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Paul Zimmerman
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HHS’s Proposed Healthcare Conscience Rules May Open Up New Markets for Health Insurance

HHS’s newly proposed healthcare conscience rules give employers and other health plan sponsors who want to purchase group health insurance, but don’t want to fund abortions, a weapon to force the hand of states which have refused to permit the sale of such coverage. Under recently-proposed regulations enforcing the Weldon Amendment, health plan sponsors will be able to file complaints with the HHS Office for Civil Rights (OCR) challenging these state rules. And the new regulations will give OCR strong enforcement powers: either the states permit the sale of health insurance that does not include abortion services or they lose federal funding for healthcare programs like Medicaid.

The rule is part of the proposed “Protecting Statutory Conscience Rights in Health Care” regulations issued by HHS on Jan. 26, 2018. 83 Fed. Reg. 3880. It is based on the Weldon Amendment, which has been included in federal appropriation acts since 2004 and prohibits the payment of funds to a federal agency or program or to a state which discriminates against a health care entity that does not provide, pay for, provide coverage for, or refer for abortions. Pub. L. 115-31, Title V §506(d) (May 5, 2017).

All states receive billions in federal funds for healthcare programs. But despite Weldon, some states have enacted rules prohibiting health insurers from selling policies that do not cover abortion services. This has caused churches and other health plan sponsors who object to such coverage to drop their health insurance. While a number of churches have filed suit against these rules on constitutional grounds, they have so far met with little success. See Foothill Church v. Rouillard, 2017 WL 3839972 (E.D. Cal., Sept. 1, 2017).

The Weldon Amendment does not include an enforcement provision, so some have concluded that it may not be enforced via a private lawsuit. See California ex rel. Lockyer, 450 F.3d 438, 443 (9th Cir. 2006). In 2016, HHS erected other barriers to its enforcement, by opining that it only protects health insurers, and not their customers such as employer or union-sponsored health plans; and by concluding that it only protects objections to abortion based on religion, and not conscience.

HHS’s new proposed rule reverses these prior positions. HHS notes that the text of the Weldon Amendment prohibits discrimination by states against a “health care entity” – which Weldon defines to include not only HMOs and insurers, but also “any other kind of health care facility, organization or plan.” So under HHS’s new rule, the term “health care entity” will include individual and group plans, plan sponsors, issuers, and third-party administrators. Proposed 45 CFR §88.2. HHS adds that its rule will prohibit discrimination even against plan sponsors who are not primarily engaged in the business of health care – e.g., churches and commercial enterprises.

HHS’s proposed rule also provides a definition for “discrimination” under Weldon, which will include “to withhold, reduce, exclude, terminate, restrict, or otherwise make unavailable any benefit or privilege.” Proposed 45 CFR §88.2. A state law mandating abortion coverage would be considered discriminatory under this definition, because the state law denies an employer who is unwilling to pay for insurance with abortion coverage the right to purchase insurance at all.

The proposed rule also makes up for the lack of an enforcement mechanism in Weldon by importing much of HHS’s enforcement scheme for Title VI and the other “Federal Financial Assistance” (FFA) civil rights acts. Under the new rule, an aggrieved health entity may file a complaint with OCR. If OCR finds a violation, it will attempt to resolve the matter by informal means. But the proposed rule adds that even while it pursues such voluntary compliance, OCR may also act to cut off federal funding administered by HHS from the state. Proposed 45 CFR §88.7(j).

While the proposed rule provides an avenue of relief for employers who have been shut out of the insurance market because of abortion mandates, it creates a quandary for health insurers. Neither the Weldon Amendment nor HHS’s proposed regulations directly overturn state laws requiring insurers to cover abortions. Rather, HHS’s new rules present a state with the choice of either dropping its abortion mandate or forfeiting money for federal healthcare programs. At the same time, the pending regulations will apply not only to federal and state government entities, but also to any entity that receives FFA through a program funded by HHS. So while the mandate remains in effect, an insurer that receives FFA may be faced with a choice of violating state law or cooperating with a discriminatory practice.  

There may, however, be a way around this problem. Under analogous HHS precedent, an insurer should only be responsible for its own independent acts and decisions. If a state law prohibits an insurer that receives FFA from selling policies without abortion coverage, this arguably would constitute discrimination by the state, not the insurer.  

HHS’s new proposed rules provide remedies for several other important healthcare conscience statutes as well. They also impose administrative burdens similar to those imposed for the FFA Acts, such as requirements to provide assurances of compliance and nondiscrimination notices.

For more information about these obligations or to learn more about the new healthcare conscience remedies, contact David D. Johnson at david.johnson@mrllp.com.

This blog post is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.