds if it became insolvent. §322(b)
Establishment of payment rates
The Secretary would be required to negotiate payments for
No provision.
providers, items, and services, including prescription drugs.
Payment rates in aggregate would not be allowed to be lower
than rates under Medicare, and not higher than average rates paid
by other qualified health benefit offering entities. The Secretary
would be required to implement payment and delivery system
reforms under the public option that had been determined
successful under other parts of this Act. §323 and §324
CRS-78
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 9
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Provider networks
Medicare-participating providers would be providers for the
No provision.
public option, unless they chose to opt out in a process
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
Each contract for an MSQHP would be for at least 1 year, and could
the administration of the public option, in the same way the
be automatical y renewed if neither party provided notice to
Secretary enters into contracts for the administration of
terminate. The Director would ensure that the benefits coverage
Medicare. Functions would include, subject to restrictions:
was in accordance with the types of coverage provided under PHSA
● Determination of payment amounts.
2701(a)(1)(A)(i) – relating to fair health insurance premiums. At least
● Making payments.
one contract would be with a non-profit entity.
● Beneficiary education and assistance.
● Provider consultative services.
The Director would implement this subsection similar to the way the
● Communication with providers.
Director implements the contracting provisions with respect to
● Provider education and technical assistance. §321(c)
carriers under the Federal employees health benefit program (FEHBP)
- through negotiating with each MSQHP on (1) medical loss ratio; (2)
profit margin; (3) premiums to be charged; and (4) such other terms
and conditions of coverage as are in the interests of enrollees in such
plans. The Director could prohibit the offering of any MSQHP that
did not meet these terms and conditions.
In entering into contracts under this subsection, the Director would
ensure that there is at least one MSQHP that does not provide
coverage of abortion services described in §1303(b)(1)(B)(i) of this
Act.
Approval of a contract could be withdrawn only after notice and an
opportunity for a hearing to the issuer. As amended by §10104:
§1334(a)
Ombudsman
The Secretary would create an office of the ombudsman, which
No provision.
would have duties similar to those of the Medicare Beneficiary
Ombudsman. §321(d)
CRS-79
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 9
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Consumer protections
Enrollees would have access to federal courts for the
No provision.
enforcement of rights in the same manner that Medicare
beneficiaries have with respect to the Medicare program. §321(g)
Fraud and abuse
Provisions of civil law identified by the Secretary (in consultation
No provision.
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
No provision.
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 No provision.
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
Additional state required benefits
No provision.
States could require additional benefits, but there would be no
additional premium tax credit provided for the state-only mandated
benefits. The states would make payments to an individual enrolled in
a multi-state plan or on behalf of such an individual to defray the cost
of additional benefits.
For states with age rating requirements that are lower than 3:1, the
state could require the exchange to only permit MSQHPs that comply
the state’s more protective age rating requirements. As amended by
§10104: §1334(f)
Certification
No provision.
A MSQHP offered under a contract would be deemed to be certified
by an exchange. As amended by §10104: §1334(d)
Phase-In
No provision.
The Director would enter into a contract with a health insurance
issuer if the issuer offered the plan in at least 60% of states in the first
year, at least 70% in the second year, at least 85% in the third year,
and in all states thereafter. As amended by §10104: §1334(e)
Other duties of the Director
No provision.
The requirements of the FEHBP program would only apply to
MSQHPs to the extent that they were not in conflict with the
requirements of this Act. As amended by §10104: §1334(f)
CRS-80
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 9
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Applicability
No provision.
The Director could not reduce financial or personnel resources to
the functions of OPM related to the administration of FEHBP.
Enrollees in a MSQHP would be treated as a separate risk pool from
FEHBP.
The Director could establish separate units or offices within OPM, to
ensure that the administration of MSQHPs did not interfere with the
administration of FEHBP. The Director could appoint additional
personal to carry out activities under this section. The Director
would ensure that the program under this section is separate from
FEHBP. FEHBP plans would not be required to offer a MSQHP. As
amended by §10104: §1334(g)
Advisory committee
No provision.
The Director would establish an advisory board to provide
recommendations. A significant percentage of the members of the
board would be comprised of enrollees in a MSQHP or their
representatives. As amended by §10104: §1334(h)
Authorization of Appropriations
No provision.
Such sums as necessary would be authorized to be appropriated to
carry out this section. As amended by §10104: §1334(i)
CRS-81
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 (House-passed)
H.R. 3590 (Senate-passed)
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
No provision.
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.
CRS-82
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 10
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
● 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
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
No provision.
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
Nothing in this section would be construed to prevent a
CO-OP participants would be permitted to establish a private
cooperatives
cooperative in one state from integrating with a cooperative
purchasing council for collective purchasing arrangements for items
established in another state(s) for the administration, issuance of
and services that increase administrative and other cost efficiencies
CRS-83
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 10
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
coverage or other activities related to acting as a QHBP. Nothing
including claims administration, health information technology, and
in this section would be construed as preventing a state from
actuarial services. This council could not set payment rates to
taking actions to permit such integration. §310(b)(4)
providers and would not preempt applicable antitrust law. §1322(d)
Amortization of grants and loans
The Secretary would provide for the repayment of grants or
Not later than July 1, 2013, and prior to awarding loans and grants
loans to the Treasury in an amortized manner over a 10-year
under the CO-OP program, the Secretary would promulgate
period. §310(b)(5)
regulations with respect to the repayment of loans and grants in a
manner that is consistent with state solvency regulations and other
similar state laws that may apply. In promulgating such regulations, the
Secretary would provide that such loans would be repaid within 5
years and such grants would be repaid within 15 years, taking into
consideration any appropriate state reserve requirements, solvency
regulations, and requisite surplus note arrangements that must be
constructed in a state to provide for such repayment prior to
awarding such loans and grants. §1322(b) as amended by §10104
Repayment for violations of terms
If a cooperative violated the terms of the CO-OP program and
If the Secretary determines that a cooperative has failed to meet any
of the program
fails to correct the violation within a reasonable period of time, as of the requirements and has failed to correct such failure within a
determined by the Commissioner, the cooperative would be
reasonable period of time then the cooperative would be required to
required to replay the total amount of any loan or grant received
repay to the Secretary an amount equal to the sum of 110% of the
plus interest at a rate that would be determined by the Secretary. aggregate amount of loans and grants received plus interest on the
§310(b)(6)
aggregate amount of loans and grants received.
The Secretary would also notify the Secretary of the Treasury of any
determination of a failure that results in the termination of an issuer’s
tax-exempt status. §1322(c)(iii)
CRS-84
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 (House-passed)
H.R. 3590 (Senate-passed)
Primary location in the bill
Sections 531-534, 551-555
Sections 9001-9017 and Sec. 10901-10906
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 bill would impose an additional
individuals
income. The marginal tax rates vary from
on modified adjusted gross income (AGI)
payroll tax of 0.9 percentage points on
10% of taxable income for very low income that exceeds $500,000 for single filers and
high-income workers with wages over
taxpayers to 35% for high-income
$1 million for joint filers.
$200,000 for single filers and $250,000 for
taxpayers.
joint filers Since employers will not know
Effective date: Date of enactment of this
the wages of a spouse, they are directed to
Among higher income taxpayers in 2009:
Act. §551
collect these revenues from all workers
Married filers with adjusted gross income
Raises $460.5 billion over 10 years.
with 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 0.9 percentage point tax would also be
over $372,950 pay $108,216 plus 35% of
levied on payroll for self-employed if their
the excess over $372,950
incomes exceed the specified thresholds.
The self-employed would not be allowed to
In addition to federal tax rates, both
deduct this additional tax as a business
employees and employers each pay a
expense.
payroll tax of 7.65%. Of which 6.2% is for
Old Age Survivors and Disability Insurance
Effective for taxable years after December
and 1.45% to for Hospital Insurance to
31, 2012. §9015 as amended by §10906
finance Medicare Part A.
Raises $86.8 billion in revenues over 10
years.
Excise Taxes
Excise tax on high-cost
No provision.
The bill would impose an excise tax of 40%
plans
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-85
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 11
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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 (including
longshore workers) 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 $148.9 billion over 10 years.
CRS-86
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 11
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Annual fee on health
No provision.
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 annual fee al ocated
across health insurers would be $2 billion
in 2011, $4 billion in 2012, $7 billion in
2013, $9 billion in 2014-1016 and $10
billion thereafter.
The fee would not apply to self-insured
plans, federal, state or government entities
or non-profit insurers. 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, 2011. §9010
as amended by §10905
Raises $59.6 billion over 10 years.
Limit on executive pay of
No provision.
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 $0.6 billion in revenues over 10
years.
CRS-87
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 11
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Annual fee on branded
No provision.
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 $2.3 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 from 2011 to 2017
and $3 billion thereafter. The fee would be
Raises $20.0 billion over 10 years.
levied on device manufacturers based on
their annual sales. 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 as amended by §10904
Raises $19.3 billion over 10 years.
Excise tax on elective
No provision.
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
CRS-88
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 11
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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, 2011.
a pre-tax basis for specified health care
effective January 1, 2013. This threshold
§9005 as amended by §10902
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
Raises $13.3 billion over 10 years.
to set limits on FSA contributions.
Raises $13.3 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-89
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 11
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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
No provision.
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-61-09.
CRS-90
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Table 12. Abortion
Topics for Table 12
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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
A state could elect to prohibit abortion coverage in Exchange plans if
qualified health plans
whether the plan provides coverage for either elective abortions
the state enacts a law that provides for such a prohibition. The issuer
or abortions for which the expenditure of federal funds
of a qualified health plan would determine whether or not the plan
appropriated for HHS is permitted. However, if a plan includes
provides coverage for elective abortions, as well as abortions for
coverage for elective abortions, the entity that offers the plan
which the expenditure of federal funds appropriated for HHS is
must offer another plan that is identical in every respect, except
permitted. §1303(a), (b)(1)
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
No provision.
the public option
provides coverage for either elective abortions or abortions for
which the expenditure of federal funds appropriated for HHS is
permitted. §222(e)(2)
Use of federal funds for abortion
Would prohibit federal funds from paying for an abortion or
The issuer of a qualified health plan that provides coverage for
services
covering any part of the costs of any health plan that includes
elective abortions could not use any amount attributable to a
coverage of abortion, except in cases where a pregnancy is the
premium assistance credit or cost-sharing reduction to pay for such
result of an act of rape or incest, or where a woman’s life would
abortions. §1303(b)(2)(A)
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-91
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 12
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Segregation of funds
No provision.
The issuer of a qualified health plan that provides coverage for
elective abortions would be required to col ect two separate
payments from each enrollee in the plan: one payment that reflects an
amount equal to the portion of the premium for coverage of services
other than elective abortions; and another payment that reflects an
amount equal to the actuarial value of the coverage of elective
abortions. The plan issuer would be required to deposit the separate
payments into separate allocation accounts that consist solely of each
type of payment and that are used exclusively to pay for the specified
services. State health insurance commissioners would ensure
compliance with the segregation requirements in accordance with
applicable provisions of general y accepted accounting requirements,
OMB circulars on funds management, and GAO guidance on
accounting.
To determine the actuarial value of the coverage for elective
abortions, the plan issuer would estimate the basic per enrollee, per
month cost, determined on an average actuarial basis, for including
such coverage. The estimate may take into account the impact on
overal costs of including coverage for elective abortions, but may not
take into account any cost reduction estimated to result from such
services, including prenatal care, delivery, or postnatal care. The per
month cost must be estimated as if coverage were included for the
entire population covered and may not be less than $1 per enrol ee,
per month. §1303(b)(2)
Notice to enrol ees
No provision.
A qualified health plan that provides coverage for elective abortions
would be required to provide notice of such coverage to enrollees as
part of the summary of benefits and coverage explanation at the time
of enrollment. The notice, any plan advertising used by the issuer,
any information provided by the Exchange, and any other information
specified by the Secretary would provide information only with
respect to the total amount of the combined payments for elective
abortion services and other services covered by the plan. §1303(b)(3)
Provider conscience protections
Would prohibit a federal agency or program, and any state or
Would prohibit qualified health plans offered through an Exchange
local government that receives federal financial assistance under
from discriminating against any individual health care provider or
H.R. 3962 from:
health care facility because of its unwillingness to provide, pay for,
● subjecting any individual or institutional health care entity to
provide coverage of, or refer for abortions. §1303(b)(4)
discrimination on the basis that the health care entity does not
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
CRS-92
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 12
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
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
Same as H.R. 3962. §1303(c)
laws regarding abortion
or funding for abortions, and state laws involving abortion-related
procedural requirements would not be preempted. Federal
conscience protection and abortion-related antidiscrimination
laws, as well as Title VII of the Civil Rights Act of 1964, would
also not be affected by H.R. 3962. §258
CRS-93
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 (House-passed)
H.R. 3590 (Senate-passed)
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
CRS-94
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 (House-passed)
H.R. 3590 (Senate-passed)
Reporting requirements/
No provision.
The Secretary would be required to
promulgation of regulations
develop reporting requirements for group
regarding coverage of
health plans and health insurance issuers
prevention and wellness
with respect to plan or coverage benefits
activities
and health care provider reimbursement
structures that, among other things,
implement “wellness and health promotion
activities.” Health plans and insurance
issuers would be required to annual y
submit to the Secretary and enrollees a
report on whether the benefits under the
plan or coverage satisfy these and other
elements. This section also would require
the Secretary to promulgate regulations
providing criteria for determining whether
a reimbursement structure meets these
elements. Under this section, wellness and
health promotion activities could include
personalized wellness and prevention
services “that are coordinated, maintained
or delivered by a health care provider, a
wellness and prevention plan manager, or a
health, wellness or prevention services
organization that conducts health risk
assessments or offers ongoing face-to-face,
telephonic or web-based intervention
efforts for each of the program’s
participants....” These activities could
include wellness and prevention efforts
such as smoking cessation, weight
management, nutrition, and healthy lifestyle
support.
This section also contains provisions
relating to gun rights. Among these
provisions, a wellness or health promotion
activity (as referenced above) could not
require disclosure or collection of any
information relating to (A) the presence or
storage of a lawfully possessed firearm or
ammunition in the residence or on the
CRS-95
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 14
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
property of an individual; or (B) the lawful
use, possession, or storage of a firearm or
ammunition by an individual.
§1001 as amended by section 10101(e)
(creating Sec. 2717 of the PHSA)
Incentives in employer-
Among the federal laws that apply to
No provision.
Section 1201 (creating sec. 2705 of the
provided wellness programs wellness programs, HIPAA clarifies that
PHSA) would amend section 2702 of the
group health plans and health insurance
PHSA to largely codify an amended version
issuers offering group health coverage may
of the HIPAA wellness program
establish premium discounts or rebates or
regulations. Wellness programs that do not
modify otherwise applicable copayments or
require an individual to satisfy a standard
deductibles (i.e., rewards) in return for
related to a health factor as a condition for
adherence to these programs. HIPAA
obtaining a reward (or do not offer a
regulations provide a framework for
reward) would not violate HIPAA, so long
structuring these wellness programs and
as participation in the programs is made
divide wellness programs into two
available to all similarly situated individuals.
categories. First, if a wellness program
Wellness programs with conditions for
provides a reward based solely on
obtaining a reward that are based on an
participation in a wellness program, or if it
individual meeting a certain standard
does not provide a reward, the program
relating to a health factor, would have to
complies with HIPAA without having to
meet additional requirements. Among
satisfy any additional standards, as long as
these requirements, the reward must be
the program is made available to all
capped at 30% of the cost of the employee-
similarly situated individuals. Second, if a
only coverage under the plan (instead of
reward is based on an individual meeting a
20% under the current regulations), but the
certain standard relating to a health factor,
Secretaries of HHS, Labor, and the
then the program must meet additional
Treasury would have the discretion to
requirements. Among these additional
increase the reward up to 50%. The HHS
requirements, a reward offered by this type
Secretary, in consultation with the
of wellness program must not exceed 20%
Secretaries of the Treasury and Labor,
of the cost of employee coverage under
would establish a 10-state pilot program in
the plan (i.e., the amount paid by the
which participating states would be
employer and the employee for that
required to apply the wel ness program
employee for coverage).
provisions to health insurers in the
individual market.
§1201, §1562 as amended by §10107
(applying the provisions of §1201 to group
health plans and health insurance issuers
under ERISA and the IRC)
Wel ness program grants to
The Secretaries of HHS and Labor would
The Secretary of HHS would be required
CRS-96
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 14
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
employers
be required to establish a grant program to
to award grants to eligible employers to
help smal employers (to be defined) cover
provide their employees with access to
50% of the costs of providing employee
comprehensive workplace wellness
wellness programs. Allowable costs would
programs. The grant program would be
be those attributable to the wellness
conducted for a 5-year period. Eligible
program (excluding the cost of food), and
employers would be defined as those that
not to the health plan or health insurance
employ fewer than 100 employees who
coverage offered in connection with such a
work 25 or more hours per week, and that
plan. Grants for a given plan year would be
do not provide a workplace wellness
capped at $150 per employee. Grants
program as of the date of enactment. To
could be provided for up to three years
receive a grant, such employers would be
and would be capped at $50,000, in total,
required to submit an appropriate
for an employer.
application to the Secretary.
A qualified wellness program would be
The Secretary would be required to
jointly certified by the Secretaries of HHS
develop program criteria consistent with
and Labor as meeting several criteria,
evidence-based research and best practices,
including (1) being consistent with current
considering the Guide to Community
evidence-based research and best practices; Preventive Service and the National
(2) being cultural y appropriate, and
Registry for Effective Programs.
accessible for individuals with disabilities
and with limited English proficiency, among
Wel ness programs would have to be made
others; (3) having a number of required
available to all employees and include
components, including health awareness,
several specified components, including
health education, periodic screenings,
education, efforts to encourage
employee engagement, and listed behavioral participation, initiatives to change unhealthy
change activities (including smoking
behaviors, and supportive work
cessation and weight reduction); and (4)
environments.
having supportive work policies regarding
There would be authorized to be
tobacco use, food choices, stress
appropriated $200 million in total, to be
management, and physical activity. A
available until expended, for FY2011
program could not be certified unless each
through FY2015.
required program component were
available to all employees. Employee
§10408
participation could not be mandated.
Qualified programs could provide
incentives for participation provided such
incentives are not tied to the premium or
cost-sharing of the individual under the
health benefits plan. Any employee health
information collected through the wellness
program would be confidential and could
not be used for purposes other than
CRS-97
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 14
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
administration of the program.
There would be authorized to be
appropriated SSAN to carry out this
section.
§112
Wellness program technical
No provision.
Section 4303 would require the CDC
assistance, surveys, and
Director to provide employers with
evaluations
technical assistance and other resources to
evaluate workplace wellness programs,
including measuring employee participation;
developing standardized measures of
factors that have a positive effect on health
behaviors, outcomes, and expenditures;
and evaluating the effect of programs on
health outcomes, absenteeism, productivity,
workplace injury rates, and medical costs.
The Director also would be required to
build evaluation capacity among workplace
staff and provide resources, technical
assistance, and consultation. The CDC
Director would be required to conduct a
national survey of employer-based health
policies and programs, and to report to
Congress on findings and recommendations
for the implementation of effective policies
and programs. In addition, the Secretary of
HHS would be required to evaluate al
programs funded through the CDC before
conducting such an evaluation of privately
funded programs, unless an entity with a
privately funded wellness program requests
such an evaluation. Final y,
recommendations, data, or assessments
carried out under this part could not be
used to mandate requirements for
workplace wellness programs.
§4303, as amended by §10404
CRS-98
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 14
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Multiple employer welfare
ERISA defines a MEWA as an employee
No provision.
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
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
CRS-99
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 14
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Nothing in the section would preempt or
medical malpractice claims. §6801
modify existing state laws that limit
Would authorize the Secretary of Health
attorneys’ fees or cap damage awards; nor
and Human Services to award
would the provision impair a state’s
demonstration grants to states for the
authority to establish such laws, or restrict
development, implementation, and
the eligibility of a state for an incentive
evaluation of alternatives to current tort
payment on the basis of such laws provided litigation.
they are not established or implemented as
part of an alternative medical liability law
A state desiring a grant would be required
that meets the requirements described
to develop an alternative that (A) allows for
above.
the resolution of disputes caused by health
care providers or organizations, and (B)
The Secretary would be required to submit promotes a reduction of health care errors
to Congress an annual report on the
by encouraging the collection and analysis
progress states are making in enacting and
of patient safety data.
implementing alternative medical liability
laws and the effectiveness of such laws. The The Secretary is to provide technical
section would authorize to be appropriated assistance to the states including guidance
such sums as necessary for the incentive
on common definitions, non-economic
payments, which would be used to improve damages, avoidable injuries, and disclosure
health care in the state. §2531
to patients of health care errors and
adverse events.
The Secretary is to consult with a review
panel composed of relevant experts
appointed by the Comptroller General
when reviewing applications.
Each state receiving a grant is to submit a
report to the Secretary covering the
impact of the activities funded on patient
safety and on the availability and price of
medical liability insurance. The Secretary is
similarly required to report to Congress.
The provision would not limit any prior,
current, or future efforts of any state to
establish any alternative to tort litigation.
It would appropriate $50,000,000 for 5
years beginning FY2011 to carry out this
section. § 10607.
CRS-100
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 14
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Medical Malpractice and
Under the Public Health Services Act,
No provision.
Would extend federal employee status to
Free Clinics
health professionals, officers, governing
officers, governing board members,
board members, or employees of a
employees, or contractors of free clinics.
federally qualified health center are deemed
employees of the Public Health Service.
§ 10608
Thus, such individuals or entities cannot be
sued for medical malpractice that was
committed within the scope of
employment. Any medical malpractice claim
that, in the absence of this provision, could
be brought against such an entity or
individual may instead be brought against
the United States.
For the same purposes, health professionals
who volunteer at free clinics and provide
qualifying health services are deemed to be
federal employees of the Public Health
Service. However, board members, officers
or other employees of free clinics are not
extended the same liability protection.
End-of-life planning
QHBPs would be required to provide for
No provision.
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
CRS-101
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 14
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
Assisted suicide
No provision.
The federal government, any state or local
government, or health care provider that
receives federal financial assistance under
this Act or any health plan created under
this Act would be prohibited from
subjecting an individual or institutional
health care entity to discrimination based
on not providing a health care item or
service 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
Standards for electronic
To promote the growth of electronic
Section 115 would require the Secretary,
Similarly, HIPAA’s Administrative
billing and other
record keeping and claims processing,
within two years of enactment, to adopt an
Simplification provisions would be amended
administrative transactions
HIPAA’s Administrative Simplification
additional set of administrative and financial
with the intent of creating uniformity in the
provisions (SSA Sections 1171-1179)
transactions standards to help clarify,
use of HIPAA electronic transactions
mandated the development of electronic
complete, and expand the existing HIPAA
standards. However, the Senate bill takes a
format and data standards for specified
standards. The goal would be to create
different approach. It would establish a
administrative and financial transactions
uniformity in the use of those standards.
timeline, extending through mid-2014, for
between providers and health plans.
Within five years of enactment, the
the adoption of a single set of operating
Updated standards to replace the versions
Secretary would have to submit to
rules for each HIPAA transaction for which
currently in use were recently published.
Congress a plan for implementing and
there is an existing standard. It also would
The compliance deadline for the updated
enforcing the new standards. Until such
mandate the adoption of an electronic
standards is January 1, 2012. While the
time as the new standards are adopted, the
funds transfer (EFT) standard for the
standards are intended to eliminate
Secretary would be required to adopt an
payment of health claims. By December 31,
variation in electronic billing and other
interim companion guide (including
2015, health plans would have to certify
routine transactions, they include optional
operating rules) for each HIPAA
that their health information technology
data/content fields that can accommodate
transaction.
systems comply with the most current
plan-specific information. Providers often
standards and operating rules. Health plans
are faced with a multiplicity of
The Secretary would be required to
that failed to meet the certification
implementation guides and plan-specific
establish a unique health plan identifier and
requirements would be fined.
requirements and must customize
adopt a transaction standard for health
transactions on a plan-by-plan basis.
claim attachments (one of the two HIPAA-
The Secretary would be required to
specified transactions for which a standard
establish a unique health plan identifier and
HIPAA also mandated the development of
has yet to be adopted). The section would
adopt a transaction standard and associated
unique identifiers for providers, health
amend the Medicare statute to require that
operating rules for health claim
plans, employers, and individuals for use in
all Part A and Part B payments, with some
attachments (one of the two HIPAA-
CRS-102
Private Health Insurance Provisions of H.R. 3962 and H.R. 3590
Topics for Table 14
Current Law
H.R. 3962 (House-passed)
H.R. 3590 (Senate-passed)
standardized transactions. Unique
exceptions, be made electronically as of
specified transactions for which a standard
identifiers have been adopted for providers
January 1, 2015.
has yet to be adopted). The section would
and employers, but not for health plans.
amend the Medicare statute to require that
Congress has blocked the development of a §115
all Part A and Part B payments, with some
unique individual identifier.
exceptions, be made electronically as of
January 1, 2014. §1104
HIPAA’s Administrative Simplification
provisions would be further amended
requiring the Secretary, by January 1, 2012,
and every 3 years thereafter with input
from specified groups, to consider adopting
additional standards for financial and
administrative transactions not already
named under HIPAA (including certain
specified activities) to improve the
operation and efficiency of the health care
system. In addition, the Secretary would be
required to consider, and post online,
revisions to the crosswalk between the 9th
and 10th versions of the International
Classification of Disease (ICD), and to post
crosswalks of future ICD versions. §10109
CRS-103
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
Specialist in Health Care Financing
pcmorgan@crs.loc.gov, 7-7317
Acknowledgments
Ruth Ellen Wasem (77342) contributed to the sections relating to immigration status and treatment of
noncitizens. Jennifer Staman (7-2610) contributed the sections on MEWAs and wellness programs, and to
the definitions in the report’s introduction. Sarah Lister (7-7320) also contributed to the section on wellness
programs. 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
104