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I.
States that regulate abortion in all insurance plans¹:
Note: states that forbid abortion coverage generally include an
exception if carrying the pregnancy to term endangers a woman's life.
a) states that allow any insurance plan within the state to
offer abortion coverage only by optional rider:
Kentucky
No insurance coverage of abortion under any plan
offered unless "by an optional rider for which
there must be paid an additional premium."
KRS 304.5-160.
Missouri
No health insurance issued in the state can
provide abortion coverage for except by "optional
rider for which there must be paid an additional
premium." MO St 376.801.
North Dakota
No health insurance plan can provide coverage for
abortion except by optional rider with an
additional premium paid. N.D.C.C. $14.02.3-3.
State also has a "Domestic Relations and Persons"
and Abortion Titles which states that no funds of
"this state or any agency, county, municipality,
or other subdivision thereof" can be used to cover
abortion. N.D.C.C. $14-002.3-01-02.
Pennsylvania
Any insurance plan offered within the state must
provide an alternative policy which excludes
abortion. 18 P.S. $3215(e). 2 Insurance for state
employees cannot provide abortion except in cases
of rape or incest (reported to law enforcement
within 72 hours) or life-threatening pregnancies.
18 P.S. $3215 (d).
1
This chart contains information about state abortion funding
regulations prior to enactment of the Hyde Amendment provisions which required
funding in cases of rape or incest. Subsequent to this amendment, most states
are now providing abortion funding for rape and incest victims, or have
indicated to HCFA that they are taking action to comply. States that are
resisting compliance (as of May 31, 1994) include: Arkansas, Colorado, Idaho,
Kentucky, Louisiana, Michigan, Mississippi, Montana, New Hampshire, North
Dakota, South Dakota, Utah. Kansas has indicated that it will not be
complying until 1995. Status of State Responses to HCFA Concerning Compliance
with Hyde Amendment.
Since all states must provide abortion funding for Medicaid-
eligible women in cases of life endangerment, the states listed in the "?'s
life endangered" column are those that specifically provide that funding is
available in such situations.
2
Until this statute was amended in 1988, it had required
the insurance company to offer the non-coverage plan at a lower
premium. 18 P.S. $3215(e).
c) states that allow (but do not require) any health care
plan within the state to exclude abortion coverage:
Iowa
"A health insurance program provided by an
employer may exclude coverage of abortion" (except
if woman's life is endangered or "where medical
complications have arisen from an abortion").
Iowa statute $216.13 (2)
Montana
The statute requiring minimum benefits for health
association plans specifies that charges for
abortion do not need to be covered unless the
woman's life is endangered. MCA 333-22-
1521 (2) (b) (xii)
II. States specifically restricting abortion coverage for state
employees:
a)
States that totally prohibit abortion coverage for
employees
Colorado
The state Constitution includes a provision
that prohibits the use of public funds for
abortion "either directly or indirectly."
Colorado Constitution, Article V. A Colorado
Attorney General Opinion asserts that under
the state constitution group health care for
state employees must exclude abortion
coverage. 1985 WL 194202 (Colo.A.G. 1985).
Massachusetts
The state employees insurance statute
specifies that its "policy, administrative
services, or similar contract shall contain a
condition that coverage for abortions shall
only be included" if necessary to prevent the
woman's death. M.G.L. 32B $3A.
Pennsylvania
No abortion coverage for state employees
except in cases of rape or incest (reported
to law enforcement within 72 hours) or life-
threatening pregnancies. 18 P.S. $3215 (d)
Similarly, any insurance plan offered within
the state must provide an alternative policy
that excludes abortion (except in cases of
reported rape or incest, and life
endangerment) 18 P.S. $3215 (e) 3
3
Until this statute was amended in 1988, it had required
the insurance company to offer the non-coverage plan at a lower
premium. 18 P.S. $3215(e).
Rhode Island⁴
No abortion coverage for state employees
except in cases of rape, incest or life
endangering pregnancies. R.I.G.L. 32-12-2.1.
All health insurance contracts within the
state can only provide abortion coverage by
"an optional rider for which there must be
paid an additional premium." R.I.G.L. 27-18-
28.
b) states that only allow coverage for state employees by
optional rider:
Idaho
Can only offer abortion coverage if employee pays
for additional coverage. Whether or not to offer
the opt-in is at insurance company's discretion.
I.C. $41-3439.
Illinois
A State Employees Group Insurance statute states
that: "[N]othing in this Act shall be construed to
permit
the non-contributory portion of any
such program to include the expenses of obtaining
an abortion
"
5 ILCS 375/6(a).
Nebraska
No publicly funded insurance may provide abortion
coverage but "[t]his section shall not prohibit
the insurer from offering individual employees
special coverage for abortion if the costs for
such coverage are borne solely by the employee."
Neb.Rev.St. $44-1615.01.
4
Rhode Island's statute was found unconstitutional (as violative of
Roe V. Wade) in National Education Assoc. of RI V. Garrahy, 779 F.2d 790 (1st
Cir. 1986). Furthermore, there seems to be a discrepancy in some of the
state's policy since a rider is available statewide yet the state employees
plan specifically excludes abortion and does not mention a rider at all.
According to NARAL, state employees are not entitled to the rider.
III. Broad Statutes/Exclusion Possible
States with broad anti-abortion funding policies that could
possibly be interpreted as prohibiting coverage but have not
been used to do so:
Arizona
Under the "Budgetary and Fiscal Provisions for
State Agencies" statute, no public funds nor tax
monies
passing through the state treasury" may
be expended for abortion. A.R.S. $35-196.02.
Arkansas
State constitutional provision excludes abortion
funding of any kind by the state. AR Const.
Amendment 68, §1.
Indiana
"Neither the state nor any political subdivision
may make a payment from any fund under its control
for the performance of an abortion
"
16
I.C.
34-1-2.
Louisiana
No public funds "made available to any
institution, board, commission, department,
agency, official, or employee of the state
or
any political subdivision therefore" from any
"federal or state public source shall be used in
any way for, to assist in, or to provide
facilities for an abortion." 40 L.A.R.S.
1299.34.5.
South Dakota
Although this statute is specifically addressing
medical assistance payments, it may be broad
enough to cover state employees health insurance.
The language in the state's "Medical Services to
the Indigent" statute broadly says that "No funds
of the state of South Dakota or any agency,
county, municipality or any other political
subdivision thereof and no federal funds passing
through the state treasury or any agency of the
state
county, municipality or any other
political subdivision thereof" shall be used to
pay for abortion services. 28 S.D.C.L. 6-4.5.
Wisconsin
The state has a "General Administrative Provision"
to its budget provisions that broadly states that
"no funds of this state or of any county, city,
village or town or of any subdivision or agency of
this state or of any county, city village or town
and no federal funds passing through the state
treasury shall be authorized for or paid to a
physician or surgeon or a hospital, clinic or
other medical facility for the performance of an
abortion." W.S.A. 20.927.
1
Wyoming
The state has an "Abortion" provision that
prohibits any type of public funding. W.S. 35-6-
117.
IV. No Specified Restrictions on State Employees
States which restrict state medical assistance funding but
do not specify any regulations of abortion coverage for
state employees.
Alabama
New Jersey
Connecticut
New Mexico
Delaware
North Carolina
Florida
Ohio
Georgia
Oklahoma
Kansas
South Carolina
Maine
Tennessee
Maryland
Texas
Michigan
Utah
Minnesota
Vermont
Mississippi
Virginia
Nevada
West Virginia
New Hampshire
V. No Denial of Any Type of Funding
States with no funding restrictions mentioned in state
statutes or state Medicaid plan or regulations.
Alaska
California
Hawaii
New York
Oregon
VI. Coverage Provided
States which affirmatively provide abortion coverage for
state employees insurance.
Washington
If the state provides maternity care benefits,
services or information by "any program
administered or funded in whole or in part by the
state, " it must also provide women with
"substantially equivalent benefits, services, or
information to permit them to voluntarily
terminate their pregnancies." RCW $9.02.160.
2
Insurance Coverage of Abortion
X = state government employees
O = private sector insurance plans
July 5, 1994
State
No
Coverage
Option
Broad
Ban on
No State
Affirma-
coverage
Only By
to
Funding
funding
Funding
tively
Rider
Exclude
Ban
but No
Restric-
Provide
Coverage
Language
Restric-
tions
Coverage
(Could
tions on
Possibly
insurance
Affect
Insurance
but Not
Applied)
Alabama
X
Alaska
X
Arizona
X
Arkansas
X
California
X
Colorado
X
o
Connecticut
X
Delaware
X
Florida
X
Georgia
X
Hawaii
X
Idaho
X
1
State
No
Coverage
Option
Broad
Ban on
No State
Affirma-
coverage
Only By
to
Funding
funding
Funding
tively
Rider
Exclude
Ban
but No
Restric-
Provide
Coverage
Language
Restric-
tions
Coverage
(Could
tions on
Possibly
insurance
Affect
Insurance
but Not
Applied)
Illinois
X
Indiana
X
Iowa
O/X
Kansas
X
Kentucky
O/X
Louisiana
X
Maine
X
Maryland
X
Massachusetts
X
Michigan
X
Minnesota
X
Mississippi
X
Missouri
O/X
Montana
O/X
Nebraska
X
2
State
No
Coverage
Option
Broad
Ban on
No State
Affirma-
coverage
Only By
to
Funding
funding
Funding
tively
Rider
Exclude
Ban
but No
Restric-
Provide
Coverage
Language
Restric-
tions
Coverage
(Could
tions on
Possibly
insurance
Affect
Insurance
but Not
Applied)
Nevada
X
New Hampshire
X
New Jersey
X
New Mexico
X
New York
X
North
X
Carolina
North Dakota
O/X
Ohio
X
Oklahoma
X
Oregon
X
Pennsylvania
X
O
Rhode Island
X¹
o
1
Rhode Island's statute requiring abortion coverage only by additional rider has been declared
unconstitutional by the First Circuit Court of Appeals. Furthermore, even though the state has a rider
provision, the state employees' insurance statute denies all coverage, therefore, according to NARAL, state
3
State
No
Coverage
Option
Broad
Ban on
No State
Affirma-
coverage
Only By
to
Funding
funding
Funding
tively
Rider
Exclude
Ban
but No
Restric-
Provide
Coverage
Language
Restric-
tions
Coverage
(Could
tions on
Possibly
insurance
Affect
Insurance
but Not
Applied)
South
X
Carolina
South Dakota
X
Tennessee
X
Texas
X
Utah
X
Vermont
X
Virginia
X
Washington
X
West Virginia
X
Wisconsin
X
Wyoming
X
TOTAL:
3
7
2
7
25
5
1
employees cannot obtain abortion coverage.
4
NARAL
ID:202-973-3098
JUN 17'94
18:42 No. 011 P.03
NARAL Promoting Reproductive Choices
To Jenk
fy
CONTACT: Karen Schneider
Darryl Lynette Figueroa
202/973-3032
ABORTION COVERAGE AND HEALTH CARE REFORM:
PROTECTING WOMEN'S HEALTH
1. Do private insurance plans currently cover abortion services?
Yes. The majority of private health insurance plans currently provide coverage for
abortion services. Typically if an insurance policy provides coverage for pregnancy-related care,
it includes abortion as part of that coverage. Excluding abortion from national health care
reform would take away coverage from millions of women who currently have it.
In the first large-scale study of abortion coverage in private health insurance, the Alan
Guttmacher Institute recently found that two-thirds of fee-for-service plans and 70 percent of
HMO's cover abortion. Abortion is covered by such major insurance carriers as Aetna, Blue
Cross/Blue Shield, Kaiser Permanente, Pacificare Health Systems, Principal Financial Group and
the Travelers.
2. Will excluding abortion from health care reform harm women's health?
Yes. Although the need for abortion will not be diminished by taking away insurance
coverage, abortion will become even further marginalized and isolated from mainstream medical
practice. Already 83% of counties have no abortion provider. Given the host of anti-choice
tactics being pursued to make abortion unavailable from state-imposed restrictions to bombings
and clinic blockades to murder exclusion from health care reform would have a devastating
effect on women's ability to exercise the right to choose. Lack of coverage will result in fewer
doctors performing abortions and increased cost and delay in obtaining the procedure, which
would endanger women's health and lives.
If health care reform takes away coverage for abortion, only women who
could afford an abortion and find a provider trained and willing to perform the
procedure would have access to safe services. Those women unable to overcome
National Abortion
and Reproductive Rights
these substantial obstacles would be compelled to resort to unsafe alternatives or
Action esgue
forced childbearing, and others would suffer delays resulting in riskier procedures.
1156 15th Street, NW
The American Medical Association recently concluded that "as access to safer, earlier
Suite 700
legal abortion becomes increasingly restricted, there is likely to be a small but
Washington, DC 20005
measurable increase in mortality and morbidity airiong women in the United States."
Phono (202) 973 3000
Fax (202)973-3096
NARAL
ID:202-973-3098
JUN 17'94
18:42 No. 011 P.04
3. Will including abortion in the basic benefits package encourage abortion?
No. Maintaining coverage for abortion, which most private insurers currently
provide, will not encourage or increase the need for abortion. Insurance coverage does not
lead to abortion - -- unintended pregnancy does. Women choose abortion for complex moral
and ethical reasons and out of concern for their health and their families. Providing
coverage for a full range of reproductive health services, including contraception, would
actually help make abortion less necessary but excluding coverage for abortion would
endanger women's lives.
4. Would it discriminate against women to exclude abortion from the basic benefits
package?
Yes. Singling out abortion, a medical service that only women need, would create a
two-tiered health system, one for men and one for women. While women would be denied
coverage for abortion, a medical service only women need, men would have coverage for
male-specific services such as prostate operations. In a June 12, 1993 editorial, the New
York Times stated: "To provide abortion services under a health insurance plan is not to
give women a new benefit. Instcad it's to continue the coverage most Americans already
have under their private plans. To do otherwise is to discriminate against women pure and
simple."
5. If health care reform includes abortion, will doctors or Catholic or other religious
hospitals be forced to provide abortions?
No. President Clinton's health care reform plan and other proposals include a
conscience clause that would ensure that health care providers -- individuals and institutions -
- are not required to provide health services they oppose based on religious beliefs or moral
convictions. Pro-choice Americans support a reasonable conscience clause and do not want
to force medical professionals to perform any procedure against their will. The conscience
clause must not, however, deny access to abortion, family planning, sterilization or other
guaranteed services.
6. Should the conscience clause apply to health care plans and employers?
No. Expanding the conscience clause to include employers or insurance plans would
open the door to all kinds of discriminatory treatment and undermine the goals of health care
reform. If employers or health plans are permitted to single out abortion, what will be next?
Eliminating contraception coverage because an employer is morally opposed? Excluding
blood transfusions because an employer has religious objections? Or refusing to cover
treatment for AIDs patients because an insurance company says it is morally opposed to their
lifestyle? Neither an individual's employer nor their health insurance plan should be
permitted to take away coverage for medical services.
NATIONAL ABORTION AND REPRODUCTIVE RIGHTS ACTION LEAGUE
JUNE 6, 1994
2
NARAL
ID:202-973-3098
JUN 17'94 18:43 No. 011 P.05
7. Will including abortion in the basic benefits package overturn the Hyde amendment
and require the use of taxpayer dollars for abortion?
Health care reform will take government out of the business of paying directly for
medical services. Tax dollars will go to purchase health insurance, and the choice of which
treatment to pursue will be left to women and their doctors. The basic benefits package for
health care reform cannot be based on the personal beliefs or objections of some taxpayers.
Some Americans oppose contraception, abortion, blood transfusions and AIDs treatment for
moral or religious reasons, but health coverage for such medical services should be available
to those who need them.
8. Would a fair compromise be to exclude abortion from the basic benefits package and
let women purchase coverage through a rider?
No. Singling out abortion to be covered only through a rider is discriminatory. It
would raise women's insurance premiums and violate their privacy and it wouldn't work.
According to a recent poll conducted by Hickman-Brown Public Opinion Research for
NARAL, the vast majority of American voters 72 percent -- believe medically necessary
or appropriate abortion should be included as part of the basic benefits package. A clear
majority 53 percent -- are opposed to requiring women who want abortion coverage to pay
for an additional rider.
Women's health needs should be addressed in the basic benefits package, not tacked
on as an "extra" that costs women more. Offering coverage through a rider would in effect
take away coverage millions of women have today through private health insurance. Women
would be unlikely to purchase the rider, in part because abortion is rarely anticipated.
Confidentiality needs may also prevent a woman from obtaining the rider because rider
selection may be highly visible to a woman's employer. Moreover, insurance companies
would be unlikely to offer a rider because they would quickly become targets for anti-choice
violence, harassment and boycotts.
A rider for abortion will open the door to requiring riders for contraceptives, AIDs
treatment, health care for smoking- related illness and other medical services some people
oppose. Adequate health coverage for all Americans -- the primary goal of health care
reform -- can best be achieved by assuring coverage for a guaranteed comprehensive benefits
package, not by requiring separate riders for each health care need.
NATIONAL ADORTION AND REPRODUCTIVE RIGHTS ACTION LEAGUE
JUNE 6, 1994
3
NARAL
ID:202-973-3098
JUN 17'94
18:44 No. 011 P.06
9. Are anti-choice forces trying to take away coverage for contraceptive services?
Yes. Anti-choice groups are trying to take away coverage for abortion and
contraceptive services. The American Life League, for example, claims that contraceptive
devices "such as the
birth control pill, the IUD, Depo-Provera, and Norplant act part of
the time by interrupting a pregnancy, rather than preventing onc. Their mandatory inclusion
in all health plans' coverage means that pro-lifers would be paying for chemical abortions
against their will." Helen Alvare, Secretariat for Pro-Life Activities for the National
Conference of Catholic Bishops testified before a subcommittee in Congress that
"contraception and sterilization are themselves elective procedures
Such procedures
have a poor claim to the status of essential health services, and they should not be forced
upon employers and individuals who have moral or religious objections to them."
10. Would health care reform that includes abortion overturn parental consent or
notice laws, mandatory waiting periods or blased counseling requirements?
No. Although these laws are harmful to women, they would not be overturned by
national health care reform. A guaranteed benefits package that includes abortion will not
change the constitutional standard used to review state abortion restrictions.
11. Would including abortion in the basic benefits package require states to allow
abortion through the ninth month of pregnancy?
No. Under Roe V, Wade and Planned Parenthood of Southeast Pennsylvania V.
Casey, states are permitted to restrict or even ban abortion after viability, except in cases
where there is a threat to the life or health of the woman. National health care reform will
not change that.
NATIONAL ABORTION AND REPRODUCTIVE RIGHTS ACTION LEAGUE
JUNE 6, 1994
4
NARAL
ID:202-973-3098
JUN 17'94
18:44 No. 011 P.07
INCLUDING ABORTION SERVICES AND CONTRACEPTION
IN NATIONAL HEALTH CARE REFORM:
Pro & Con
ANTI-
If pro-abortion lawmakers get their way, health care reform will dramatically
CHOICE
expand women's access to abortion.
PRO-
Abortion is alrcady covered by two-thirds of private insurance companics,
CHOICE
including Blue Cross/Blue Shield, Kaiser Permanente and Aetna. By
providing coverage for the full range of reproductive health services, including
contraception and abortion, our nation can ensure that women have access to
medically safe abortion and at the same time make abortion less necessary.
But if opponents of choice succeed in using health care reform to advance their
own agenda, women will lose critical coverage for reproductive health services
and the promise of universal health care will be wasted.
ANTI-
Americans shouldn't be forced to use their tax dollars to pay for abortions,
CHOICE
which is precisely what will happen if abortions are covered under national
health care reform.
PRO-
Health care reform will take government out of the business of paying directly
CHOICE
for medical services. Tax dollars will go to purchase health insurance, and
women and their doctors will choose what course of treatment to pursue.
Abortion is a health issue, and individuals must be able to make their
own health decisions. Women and their doctors -- not politicians -- should
make the complex and personal decisions about abortion and contraception
without interference from the government. That is as true for low-income
women as for women of means, and national health care reform must not
perpetuate the discrimination that currently denies poor women access
to reproductive health care. A primary goal of health care reform is to
ensure that all Americans have access to a basic health benefits package.
In addition, some Americans oppose contraception, abortion and even blood
transfusions for moral or religious reasons, but these medical services are
legal, and should be available to those who need them. The new health
care plan must cover the full range of women's reproductive health services,
and adequately address the moral and religious views of opponents of choice
through a conscience clause that cnsures that mcdical professionals and
religious institutions are not required to provide abortion services.
NARAL
ID:202-973-3098
JUN 17'94
18:45 No. 011 P.08
Page Two
ANTI-
Providing coverage for abortion under health care reform will encourage
CHOICE
women to use abortion as birth control, lead to abortion on demand and make
the number of abortions skyrocket.
PRO-
Maintaining coverage for abortion, which most private insurers currently
CHOICE
provide, will not increase the need for abortion. Insurance coverage doesn't
lead to abortion -- unintended pregnancy does. Women choose abortion for
complex moral and ethical reasons and out of concern for their health and their
families. Providing coverage for the full range of reproductive health
services, including contraception, would actually help make abortion less
necessary -- but excluding coverage for abortion services would endanger
women's lives. Abortion already is unavailable in 83 percent of U.S. counties.
If the new plan fails to cover abortion services, more doctors and hospitals
will be reluctant to perform abortions, more medical schools will stop teaching
the procedure, and the already severe shortage of abortion providers will grow
worse.
ANTI-
Health care reform that includes coverage for abortion services will overturn
CHOICE
state laws, such as parental consent and waiting periods, that restrict abortion.
PRO-
Although constitutionally permissible waiting periods, informed consent and
CHOICE
parental consent or notice laws are harmful to women, they would not be
overturned by national health care reform. In addition, states will still be able
to restrict third-trimester abortions. National health care reform will regulate
health insurance, not the delivery of medical services.
NARAL
ID:202-973-3098
JUN 17'94
18:46 No. 011 P.09
Page Three
ANTI-
Contraception and abortion are elective services that are distinctly different
CHOICE
from other medical procedures.
PRO-
For women, reproductive health care is primary health care -- and
CHOICE
contraception and abortion are important reproductive health services.
President Clinton's health care plan and many other proposals cover services
that are medically necessary or appropriate, and contraception and abortion
rightfully are included. Americans should remember what risks women were
forced to take when contraception and abortion weren't available. We don't
want to go back to those days.
ANTI-
Abortion and contraception really are moral issues, not health issues --
CHOICE
and they don't belong in a national health care plan.
PRO-
Abortion and contraception are and always have been health issues. Abortion
CHOICE
was made legal in the U.S. after women were forced to sacrifice their health
and even their lives through back alley or self-induced abortion. To deny
coverage won't reduce the number of abortions. It will make abortion more
dangerous and difficult, cause fewer doctors to perform and fewer clinics to
offer the procedure, and cause higher rates of infant mortality and more
children to be born too early, too small and too sick. If some Americans
consider this a political issue, it is because opponents of choice have spent
decades terrorizing women at health clinics and trying to pass laws that make
abortion illegal and inaccessible but abortion and contraception really are
basic reproductive health services.
NARAL
ID:202-973-3098
JUN 17'94
18:46 No. 011 P.10
Page Four
ANTI-
Since so many Americans strongly oppose abortion -- and even more oppose
CHOICE
abortion funding -- the fairest system would exclude abortion from the plan
and allow women who wish to purchase coverage for abortion to do so
through riders offered by insurance plans or by allowing insurance plans to
offer abortion coverage if they want to. That way, people who consider
abortion morally repugnant won't be forced to subsidize it.
PRO-
Singling out abortion services to be covered only through a rider is
CHOICE
discriminatory. It would raise women's insurance premiums and violate
women's privacy -- and it wouldn't work. Women's health needs should be
addressed in the basic benefits package, not tacked on as an "extra" that costs
women more. Establishing a system of riders would effectively take away the
reproductive health coverage millions of women have today through private
health insurance. Women would be unlikely to purchase a rider because
abortion is rarely anticipated and because selection of a rider would
become known to an employer. Insurers would be unlikely to offer such
coverage because they would quickly become targets for anti-choice violence,
harassment and boycotts. A rider for abortion services also would open the
door to requiring separate riders for other medical services such as
contraception because some people are opposed to it, or treatment of AIDS
patients because some lawmakers are opposed to their lifestyle. Opposition to a
medical service does not give anyone the right to redline health care treatment
for millions of Americans.
ANTI-
Mandating coverage for abortion and contraception would force physicians and
CHOICE
hospitals that oppose these services to perform them, and force institutions
such as the Catholic and Mormon Churches to subsidize them.
PRO-
President Clinton's health care reform plan and several other proposals include
CHOICE
a strong conscience clause that would ensure that health care providers --
individuals and institutions -- can decline to provide health services they
oppose because of personal religious beliefs or moral convictions. Pro-choice
Americans support a reasonable conscience clause, and do not want to force
medical professionals to perform any procedure against their will. The
conscience clause must not, however, deny access to abortion, family
planning, sterilization, or other guaranteed services. Neither a woman's
employer nor her health insurance plan should be permitted to take away
coverage for services that are part of the guaranteed benefits package.
NARAL
ID:202-973-3098
JUN 17'94
18:47 No. 011 P.11
Page Five
ANTI-
"Are we going to be so fem-centric that we're going to condone the sclf-
CHOICE
indulgent conduct of the body of a woman who has already demonstrated in
most cases they were damned careless with it in the first place'!"
-- Congressman Dick Armey, R-Texas, a leading Congressional spokesperson
in the campaign to remove abortion coverage from health care reform.
PRO-
Congressman Armey's callous statement reveals the underlying motivation
CHOICE
of anti-choice Members who want to remove abortion coverage from health
care reform. Their goal is to punish women, pure and simple. Their policy
claims about "taxpayer dollars" and "abortion on demand" are smoke screens
that arc meant to conceal their anti-woman, anti choice agenda.
JUL-11-1994 11:13 FROM ACTUARIAL RESEARCH
TO
2024562878 P.01
ACTUARIAL RESEARCH CORPORATION
6928 Little River Turnpike, Suite E
Annandale, Virginia 22003
(703) 941-7400
FAX (703) 941-3951
---
Please Deliver Immediately
TO:
Jennifer Klein
FROM:
Condon Trapuell
DATE:
July 4, 94
RE:
MEMO:
There are 10 pages being transmitted (including this cover sheet).
If there are any problems with the transmission of this fax, please call the above
number as soon as possible.
JUL-11-1994 11:13 FROM ACTUARIAL RESEARCH
TO
2024562878 P.02
Memorandum
From: Gordon R. Trapnell
Date: July 10, 1994
Re: Alternatives to Abortion Coverage
1. Alternatives to Abortion Coverage
The primary objective is to find an alternative to abortion
benefits that can be elected by persons morally opposed to
abortion. Success in diffusing this issue, however, requires
meeting a more stringent standard: that no funds paid for insurance
by persons objecting to abortion be used to pay for them.
To meet the latter standard, in addition to offering a benefit
of equal value to abortion, it must be clearly demonstrated that no
funds contributed by persons objecting to abortions subsidized such
coverage for others. Further, for the separation to be credible
with the general public, there must be an objective, easily
understood accounting procedure that demonstrates that no money for
from those electing the alternative to abortions was used to pay
for abortions.
In addition, it must be demonstrable that no public dollars
are used to pay for the abortion benefit. This prohibition applies
to both government subsidies toward premiums and government
subsidies toward cost sharing.
If the funding of abortions is entirely through a separable,
designated premium addition (or "rider") to which there is an
alternative, then the premium subsidy issue is only raised by
subsidies that reduce the contributions paid by an individual
covered for abortions below such addition. Otherwise the employee
contribution can be used to pay for the abortion coverage.
Similarly, only if there is a cost sharing subsidy that
reduces out of pocket payments by an insured individual below those
required for any abortions received would the issue of public
subsidy of abortions be raised. Further, under the presumption
that all persons whose premiums are fully subsidized would be
enrolled in a low cost sharing plan, the cost sharing subsidy issue
is relatively unimportant.
An additional question relates to whether it is necessary to
demonstrate that contributions made by an employer that does not
wish to pay for abortions have not been so used. The question
would only arise when employers pay the full premium, since if
there is an employee contribution it can be argued that the
abortion benefit was funded by the employee. It can also be argued
that employer contributions are simply an extension of wages, and
JUL-11-1994 11:14 FROM ACTUARIAL RESEARCH
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2
thus do not represent employer use of funds.
2. Policy Choices
The most important policy choices are (i) whether the option
is made only by individuals or family units that are subject to the
risk of needing an abortion or are available to all insured units,
and (ii) the nature of the alternative coverage. Other important
choices involve how the question of public subsidies of premiums is
handled.
We will discuss the latter first.
a. Premium and Cost Sharing Subsidies
One solution to the issue of public subsidy of premiums that
are used to pay for abortions is to charge a minimum contribution
to all those who are take the abortion option and who would
otherwise contribute less than the average cost of abortion
coverage.
If the individual or family unit in question receives cash
assistance, cash benefits could be reduced by the average cost of
abortion coverage. It could then be argued, however, that public
funds had paid for the abortion coverage, since the rider premium
had been paid from welfare funds. It can also be argued that once
welfare payments have been made, that the money belongs to the
recipients. But given that welfare payments are based on an
assessment of needs (one of which is the cost of the abortion
coverage or the alternative), this argument may not hold. It does
force opponents to present a more complex argument.
The issue of whether welfare recipients are using their own
money to pay for abortion would be highlighted if some states
increase welfare payments by enough to offset the minimum required
contribution (i.e. the average cost of abortion coverage). This
would make it clear that the abortion coverage was in fact being
paid from public funds, although the beneficiaries of fully
subsidized premiums would only have the same choices that other
covered individuals have, i.e. to be covered for abortions or elect
the alternative offered.
To avoid these arguments, it may be necessary to prohibit such
state supplementation. In the longer run, however, as welfare
payments are increased with living costs, it would be impossible to
determine whether supplementation had taken place.
Thus diffusing the use of public funds issue may require a
demonstration that welfare benefits were actually reduced. This is
only if the minimum contribution is relatively small, e.g. less
than $1 a month.
JUL-11-1994 11:14 FROM ACTUARIAL RESEARCH
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There is the further problem of defining the appropriate
premium for abortion coverage. This depends in turn on how it is
determined for purposes of offering an equivalent benefit,
discussed below.
b. Separable Rider
The most credible manner to address the problem of
demonstrating that those objecting to abortions are not paying for
them is to make abortion coverage a "rider", i.e. separable, self
supporting benefit, for which the premium is fully self supporting.
The same rider premium would be charged to those not electing
abortion coverage, but the funds raised from these premiums would
be used for an alternative purpose. Thus there would be two
separable rider pools funded by the same unit premiums, which could
vary by demographic category if a different manner than the basic
coverage.
The difficulty with this approach is that a majority of the
population to be insured has no need of abortion coverage and is
fully cognizant of this (especially the male half). Thus large
proportions of those who have no particular problem with abortions
will elect alternative benefits if they are found desirable.
Further, limitation of the coverage to individuals and family units
who fear they may need it (which may exclude a substantial portion
of those that do) will raise the average cost to those electing
such coverage. A higher abortion rider premium will make the level
of the alternative benefits correspondingly more attractive,
increasing their election and thus reducing the base for the
abortion coverage further. Also, the rider cost will become large
enough that funding the differential premium for persons with fully
subsidized premiums from reductions in cash benefits impractical.
Thus for a system in which funds used to pay for abortions are
clearly separable from other health insurance funds, those electing
the alternative can not select against the system (i.e. all males
or women not in child bearing ages electing the alternative). If
the cost of abortions is averaged only over those who believe that
they have a need for them, the average cost will be unacceptably
high. (The suggestion that the premium would rise to the average
cost of an abortion is extreme since as a practical matter
predictions of need could never be that efficient; and based on
insurance purchasing patterns, many families with a relatively low
risk are likely to elect coverage. But a benefit cost of $25 to
$50 could occur with a separable, optional abortion benefit.)
Given the absence of appeal of paying for an abortion benefit
(except perhaps for families with teen age girls or single women at
higher risk for unwanted pregnancies), adverse selection can be
anticipated the latter is unlikely to be achieved unless the
alternative use of the funds is something without much general
appeal or the choice can be phrased as a simple option to avoid
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using the funds to support abortion (and to some general fund
otherwise).
The election must be limited to those who have a moral problem
with abortion. This may achieved if the election is presented as
a negative, conscientious objection, rather than the election for
a preferred use for some of a payer's premium dollars. This would
almost certainly be effective in the absence of any further
attention.
There would appear to be a danger, however, that such an
attempt to present the choice in this context would fail. The
anti-abortion movements can be counted on to mount campaigns to
persuade a high proportion of the population to take the none-
abortion option, especially when they discover that this will drive
up the cost for those electing abortion coverage and make it
unaffordable for those with completely subsidized premiums. The
campaign could well succeed despite the wording with which the
choice is presented. (There is also the probability that some
future Administration will be opposed to abortions and reword the
choice accordingly.)
To reduce the chances that such a campaign would be
successful, the alternate use of funds must be both
noncontroversial and relatively unappealing. Some candidates:
Used to reduce government contributions for subsidies or
for those previously eligible for Medicaid
Contributed to a fund to be used to reduce the National
debt.
Improved medical services in prisons
[Note: On further reflection, I believe that contributing to
something as generally accepted by the public to be good as medical
research might be appealing enough to provide the basis for a
successful campaign to solicit such contributions and limit the
base for funding the abortion coverage. Hence we need an
inspiration for the right combination of absence of controversy or
base for moral objections and absence of general appeal. I feel
confident with enough thought by political consultants, the right
cause can be found. (There is of course the danger that Congress
would substitute something more appealing.) )
C. Option Available Only to Women of Child Bearing Age
Another approach would be to offer the alternative only to
women who could conceivably have an abortion, i.e. between the ages
of 12 and around 50-55 (and perhaps at older ages for women willing
to certify that they can still become pregnant). The average value
of the alternative benefit would be higher, but it would be offered
JUL-11-1994 11:15 FROM ACTUARIAL RESEARCH
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5
to fewer individuals and family units. This could have the
disadvantage of making the alternative appear more desirable (since
it is larger) but the possible advantage of widening the types of
alternatives that could be offered. Thus the alternative could be
a medical service perceived to be an alternative to abortion, such
as birth control counseling, norplants, etc.
The primary disadvantage of this approach is that it does not
diffuse the issues of who pays for abortions. Further, within the
structure and under the rationale of community rating, it is
difficult to argue that within the global pooling, such payments
have not taken place.
d. Option with the Same Actuarial Value
Another approach would be to base the value of the alternative
on the "actuarial value of abortions", which would be further
defined to be the community rate for abortion coverage, since all
other rates are community rated. This would have the advantage of
reducing the value of the alternative benefit to the this actuarial
value, which would not be increased by a reduction in the base from
those electing the alternative.
This approach is also unlikely to diffuse the issue
sufficiently for general acceptance by the public. It would not
clearly assure that no commingled funds had been used to purchase
abortions. Further, the arguments about community rating could be
turned around in support of the view that all premiums that are
community rated are in fact supporting every benefit offered to
anyone in the community.
3. Mechanism to Keep Funds Separate
The process through which funds that pay for abortions are
separated from those that do not is important, and must be
sufficiently visible that charges by abortion opponents that funds
are really being commingled will not convince the general public.
Elements that might be incorporated:
Separate trust funds onto which abortion and non-abortion
premiums are deposited, and disbursements made to the
respective purposes.
An advisory counsel, representative of both abortion
proponents and opponents, that meets at least once a year
and produces a report that in effect verifies that the
levels of earmarked premiums for abortions were self
supporting, and that no moneys from abortion objectors
were used to pay for abortions.
4.
Cost Estimates
JUL-11-1994 11:16 FROM ACTUARIAL RESEARCH
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As set forth in my August 18, 1993 memo to Ken Thorpe (copy
attached), we estimate the cost per capita for abortions as around
$5.25 with the cost spread over the entire population under age 65.
This estimate was based on data relating to the fee screen used by
an insurer and an estimate from the Guttmacher Institute that there
are 1.6 million abortions in the U.S. annually. The general level
of the estimate was confirmed by data from an HMO. The actual cost
nationwide, however, must be regarded as highly uncertain, and
could be as low as $2 or as high as $6.
The estimate derived before was for the full cost of abortions
per capita, i.e. was not reduced by the cost sharing in the
indemnity plans. It was also loaded for the full 15%
administrative costs.
There would appear to be no conceptual reason why the premium
differential that is the base for the non-abortion election could
not be limited to the benefits. (Alternatively, only the marginal
costs of paying for abortions in addition to all other
administrative services could be used as the base.) Applying the
average cost sharing in the indemnity plan and without
administrative costs, the prior estimate would be reduced to $3.89
(and is in the high end of the range of potential costs, i.e. a
range of $1.50 to $4.50 similarly adjusted).
The "rider" premiums by demographic category would be
approximately as follows:
Single
$ 4.77
Couple
9.55
Single parent
8.90
Full family
14.11
If the alternative benefit is set at the "actuarial value" (as
misdefined above), these would be the annual contributions to be
made to the alternative cause.
If the separate funds approach is followed, however, these
amounts would be increased roughly in proportion to the decrease in
the base, i.e. roughly doubled if 50% elected the alternative
2
benefit. In practice, the increase would not be strictly in
proportion, since inevitably some of those later seeking abortions
will be in families that have elected the alternative.
The most sensitive of these amounts is probably that for
single parents, since most welfare recipients at high risk of
unwanted pregnancies will fall in this category. Obviously, if the
proportion taking the alternative benefit rises as high as 30%, the
annual cost will rise above $12.
5. Additional Considerations
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Another problem to consider is that some of the abortions
performed will inevitably be for women in family units that have
not elected the abortion option. Some of these women will be poor
and others will be in effect the victims of parental or spouse
elections. Some thought may be merited for their position.
JUL-11-1994 11:17 FROM ACTUARIAL RESEARCH
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2024562878 P.09
Memorandum
To: Ken Thorpe
From: Gordon R. Trapnell
Date: August 18, 1993
Subject: Cost of Abortions in Uniform Benefit Plans
Coverage
The question concerns the cost to include (or omit) abortions
in the uniform benefit plan mandated for employed persons and
offered through the health alliances. Plans offered by alliances
would negotiate rates to be paid to providers for abortions, which
would normally be in outpatient hospital or clinic settings. The
service would be subject to copayments in integrated care plans and
to deductible and coinsurance in fee for service plans and out of
network providers in point of service plans.
(Note that abortions are not a covered service in the FEHBP,
i.e. not included in the Blue Cross/Blue Shield Standard plan that
served as a model for the coverage. But we have always assumed
that abortions would be included in any plan promulgated by the
Clinton Administration, and prepared covered services estimates
accordingly.)
Some Facts
The number of abortions in the U.S. has varied between 1.5
million and 1.6 million each year since 1980. It was thus appear
to be highly inelastic and impervious to restrictions on payment in
public and private health insurance plans. (If there were as much
as a 5% change in utilization rates, abortion coverage would more
than pay for itself in terms of reduced medical care costs alone,
when normal delivery costs and birth defects and complications of
pregnancy are taken into account (without considering the Medicaid
burdens of additional AFDC caseloads). It seems reliable to use
1.6 million as a base.
The cost per abortion varies by a number of factors, being
lowest in subsidized settings and highest in private hospitals in
urban areas. For example, Planned Parenthood in Washington, D.C.
charges $265. But one large private insurer's prevailing charge
screen allows $690 (for CPT 59840) and $839 (for CPT 59841).
These indicate that the Planned Parenthood figure is probably
subsidized, but also indicates that HMOs could probably obtain low
cost services if desired.
JUL-11-1994 11:17 FROM ACTUARIAL RESEARCH
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Analysis
If the average cost of abortions in the U.S. is $500 in 1994,
then the average cost to pay for them will be $800 million. This
would be around $3.47 per capita per year (1994 total population of
230,318,000). Loaded for administrative costs, the additional
premium should be around $3.87.
If the average cost for insured persons is $765, the average
cost per capita is $5.26.
From my "average employer sponsored plan" matrix, projected to
1994, the cost for "terminated pregnancies" is $7.98 per capita.
This includes miscarriages, accidental abortions and still births
as well as "induced abortions" (which I believe is the figure we
want). In 1988, 27.3% of pregnancies ended in induced abortions
and another 14.4% ended in other fetal losses. Applying these
proportions to the average cost of employer plans per capita, we
get an estimate of $5.22 per year per capita. (The apparent close
agreement is undoubtedly a coincidence.)
Recommended Estimate
The premium figure probably represents the choice of providers
made by insured individuals with access to whatever setting they
like. The average figure reflects the choices available to the
average woman seeking an abortion, which is heavily weighted to low
income women. An estimate of $5.25 takes care of insurance as
currently offered. An aggressive HMO may be able to negotiate a
much lower figure.
Although there does not appear to be any impact of coverage on
utilization in the national figures, it is still tempting to
suggest that there must be some substitution effect, and that very
small substitutions would be a high proportion of the total cost.
JUL-25-1994 14:59 FROM ACTUARIAL RESEARCH
TO
J KLEIN P.02
Memorandum
To:
Ken Thorpe
Jennifer Klein
From:
Gordon R. Trapnell
Date:
July 25, 1994
Re:
Cost of Optional Abortion Coverage If Experience Rated
The attached memorandum explains that the relationship between
the average experience rates for all persons electing abortion
coverage and those not electing it will be determined primarily by
selection effects, i.e. by the average need for health care among
the two groups, rather than the cost of abortions or the
consequences of not having access to abortions. Further, the
difference in the costs for the two groups will reflect many other
aspects of the reform proposal and how coverage is financed. In
particular, age-sex specific rates and risk adjustment would tend
to produce experience rates that come closer to differences
attributable to the presence of the abortion coverage.
In view of the complexity of the question and the
interdependence of the answer with so many other aspects of health
care reform, I have no easy answer for this one. With age-sex
specific rates, however, I believe that the difference attributable
to abortion coverage would be substantially less than if the cost
of abortions is funded only by those who are willing to pay more
for the coverage. I can not predict whether the difference would
be less than the difference in whole population community rates.
One aspect is clear. The experience rate for a policy without
abortion will not exceed the experience rate for a policy with
abortion coverage, since many for whom abortion is not a practical
possibility will always elect the lower cost policy. The question
is thus how much less the experience rate for policies covering
abortion will be.
CC: Sharman Stephens
JUL-25-1994 14:59 FROM ACTUARIAL RESEARCH
TO
J KLEIN P.03
Memorandum
To:
Ken Thorpe
Jennifer Klein
From:
Gordon R. Trapnell
Date:
July 25, 1994
Re:
Cost of Optional Abortion Coverage If Experience Rated
1.
Proposal
The question has been raised concerning how rates for policies
with and without abortion coverage would compare if the rates for
all those enrolling for abortion coverage and those not electing it
were experience rated separately. The differential cost to elect
abortion coverage would then reflect all of the cost differences
between the groups electing and not electing the abortion coverage.
2. Analysis
If each insurer and self insured plan must offer separate
policies with and without abortion coverage, the rates may be set
in several different ways.
The difference can reflect the actual cost for that
insurer of paying for abortions under the policies with
abortion coverage.
The difference in what that insurer's community rates
would be with and without abortion coverage (the
differential is reduced by any substitution effects).
The difference can reflect the difference between the
overall experience of those with and without abortion
coverage, i.e. experience based rates for those with and
without abortion coverage.
The difference can reflect the difference between the
overall experience of those with and without abortion
coverage, adjusted for the actuarial composition of those
electing and not electing abortion coverage.
The difference can reflect the difference between the
overall experience of those with and without abortion
coverage, adjusted for the actuarial composition and
average risk of those electing and not electing abortion
coverage.
JUL-25-1994 15:00 FROM ACTUARIAL RESEARCH
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J KLEIN P.04
2
In addition, the differentials could be calculated from
national data rather than the experience of a particular insurer.
The last three of the above can be described as experience rated
approaches, with and without adjustment for the actuarial and risk
composition of the groups.
The question has been raised as to how the difference in
average premium rates paid by those with and without abortion
coverage would compare under one of the experience rated
approaches.
3. Cost Impact
Under any of the experience rated options, the difference in
premium rates attributable to coverage of abortions (or absence
thereof) will be swamped by other major differences in utilization
of health care services among the populations involved. The
situation will also be very different depending on whether there is
adjustment for the composition by age and sex adjustment (age is
obviously not enough here) and by exposure to risk of needing
medical services. If the premium rate without abortion coverage
tended to be higher than that with abortion coverage, the premium
rate would disappear, since a majority of those unwilling to pay
for abortion coverage would have no objection if it did not cost
more.
Without any adjustment for the different levels of need,
nearly all single males, most females over age 50 and most families
without (and perhaps a majority of those with) teenage girls will
elect not to be covered for abortions unless the premium rates with
abortion are the same or lower. At the other extreme, most women
who have had abortions would be expected to elect coverage. Many
of those women in child bearing ages who do not wish to become
pregnant but unable to find a suitable method of contraception
would also be expected to elect coverage unless they have personal
objections to abortion. A key group would be the disabled
population eligible for Medicaid, most of whom are not at risk of
pregnancy and presumably would not pay more for abortion coverage.
It is difficult to project the overall profile of those
electing abortion coverage. Among those not expected to elect
such coverage, single males are the least expensive in the
population. But adult females and those having children are the
most expensive.
If there is age and sex adjustment, most of the effects above
will be removed. The difference in experience rates will be
determined on the relative costs for those electing abortions and
those not electing abortions with age and sex groups. Since
maternity accounts for a significant portion of health care
expenditures, however, and those electing abortion coverage in any
year are unlikely to bear children, there would be a significant
JUL-25-1994 15:00 FROM ACTUARIAL RESEARCH
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J KLEIN P.05
3
bias toward a higher premium for those unwilling to pay for
abortion coverage. On the other hand, fear of needs for abortions
could be correlated with other health care problems. The elections
of the disabled population will become more important in
determining the relative experience rates.
If there is risk adjustment in addition to age and sex
adjustment, the impact will depend on the accuracy of the methods
used, and whether pregnancy was considered a condition for which
there should be risk adjustment. If risk adjustment is perfect
and includes pregnancy, the average difference in premium rates
would revert to the cost of abortion coverage, less any
substitution effects.
cc: Sharman Stephens
JUL-25-1994 15:00 FROM ACTUARIAL RESEARCH
TO
J KLEIN P.06
Memorandum
To:
Ken Thorpe
Jennifer Klein
From:
Gordon R. Trapnell
Date:
July 25, 1994
Subject: Cost of Contraception Benefits in the HSA Benefit Package
It has been proposed to offer health insurance policies with
and without contraception, following the same general model as
discussed for abortion coverage. The HSA benefit package includes
the following types of contraception benefits (not including
abortion which is not a method of contraception).
Family planning consultation by PCP
Contraceptive devices (apparently major expensive ones,
not prophylactics, diaphragms, etc.)
Oral contraceptives
Vasectomies
Tubectomies.
The relevant cost estimate is those services that would not be
covered if the HSA benefit package did not regard any of the above
as necessary medical care (which they appear not to be since most
elections to control pregnancy are voluntary) or appropriate (which
would appear to include all of the above). A large portion of
counseling with regard to contraception occurs during office visits
for other purposes. Similarly, many tubectomies are performed
during caesarian deliveries for a relatively small additional
charge. It is unlikely that these services would disappear if they
were not covered. (It is interesting that an estimated 86% of
health insurance plans and HMOs currently pay for sterilizations,
presumably regarding them as "necessary and reasonable" medical
care.)
We estimate the reduction in the average community rates for
a HSA benefit package that excludes the contraception services
listed above as 1.6%.
CC:
Sharman Stephens
JUL-13-1994 12:23 FROM ACTUARIAL RESEARCH
TO
2024562878 P.02
Memorandum
From: Gordon R. Trapnell
Date: July 13, 1994
Re: Cost of Optional Abortion Coverage:
1. Purpose
This memorandum is concerned with a specific proposal to
structure coverage of abortions under health care reform in a
manner that permits employers and employees to elect whether (i) to
be covered for abortions and (ii) to pay for them.
2. Proposal
a. Elections
All health plans offered by employers would have two versions,
one with and one without abortion coverage. Employers will decide
whether abortion coverage is included in the base for the employer
payment.
If the employer chooses to include abortion coverage, the
employer payment will be 80% (or more) of the average
premium for a plans with abortion coverage. Employees
who do not wish to have (or pay for) abortion coverage
can elect the version of the chosen policy without it,
and their contribution will be reduced by the percentage
of the premium attributable to the abortion coverage
(i.e. 20% of such difference if the employer is paying
80%) The employer contribution for those electing not
to have abortion coverage is reduced by the employer
share of the difference attributable to the abortion
coverage.
If the employer chooses not to include abortion coverage,
the employer payment will be 80% (or more) of the average
premium for plans without abortion coverage. Employees
who wish to have abortion coverage can elect the version
of the chosen policy with it, and pay (all of) the
difference attributable to the abortion coverage.
Both employers electing not to pay toward abortion coverage
and employees electing not to be covered for abortion coverage
would have to certify under oath (i.e. a notary public) that such
election was based on moral grounds. (Procedures similar to those
used to establish grounds for conscientious objectors from military
service? - or something less sectarian.] Once a election has been
made, employers can not change it until the next open enrollment
period. Individual elections can only be changed when a different
JUL-13-1994 12:23 FROM ACTUARIAL RESEARCH
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2024562878 P.03
2
health care plan is selected.
b. Base of Premium Differential
The difference in premium rates for versions of health plans
with and without abortion coverage would be set according to one of
the following rationales.
A predesignated rate, based on the estimated difference
in the average premium rates that would be offered if
abortion were included as a benefit and if it were not.
A predesignated rate, based on the estimated community
rate required to fund abortions, i.e. the numerator is
the projected expenditures for abortions and the
numerator would be the total population.
The difference in the average community rates of plans
that include abortion coverage and those that do not
(where each plan determines the relevant community rates
in each alliance area, presumably reflecting their actual
overall experience).
The first of these calculation methods in effect allows for
the substitution of other medical services for abortions by those
not covered for them. The second does not. The last spreads the
cost of abortions only over those with policies that include the
abortion coverage.
For the third policy year, the predesignated rates could be
recalculated based on data accumulated from the first year (and
analyzed during the second).
3. Analysis
The funding effects of the abortion option are very different
if the differential is based on a community rate rather than funded
by those who believe they have a specific need for the coverage.
The community rate under the first concept above would
theoretically be slightly lower than the second, but is unlikely to
be significantly different in practice since there are no
substitutes (the fetus is terminated or a brought to term) and
demand for abortions is highly inelastic. (For the latter reason
we have not estimated a significant increase in abortions performed
when there is a universal source of payment.) Further, the
elasticity of demand is unlikely to be estimated with enough
precision to be included in the kind of public methodology that
would be required to support the calculation of the community rate.
The differential attributed to abortions will be substantially
higher under a separate funds basis such as the third method
JUL-13-1994 12:24 FROM ACTUARIAL RESEARCH
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2024562878 P.04
3
described above. How much higher depends on the degree of
antiselection by employers and employees seeking lower costs for
themselves, and how much the natural incentive to obtain lower
outlays is impeded by the conscience statement.
Under the policy described, employers that choose not to pay
for abortion coverage are essentially shifting the cost of paying
for it to employees for those that elect abortion coverage, but
will save a significant portion of the premium differential for
those who do not. Further, in the absence of the certification,
most employees would elect not to be covered, since they would not
regard the need for an abortion to be a realistic possibility.
Thus without the certification, the base for calculating the
abortion differential will be relatively narrow, and the average
cost over those that elect it will rise accordingly, along with the
premium differential.
The degree of restraint produced by the certifications is thus
crucial to the level of premium differential under the separate
funds approach. Very different estimates can be obtained under an
assumption that only those expressing comparable opinions in polls
were willing to certify their objections and if the general public
regards the certification in the same manner as say, speeding on an
interstate highway or reporting purchases abroad to the U.S.
customs. Accordingly, I will estimate the effect with a 33%
objection ratio and a 67% objection ratio.
[Another danger is that the number of persons willing to state
positions against abortion is likely to be increased to match the
financially more advantageous position. (Abortion opponents should
like the proposal, since it is likely to improve their standing in
the polls.)
Most larger employers are likely to make the coverage
available as long as the rate differential is relatively minor
(e.g. certainly if the differential is based on the full community
rates). Most large employer plans will now pay for abortions.
This practice is most likely to be continued, since no employees
will be forced to have the coverage, and there is a tax advantage
for employers to pay for it. Further, under the full community
community rate concept, they will not have to cross subsidize the
cost for the employees of employers that opt out. There should be
a substantial opt out rate among small employers, corresponding to
the actual religious beliefs of the owner-entrepreneurs and their
key employees.
4. Cost Estimates
a. Community Wide Community Rates
Using the same cost basis as for my previous memoranda on this
subject, we estimate the community rate for abortion services (i.e.
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without administrative loads) would be $3.89 per capita with the
cost spread over the entire population under age 65. This would
constitute 0.29% of the average Health Security premiums per capita
($1,343). (The cost would be $.33% of Health Security if a full
administrative load was included.) This would be the applicable
base for the differential under either of the first two calculation
methods described above.
The (minimum) employer share of the abortion differential for
employers not opting out would then be 0.23% of the premiums and
the employee share (or savings if objecting) would be 0.6%. For
objecting employers, the employer contribution would be decreased
by the 0.23% and employees desiring coverage would have to pay the
full 2.9% more.
b. Separately Funded Approach
Under the separately funded premium basis, the average premium
differential will depend on the proportions of employers and
employees that elect coverage. Opting out among employers should
be relatively low among employers with as many as 50 employees, but
rise as the size of the firm decreases, becoming as high as 75%
(including those motivated primarily be cost considerations) among
employers with fewer than 5 employees.
Among the employees of employers that do not opt out, those
electing not to pay for abortion coverage would be expected to
reflect those expressing strong moral objections to abortions in
their own families (around 50% I believe). This proportion should
rise to 75% or so among the employees whose employers refuse to pay
for the coverage. (These are obviously wild guesses, and the
actual results could be strongly affected by a number of unknown
factors, including exactly what the certification says, whether it
must be notarized, the publicity and effectiveness of campaigns to
persuade employers not to offer the coverage (boycotts by abortion
opponents?).
In view of the uncertainty surrounding the proportions of both
employers and employees that opt out of the abortion coverage,
estimates based on relatively low and high rates of participation
may be considered. If only 33% are covered, the rates noted above
will be trebled. If 50% are covered, the rates are doubled, and if
67% are covered the rates increase 50%.
Thus the cost is highly uncertain. The participation rate
compounds uncertainty concerning just how much the abortions would
cost under the new sets of conditions under health care reform.
C. Other Considerations
The basic cost estimate used above, $3.89 per capita, is
derived from 1.6 million abortions and an average cost of $650, for
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a cost of $4.47 per capita over 230.3 million persons under age 65,
of which 87% would be paid by the insurance plans. The actual
charges for abortion are somewhat lower than this, representing
subsidies from a number of sources. For example, charges by
Planned Parenthood in Washington D.C. average around $250. If the
estimate were based on the actual payments for abortions by
patients and their insurers, the cost differential attributable to
abortion would be much lower, perhaps half of the figures noted
above. Whether subsidies were continued would depend on many
elements of the proposal and the environment created by the
implementation of the program.
002
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002
UNITED STATES
OFFICE or PERSONABL MANAGEMENT
WARNINGTON, DC STATE
CFFICE or TRE CERECTOR
Honorable Barbara A. Mikulski
Chairwoman, Subcommittee
on Aging
United States Senate
Washington, DC 20510-0300
Dear Senator Mikulski:
Thank you for your letter of August 2, 1094, requesting information concerning
the Federal Employees Health Benefits (FEHB) Program. We are happy to provide
you with the information you requested, and are responding to your questions in
the order in which they were asked In your letter.
11 How many FEHBP plans are offered? How many are nationwide and how many
are state or local plans?
There are currently 327 health insurance carriore participating in the FEHB
Program. Fourteen are traditional fee-for-service plans available nadonwide (seven
open to all Federal employees and seven open only to members of specific
employee organizations). The remainder are prepaid comprehensive medical plans
(HMOs) serving specific geographio drass.
21 How many FEHBP plans offer abornon coverage to their enrollees? What
percentage of the state plans and nationwide plans offer this coverage?
145 FEHB Program plans currently offer coverage for shortion. Nine fee-for-scrvice
plens 164 perceati and 136 prepaid plans 143 percent) offered abortion coverage In
1894.
3) Are there regulations which state that plans must inform the enrollee If they
offer or do not affer abortion coverage? If It is not required that plans inform
anrollens, do you have any Information on how many state and nationwide plans
volunteer this Information?
All FEHB plans must describe their benefits in the Individual plan brochures
provided to all enrollees. All plano that changed their abortion coverage for 1994
noted that fact in their 1994 brochures in the section describing how their benefits
changed in 1994.
i
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Honorable Barbara A. Mikulski
2
4) Do Insurers offer a plan that is the same in oli benefits except one does not
provide abortions? If 80, is there any difference in the premium?
There are no FEHB Program plans that ulles inc coparate benefit structures that
are the DATE except for coverage for abortion.
5) What is the financial Impact on 1994 promiums of FEHBP plans now that
strersion can be covered?
We have no data on the behavior of Federal employees with respect to abortion. in
estimating the financial Impact on the 1994 premiums of FEHB plans, we assumed
abortion coverage to be a cost noutral benefit. We do not project that the premium
of any FEHB pien would Increase or decrease B5 a result of any change in its level
of abortion coverage, nor do we roresco any Impact on overall FEHB Program costs
as 4 result of such changes.
I hope this information is helpful.
-
Sincerely,
Jumes B. King
Director
at
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Post-It™ brand fax transmittal memo 7671
# of pages
To
Jennifer Kein
From
G. Trapnell
Co.
(FYI)
Co.
ARC
Dept.
Phone
# 703-941 7400
Fax #
Fax #
August 8, 1994
Susan Tew of the Alan Guttmacher Institute
(212) 248-1111
The Guttmacher Institute conducted a survey in 1987 of family
incomes of females obtaining abortions.
About a third had incomes < $11,000
Another third had incomes between $11,000 and $25,000
The other third had incomes over $25,000
They knew of no other survey on income and abortions