California progressing bill to require disclosure of "Abortion Fund" balances

I originally wrote about this issue back in 2017.

As explained in this Health Affairs article by Katie Keith and Timothy Jost:

The final Senate compromise, which was adopted as part of the ACA, largely reinforces the Hyde Amendment, which has been included in annual Congressional appropriations legislation since the 1970s and prohibits the use of federal funds for abortion services unless the pregnancy is a result of rape or incest, or would endanger the woman’s life (non-Hyde abortions).

The ACA allows the coverage of abortion services through the marketplaces but includes a number of restrictions and requirements that insurers must follow before covering non-Hyde abortions. Many, though not all, of these restrictions are outlined in Section 1303 of the ACA, which includes specific rules related to the coverage of abortion services by Qualified Health Plans (QHPs) and has been the subject of previous litigation. In particular, Section 1303:

• Prohibits insurers from using any portion of premium tax credits or cost-sharing reduction payments to pay for non-Hyde abortion services;
• Requires insurers to inform consumers in their summary of benefits and coverage that the QHP they are considering includes coverage of non-Hyde abortion services; and
• Requires insurers that cover non-Hyde abortions to determine the cost of and then separately collect and segregate funds for non-Hyde abortion services.

Section 1303 further specifies that individuals who purchase insurance that covers abortions must pay at least one dollar into a separate account specifically designated for abortion. These segregated accounts are designed to help ensure that the accounts are 1) funded solely by the enrollee’s premium (rather than by the premium tax credit) and 2) used exclusively to fund non-Hyde abortion services.

Section 1303 also allows states to ban the coverage of abortions by QHPs sold through the marketplaces: to date, twenty-six states have done so. In an additional six states, no marketplace plans offered coverage for abortion during the 2016 plan year. Two states—California and New York—require health plans to cover abortions, subject to an exception for multistate plans, at least one of which in each state must offer insurance without abortion coverage.

The actual wording of Section 1303 clarifies that the "separate account" payment has to be at least $1.00 per month per enrollee:

(C) <<NOTE: Cost estimate.>> Actuarial value of optional service coverage.-- (i) In general.--The Secretary shall estimate the basic per enrollee, per month cost, determined on an average actuarial basis, for including coverage under a qualified health plan of the services described in paragraph (1)(B)(i). (ii) Considerations.--In making such estimate, the Secretary-- (I) may take into account the impact on overall costs of the inclusion of such coverage, but may not take into account any cost reduction estimated [[Page 124 STAT. 171]] to result from such services, including prenatal care, delivery, or postnatal care; (II) shall estimate such costs as if such coverage were included for the entire population covered; and (III) may not estimate such a cost at less than $1 per enrollee, per month.

Got all that? This means that $12 per year of the ACA exchange premiums paid to an insurance carrier which provides abortion coverage has to be kept in a separate bank account, specifically allocated to pay for any abortion medical claims by the enrollees. If a family of four is enrolled in one of these plans, $4/month or $48/year is deposited separately. The money can't be used for anything else.

In my 2017 post, it was brought to my attention that abortions are relatively inexpensive, at least compared with most medical procedures, which made me wonder just how much of that $12/year per enrollee is actually being used to pay for them. After a lot of back-of-the-envelope math, I concluded that the answer is probably...not much. In fact, I estimated that:

...Assuming I'm reasonably close with all of this (and I could be way off, I admit), it looks like nationally, individual market carriers have deposited roughly $106 million into "abortion-only" acounts over the past four years but have only paid out perhaps $14 million in abortion claims, leaving them with around $92 million just sitting there gathering dust, untouchable for any other purpose. Assuming the ACA, the Hyde Amendment and everything else stays intact for the next, say, 20 years or so, and assuming that population growth, abortion rates and inflation roughly match each other, that means there could be as much $600 million in those accounts by 2037.

Last year I updated my "13% used" estimate to figure this grand total was likely up to $200 million or so.

Well, given the current controversy surrounding the pending Supreme Court decision regarding Roe vs. Wade, it looks like in California, at least, I may not have to do back-of-the-envelope estimates anymore. As Louise Norris just alerted me:

Under the ACA, health plans that cover non-Hyde abortions must put at least $1/month of each enrollee's premium into a separate fund for abortion coverage. CA considering a bill that would require disclosure of how much is in those accounts @charles_gaba

— Louise Norris (@LouiseNorris) May 19, 2022

Here's the bill in question:

ASSEMBLY BILL NO. 2205

Introduced by Assembly Member Carrillo • February 15, 2022

An act to add Section 1347.8 to the Health and Safety Code, and to add Section 10127.20 to the Insurance Code, relating to health care coverage.

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1.  Section 1347.8 is added to the Health and Safety Code, to read:

1347.8.  (a) Beginning on July 1, 2023, and annually thereafter, a health care service plan providing a qualified health plan through the Exchange shall report to the director the total amount of funds maintained in a segregated account pursuant to subdivision (a) of Section 1303 of the federal Patient Protection and Affordable Care Act (Public Law 111-148). This annual report shall contain the ending balance of the account and the total dollar amount of claims paid during the reporting year.

(b) For the purposes of this section, a “qualified health plan” shall have the same meaning as defined in Section 1301 of the federal Patient Protection and Affordable Care Act (Public Law 111-148).

(c) For purposes of this section, “Exchange” means the California Health Benefit Exchange established pursuant to Title 22 (commencing with Section 100500) of the Government Code.

SEC. 2.  Section 10127.20 is added to the Insurance Code, to read:

10127.20.  (a) Beginning on July 1, 2023, and annually thereafter, a health insurer offering a qualified health plan through the Exchange shall report to the commissioner the total amount of funds maintained in a segregated account pursuant to subdivision (a) of Section 1303 of the federal Patient Protection and Affordable Care Act (Public Law 111-148). This annual report shall contain the ending balance of the account and the total dollar amount of claims paid during the reporting year.

(b) For the purposes of this section, a “qualified health plan” shall have the same meaning as defined in Section 1301 of the federal Patient Protection and Affordable Care Act (Public Law 111-148).

(c) For purposes of this section, “Exchange” means the California Health Benefit Exchange established pursuant to Title 22 (commencing with Section 100500) of the Government Code.

SEC. 3.  No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.

The bill doesn't require the carriers to report the actual number of abortion claims (I'm guessing that falls under HIPAA or similar privacy regulations), but knowing the actual amount collected and spent each year should make it easy to figure out roughly what percent of the funds are being used. It will be interesting to see how far off my 13% estimate is, though it wouldn't be available until at least a year from now, assuming the bill is signed into law.