H.R. 3: No Taxpayer Funding for Abortion Act

H.R. 3

No Taxpayer Funding for Abortion Act

Date
May 5, 2011 (112th Congress, 1st Session)

Staff Contact
Sarah Makin

Floor Situation

On Wednesday, May 4, 2011, the House is scheduled to consider H.R. 3, an Act to prohibit federal funding for abortion, under a rule.  The rule provides for one hour of debate with 40 minutes equally divided and controlled by the chair and ranking member of the Committee on the Judiciary, 10 minutes equally divided and controlled by the chair and ranking member of the Committee on Ways and Means, and 10 minutes equally divided and controlled by the chair and ranking member of the Committee on Energy and Commerce.  Additionally, the rule provides for one motion to recommit without instructions. 

 

H.R. 3 was introduced by Rep. Chris Smith (R-NJ) on January 20, 2011, and was referred to the House Committee on Energy and Commerce, the House Committee on the Judiciary, and the House Committee on Ways and Means.  The House Committee on the Judiciary held a markup of H.R. 3 and ordered the bill to be reported, as amended, by a vote of 23-14. 

Bill Summary

H.R. 3 would codify the Hyde amendment by establishing a government-wide, permanent prohibition on federal funding for elective abortions and insurance coverage that includes elective abortions.  The bill would also prohibit federal subsidies for abortion coverage currently allowed by the Patient Protection and Affordable Care Act (PPACA) and would prohibit tax-preferred status for abortion through health savings accounts and itemized deductions.  Lastly, H.R. 3 would codify the Hyde-Weldon conscience clause. 

SUMMARY

Title I – PROHIBITION OF FEDERAL FUNDS

H.R. 3 would prohibit the use of federal funds for abortion (funds either authorized or appropriated by federal law).  The prohibition would extend to federal prisons, international aid, the District of Columbia, federal employees, and others.  

The bill would also prohibit the use of federal funds from being used for health benefits coverage that includes coverage of abortion.  This provision would apply to the Federal Employee Health Benefits Program and the State Children’s Health Insurance Program.

H.R. 3 would prohibit abortion from being included in any health care service furnished by, or in, a federally owned or operated health facility (such as Department of Defense (DOD) and Veterans Administration (VA) facilities).  This provision would also prohibit abortions from being performed by federal employees acting within the scope of their employment.  This language reflects policies currently in place for DOD and VA medical facilities. 

The legislation would clarify that individuals, entities, states, or localities are not prohibited from purchasing separate health care coverage that includes abortion.  However, the bill would require that such coverage be purchased using non-federal funds and may not be purchased using matching funds required for a federally subsidized program.  (For example, states would be able to purchase abortion coverage for Medicaid participants, but would not be permitted to use federal funds or state Medicaid matching funds.)  Also, the bill would allow individuals who receive a federal health insurance subsidy to purchase separate abortion coverage.

 

The bill would clarify that the Act does not apply to treatment for complications caused by an abortion, and the bill would provide an exception for abortion funding in cases of rape, incest, or to preserve the life of the mother.  The following language, contained in H.R. 3, is consistent with the Hyde amendment.

“if the pregnancy is the result of an act of rape or incest; or in the case where a woman suffers from a physical disorder, physical injury, or physical illness that would, as certified by a physician, place the woman in danger of death unless an abortion is performed, including a life-endangering physical condition caused by or arising from the pregnancy itself.”     

H.R. 3 would clarify that the term “funds appropriated by federal law” includes funds appropriated by Congress for the District of Columbia and that standards set for the federal government include the government of the District of Columbia. (This language is consistent with the D.C. Hyde amendment known as the Dornan amendment.)

Lastly, H.R. 3 would prohibit federal, state or local governments that receive federal funds from discriminating against any individual or institutional health care entity on the basis that the entity does not provide, pay for, provide coverage of, or refer for abortions.  This section includes a remedies section that provides a right to sue for acts of discrimination.  (This language reflects the Hyde-Weldon conscience clause with the addition of a remedies section to allow victims of discrimination to seek redress in court.)


Title II – TAX PROVISIONS

H.R. 3 would prohibit payments for elective abortions from being tax deductable by amending section 213 of the Internal Revenue Code.  The bill would specify that abortions in the cases of rape, incest, or to preserve the life of the mother are deductable.  The bill would also clarify that treatment for complications caused by an abortion are deductable. 

The bill would prohibit PPACA premium assistance subsidies provided in the form of refundable advanceable tax credits from being used to pay for health insurance plans that include abortion, except in the cases of rape, incest, or to preserve the life of the mother.  The exception would also apply to post-abortion treatments. 

The bill would specify that individuals may purchase insurance coverage that includes abortion service coverage provided that the coverage is not paid for using a premium assistance subsidy.  The bill would further specify that non-federal health insurance issuers may continue to offer health insurance plans that cover abortion, provided that premiums for such coverage are not paid for using a premium assistance subsidy. 

H.R. 3 would prohibit PPACA health insurance expense credits for small businesses that provide for health insurance plans that cover abortions, expect in the cases of rape, incest, or to preserve the life of the mother.  The exception would also apply to post-abortion treatments. 

Lastly, the bill would prohibit abortion expenses from being included in distributions from Health Savings Accounts, Medical Savings Accounts, and Flexible Spending Arrangements, except in the cases of rape, incest, or to preserve the life of the mother.  The exception would also apply to post-abortion treatments.

Background

Hyde Amendment:  The annual domestic funding ban, known also as the Hyde amendment, has been enacted in various forms since fiscal year 1976 as a “rider” to the Departments of Labor, Health and Human Services Appropriations bill.  The Hyde amendment bans federal funding of domestic abortions, except in the cases of rape, incest or preserving the life of the mother.  H.R. 3 would make permanent the prohibition on federal funding for abortion, eliminating the inherent vulnerability that riders like the Hyde amendment face as part of the annual appropriations process.  The legislation would apply the Hyde amendment to all federal funding (as opposed to only funds from the Labor, Health and Human Services Appropriations Act, as in current law) in order to cover programs such as international aid, the federal employee health benefits program, the District of Columbia, federal prisons, Peace Corps, and others. 

Hyde-Weldon Conscience Clause:  Since 2004, the Hyde-Weldon conscience clause has protected health care providers (including doctors, nurses, hospitals, health insurance providers, etc.) from discrimination by state and local governments for refusing to provide, pay for, or refer for abortion.  H.R. 3 would make this policy permanent and would govern recipients of all sources of federal funds (as opposed to just those receiving funds under the Labor, Health and Human Services Appropriations Act as in current law).  Furthermore, H.R. 3 would provide legal recourse against actual or threatened discrimination. 

Tax Provisions:  The destruction of an innocent human life is not something that should be incentivized or subsidized by the government through the tax code.  H.R. 3 would end the incentives for abortion and abortion coverage in the following ways:

 

Tax Credits Made Available Under PPACASubsidies in the form of tax credits were included in PPACA to help individuals and small businesses purchase health insurance.  During the debate on PPACA, an amendment was offered by Representative Stupak to bar tax credits from subsidizing insurance coverage that included elective abortion.  The amendment was not approved, leaving PPACA containing a web of accounting gimmicks that resulted in the largest deviation from the principles of the Hyde amendment since it was first enacted 35 years ago.  H.R. 3 would prohibit abortion coverage subsidies in the form of tax credits and would also capture any other pre-existing tax credits for health insurance, including those that have been previously unnoticed and are not currently covered by Hyde.  The prohibition on tax credits applies to both abortion and abortion coverage.

 

Itemized Deductions Rationale:  Under current law, individuals who spend more than 7.5 percent of their income on health costs, are permitted to deduct those costs on their tax returns.  The threshold for this deductibility will soon increase to 10 percent under PPACA.  Although the Internal Revenue Code is silent on abortion, abortion is listed as a deductable medical expense on page five of IRS Publication 502.  Elective abortion is not health care and should not be given tax-preferred status by the IRS.  H.R. 3 would ensure that abortion (except in cases of rape, incest or to preserve the life of the mother) is no longer a recognized deductable expense.  H.R. 3 would not have any bearing on the deductibility of insurance coverage that includes abortion.  The legislation would only prevent deductions taken specifically for abortion.

 

Health Savings Accounts (HSA), Flexible Spending Arrangements (FSA) and Medical Savings Accounts (MSA) Rationale:  Currently, IRS Publication 969 specifies that qualified medical expenses for these accounts include any deductable medical expense listed in Publication 502, which lists abortion.  H.R. 3 would not prohibit people from paying for abortions with their own money, but it would prohibit individuals from claiming abortion in order to gain a tax benefit.  It is important to note that it is not unprecedented to limit the scope of HSAs, MSAs and FSAs.  In fact, PPACA itself prohibits the use of HSAs for certain over-the-counter medications. 

 

House Republicans agree that Americans should be able to keep more of what they earn and spend it as they choose. The tax provisions in H.R. 3 would not contradict that principle and general tax reductions are not affected. Under H.R. 3, people would remain free to spend their own money to pay for abortion and for abortion coverage.  However, they will not be able to get a tax benefit from doing so.  H.R. 3 would not affect deductions and exclusions for employer-sponsored health insurance.  Furthermore, H.R. 3 has been scored as having a negligible tax impact by the Joint Committee on Taxation, which means H.R. 3 is considered tax neutral.  In addition, American’s for Tax Reform (ATR) has written a letter stating that “ATR has no problems or issues with H.R. 3.  The bill has no net tax change whatsoever, and is therefore not legislation at all relating to the Taxpayer Protection Pledge.  Attempts to claim otherwise are not based on reality, but on mere political gamesmanship of the lowest order.”

Cost

According to Congressional Budget Office (CBO) cost estimates, enacting H.R. 3 could affect direct spending or revenues; therefore, pay-as-you-go procedures apply.  According to the staff of the Joint Committee on Taxation, the bill would have negligible effects on tax revenues.  Similarly, CBO estimates that any effects on direct spending would be negligible for each year and over the 2011-2021 period.