A Comparative Analysis of Private Health Insurance Provisions of H.R. 3962and 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


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 costsharing 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: January, 08 2010
Number of Pages: 108
Order Number: R40981
Price: $29.95

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