Private Health Insurance Provisions in Senate-Passed H.R. 3590, The Patient Protection and Affordable Care Act

Hinda Chaikind
Specialist in Health Care Financing

Bernadette Fernandez
Analyst in Health Care Financing

Chris L. Peterson
Specialist in Health Care Financing

Mark Newsom
Analyst in Health Care Financing

Janemarie Mulvey
Specialist in Aging Policy

This report summarizes key provisions affecting private health insurance in H.R. 3590, the Patient Protection and Affordable Care Act, as amended and passed by the Senate on December 24, 2009 (hereafter referred to simply as H.R. 3590). H.R. 3590 reflects the merged Senate health reform bills, S. 1679, the Affordable Health Choices Act (as ordered reported by the Senate Committee on Health, Education, Labor and Pensions on July 15, 2009), and S. 1796, America's Healthy Future Act of 2009 (as ordered reported by the Senate Committee on Finance on October 19, 2009). 

Title I of the bill imposes new requirements on individuals, employers, and health plans; restructures the private health insurance market; sets minimum standards for health benefits; and provides financial assistance to certain individuals and, in some cases, small employers. Title IX of the bill includes a number of new provisions to raise revenues to pay for health care reform. These provisions include excise taxes, annual fees on health insurers, and limits on tax deductions for out-of-pocket health care expenses. Title X contains amendments to many sections of the bill, including Titles I and IX. 

In general, the Senate bill would require individuals to maintain health insurance, with some exceptions. Individuals would be required to maintain minimum essential coverage, which includes eligible employer coverage, individual coverage, grandfathered plans, and federal programs such as Medicare and Medicaid, among others. Employers would not be required to provide health insurance, although certain employers with more than 50 full-time employees and smaller firms in the construction industry could be required to pay a penalty if either (1) they did not provide insurance, under certain circumstances, or (2) the insurance they provided did not meet specified requirements. Several insurance market reforms would be made, such as modified community rating and guaranteed issue and renewal. 

In addition to establishing new federal private health insurance standards, H.R. 3590 would enable and support states' creation of "American Health Benefit Exchanges." An exchange would not be an insurer; it would provide eligible individuals and small businesses with access to insurers' plans in a comparable way. The exchange would consist of a selection of private plans as well as "multi-state qualified health plans," administered by the Office of Personnel Management. Individuals would only be eligible to enroll in an exchange plan if they were not enrolled in Medicare, Medicaid, or acceptable employer coverage as a full-time employee. Based on income, certain individuals could qualify for a credit toward their premium costs and a subsidy for their cost-sharing; the credits and subsidies would be available only through an exchange. States would have the flexibility to establish basic health plans for low-income individuals not eligible for Medicaid. 

Individual and small group coverage under qualified health plans would be allowed to be offered through nonprofit, member-run health insurance companies. Such nonprofit insurers would be eligible for grants and loans distributed through the new Consumer Operated and Oriented Plan (CO-OP) program. 

Date of Report: January 29, 2010
Number of Pages: 51
Order Number: R40942
Price: $29.95

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