Editor’s Note: This is Tim Jost’s fourth post examining HR 3962, the House’s health reform legislation. Previous posts focused on measure’s health care financing reforms, the legislation’s provisions for an insurance exchange and a “public option,” and HR 3962’s delivery system reforms and other provisions.

How did HR 3962 change on Saturday night?

As everyone knows by now, the House passed HR 3962, the Affordable Health Care for America Act, late Saturday night, November 7 by a vote of 220 to 215.  I examined the contents in the original HR 3962 in three posts late last month.  Prior to passing the bill, the House adopted both a manager’s amendment and the Stupak abortion amendment.  It also rejected a Republican substitute amendment and a Republican motion to recommit with instructions.  This post briefly describes the amendments to HR 3962 that the House adopted prior to passing the legislation.

The most important amendment was the Stupak amendment, which the House adopted by a vote of 240 to 194.  All but one Republican voted for the amendment (one voted present), as did sixty-four Democrats.  The Stupak amendment extends to all health services funded under the Act the prohibition found in the current Hyde Amendment, which forbids Medicaid payments for abortion except in cases of pregnancies caused by rape or incest or where the pregnant woman’s life is endangered by physical disorder, illness, or injury. 

As I noted in an earlier post, HR 3962 as originally drafted would have prohibited the use of federal affordability credits to purchase abortion benefits.  Credits could be used to purchase health plans that covered abortions, however, as long as a covered plan member paid extra for the abortion coverage and the plan issuer segregated funds to assure that federal funds were not used to pay for abortion.  This arrangement was unacceptable to abortion opponents, who saw it as an accounting gimmick.

A Sweeping Ban On The Use Of Public Funds For Abortion

The Stupak amendment goes further and prohibits the use of any funds authorized or appropriated under the Act “to cover any part of the costs of any health plan that includes coverage for abortion,” except in cases of rape, incest, or physical life endangerment, even if the abortion coverage is paid for with a separate premium.  Private plans can only offer abortion coverage to persons receiving federal affordability subsidies if the coverage is offered as separate supplemental coverage, paid for with premiums that are not subsidized under the Act and that fully cover the administrative costs of the abortion coverage.  The public plan may not offer abortion coverage at all. Private plans that participate in the exchange and include abortion coverage (i.e. plans that are sold without affordability credits) must also offer plans through the exchange that are identical in every respect except for not covering abortion. Exchanges are not required to offer plans that cover abortion. 

The amendment covers all funds authorized and appropriated under the Act.  It is not, therefore, limited to the affordability credits, but also to credits paid to small employers to encourage them to insure their employees and presumably to other programs like school-based health clinics, nurse managed health centers, or health services for Native Americans that are also funded under the Act. (The Act already contained separate abortion coverage prohibitions for school-based and Native American health services).   

The Stupak amendment also changes the non-discrimination provisions of the Act.  Under HR 3962 as originally drafted, exchange-participating plans were not allowed to discriminate against providers on the basis of their willingness or unwillingness to provide abortions; under the amendment plans are only prohibited from discriminating on the basis of unwillingness.

Funding for abortions (beyond the limited Hyde Amendment exceptions) has been unavailable for years under the Medicaid program and Federal Employee’s Health Benefits program.  Abortion has been widely covered by private insurance, however, and the Stupak amendment will cut back on that coverage.  In a sense the amendment does not change much—abortion coverage remains available as a supplemental benefit and under the original HR 3962 federal premium subsidies could not have been used in any event to fund abortion coverage. 

But those who supported the Stupak amendment believe, probably correctly, that individuals would have been more likely to pay a little extra for abortion coverage than to purchase a supplemental policy.  Moreover, the Stupak amendment extends abortion coverage to all programs funded through the entire bill. 

The Stupak amendment does not reach employer-sponsored group coverage, which will continue to cover the vast majority of Americans.  Abortions will continue to be available on a self-pay basis, which is apparently how most abortions are funded today.  But the Stupak amendment is properly viewed as a major victory for abortion opponents, and will certainly be offered in the Senate as well.

Changes Affecting High-Risk Pools And Insurance Premium Regulation

Compared to the Stupak amendment, the other changes in the Act, found in the 42 page manager’s amendment (and in a brief amendment to the amendment) are less significant.  The Manager’s amendment added one more category of persons to the interim “high risk pool” program that will extend coverage until the bill goes into effect generally in 2013—retirees who face an annual increase in premiums for retiree coverage that is in excess of a limit that HHS will establish.  The high-risk pool program is one of the bill’s attempts to answer the question of what happens for the next three years before the bill goes into effect generally, and might see further elaboration in the Senate.  The manager’s amendment also limits coverage under the interim program to citizens and limited categories of legal residents, correcting what must have been an oversight in the original bill. 

The manager’s amendment further clarifies section 104 of the HR 3962, which creates an interim federal program for regulating insurance premiums and premium increases and which seems to have been added late in the drafting process.  Insurers have apparently been raising their premiums steeply in anticipation of reform and this amendment responds. 

As amended, the legislation creates a new health insurance premium review process, beginning in 2010, under which all health insurers must post on the web a justification for all premium increases before putting the increases into effect.  The amendment provides federal funding for state programs to review insurance premiums (and, where authorized under state law, approve or disapprove increases); it conditions receipt of these grants on the states providing the Commissioner with information about premium trends in the state and recommendations as to whether issuers should be excluded from the exchange (and thus the nongroup market) based on excessive and unjustified premium increases.  The amendment seems to authorize the Commissioner to exclude insurers from the exchange on this basis. 

Finally, the amendment authorizes the Commissioner to monitor premium increases, and in particular to take into account premium increases outside the exchange in considering whether to open the exchange to larger employers.

Limiting Insurers’ Protection Against Antitrust Enforcement And Adding New Programs

The manager’s amendment would further limit the protection the McCarran-Ferguson Act has offered insurers from federal antitrust enforcement.  It extends the full scope of federal antitrust enforcement to the business of insurance (and not just to the specific kinds of insurer behavior specified in the earlier amendment).  The amendment would still, however, allow insurers to engage in certain kinds of collective action in performing actuarial services or collecting and processing historical loss data.  The amendment also authorizes HHS, rather than the NAIC, to establish the rules for interstate compacts for the sale of insurance. 

Finally, the manager’s amendment continues to add new programs to the bill.  It establishes a new program for establishing quality indicators for care of people with Alzheimer’s; offers support for state Medicaid programs implementing a Community First Choice Option for coverage of community-based attendant services and support; creates a grant program for screening, brief intervention, referral and treatment for mental health and substance abuse disorders; and encourages HHS to review and improve diabetes screening programs.  The amendment clarifies that HR 3962’s state malpractice reform incentive program does not preempt current state malpractice laws.  Finally, it establishes office of minority health in five agencies within HHS, but curiously not in CMS, where one is clearly necessary.

A Party-Line Rejection Of A Republican Alternative

The House rejected by a straight party line vote of 258 to 176 the Republican substitute amendment, which would have substituted the Republican’s own health plan for HR 3962.   The House also defeated a Republican motion to recommit by a 247 to 187 vote.  The motion to recommit would have returned the bill to the Energy and Commerce Committee with instructions to add Republican provisions on Medicare funding and malpractice reform.  The motion to recommit, permitted under the rules of debate, was a bit of a surprise, as it was predicted that the motion would focus on undocumented immigrants, a potentially divisive issue among Democrats. 

Action now turns to the Senate, which is apparently awaiting a report from the CBO before releasing its own bill in the coming days.  The Senate bill will be examined here when its language is made public.