A Comparative Analysis of Private Health Insurance Provisions of H.R. 3962 and S.Amdt. 2786 to H.R. 3590

On November 7, 2009, the U.S. House of Representatives approved health insurance reform legislation, H.R. 3962, the Affordable Health Care for America Act. The “Senate Amendment” (S.Amdt. 2786 to H.R. 3590, the Patient Protection and Affordable Care Act) was offered by Senate Majority Leader Harry Reid on November 21, 2009. This report compares the private health insurance provisions of H.R. 3962 and the Senate Amendment.

Individuals currently receiving health insurance through a large employer would likely see the least direct impact from the bills. The largest changes would occur in the private health insurance market for small businesses and for nongroup coverage (currently, insurance obtained directly from an insurance company, broker or agent). The most substantial of these reforms would not take effect until 2013 under H.R. 3962, and in 2014 under the Senate Amendment. At full implementation, the required private health insurance market reforms should be fully in place, along with subsidies to certain low- and moderate-income individuals ineligible for Medicaid. At full implementation, the bills would require most individuals to obtain and, in the House bill, for larger employers to offer and contribute toward health insurance. Although the Senate Amendment does not have an explicit “employer mandate,” employers who do not offer coverage could face substantial penalties.

Shortly after enactment of either of the bills, all private health insurance would be subject to some new requirements. For example, health insurers could not offer coverage with unreasonable annual or lifetime limits on benefit payouts, and they could not cancel (“rescind”) policies unless the policyholder had committed fraud. Many other provisions are detailed in the report.

After full implementation, although prior coverage could generally continue without meeting new requirements (at least for a period of time), new coverage would have to meet federal standards stipulated in the bills—and different requirements may apply depending, for example, on whether the coverage is nongroup or employment-based. The bills also call for an exchange available in each state, through which individuals not enrolled in (or, primarily in the Senate Amendment, not eligible for) other coverage, as well as small businesses, could choose from private health insurance plans. In addition, under both bills, individuals obtaining coverage through an exchange could also choose a “public option” established by the Secretary of Health and Human Services (HHS). The public option would be appropriated start-up funding, but would ultimately have to be self-sustaining through the premiums charged. Under both bills, payments to providers (doctors, hospitals) would be established through negotiations with the Secretary. Unlike the House bill, the Senate Amendment would allow states to prohibit a public option in their exchange. Both bills also provide start-up funding for cooperatives, which would be new, member-run, nonprofit entities that could offer health insurance through exchanges.

Under the Senate bill, any participation in the exchange requires verifying citizenship or legal residence status. Under H.R. 3962, such verification is only required for premium and cost-sharing subsidies. Under both bills, such subsidies would only be available through an exchange, for qualifying low- to moderate-income individuals. Both bills would prohibit the subsidies from paying any part of elective abortions. The House bill would also prohibit subsidies from going to a plan that covers elective abortions. Besides the subsidies to individuals, small businesses would be eligible for tax credits to help them pay toward their employees’ coverage. The Congressional Budget Office (CBO) estimated the bills’ costs would be fully offset in both the 5- and 10-year budget windows by increased excise taxes and other revenues and decreased spending.

Date of Report: December 16, 2009
Number of Pages: 79
Order Number: R40981
Price: $29.95
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