|
To go to the Abortion in Health Care
index, click here.
To go to the NRLC Home page, click
here.
To go to the NRLC Legislative Action Center, click
here.
| UPDATE:
On October 9, 2009, the nonpartisan
Congressional Research Service issued a new
memorandum confirming that the "public plan"
that would be created by H.R. 3200 could spend
only federal funds. Click
here
to view or download that memo. |
To view or download the PDF version of this
memorandum, with embedded links, click
here.
MEMORANDUM
|
TO: |
Interested Parties |
|
FROM: |
Douglas
Johnson, NRLC Legislative
Director
Susan T. Muskett, J.D., NRLC
Senior Legislative Counsel
202-626-8820 |
|
RE:
|
the use of federal funds
(public funds) to pay directly for elective abortions
and to pay for insurance plans that cover elective
abortion under H.R. 3200, the Obama-backed health bill
(rebutting the "private funds" myth) |
|
DATE: |
September 7,
2009 |
THE PURPOSE OF THIS MEMORANDUM
It is now well established that H.R. 3200, particularly as revised by
the Capps Amendment (or Capps-Waxman Amendment) adopted in the House
Energy and Commerce Committee on July 30, would (1) authorize the
Secretary of Health and Human Services (HHS) to pay for elective
abortions under the proposed "public plan," and (2) allow the proposed
"affordability credits" (premium subsidy) program to subsidize private
insurance plans that cover elective abortions, as well as the public
plan. See, for example, the August 21 article by FactCheck.org, " Abortion:
Which Side is Fabricating," and the August 13 NRLC factsheet, " What
Do the 'Health Care Reform' Bills Backed by President Obama Have to Do
With Abortion?"
[It has also been conclusively demonstrated that the Hyde Amendment,
which is a provision of the annual appropriations bill for the
Department of Health and Human Services (DHHS), will not apply
to any of the funds that would flow into or out of the public plan or
the "affordability credit" program. See the NRLC memorandum posted
here, and the memoranda issued by the nonpartisan Congressional
Research Service that are linked therein.]
The memorandum that you are reading is not intended to again demonstrate
that the public option would cover elective abortion and that the
"affordability credit" programs would subsidize private insurance plans
that cover elective abortions; rather, our purpose here is (1) to
examine the question of whether the funds that would be used by the
public plan to pay for elective abortions are properly described as
"federal funds" (public funds) or as "private funds," and (2) to address
the same question for the funds that would be used to subsidize private
insurance plans that cover elective abortion.
These are important questions, partly because since late July, many
Democratic members of Congress, and some "factcheckers" and advocates in
the news media, have asserted that the Capps Amendment (or Capps-Waxman
Amendment), adopted in the House Energy and Commerce Committee on July
30, would prevent the use of "federal funds" or "public funds" for
abortions in the programs created by H.R. 3200. To cite just two
examples among dozens: On August 27, 2009, House Speaker Nancy Pelosi
(D-Ca.) issued a "Daily Mythbuster"
press release which asserted that "the latest version of the House
bill . . . clearly spells out that no federal funds can be used to pay
for abortions . . ." On August 11, 2009, Rep. Lois Capps (D-Ca.) issued
a letter in which she asserted, "Under my amendment, no federal
funds may be used to pay for abortions that are not allowed by the Hyde
Amendment . . . The only funds that may be used to pay for other
abortion services are private funds from the policyholders' own
premiums, whether the policyholder is covered by a private plan or the
public option."
However, this claim by Pelosi, Capps, and others is demonstrably
erroneous. With few exceptions, funds under the control of and expended
by an agency of the federal government cannot accurately be described as
"private funds." Under explicit provisions of H.R. 3200, the various
types of funds that would create these two new programs, and the funds
that the two programs will expend, are all "federal government funds" as
that term is used by the General Accountability Office (GAO) and by the
Congressional Budget Office (CBO), and as the terms are used with
respect to innumerable other federal programs administered by many
agencies, including the Department of Health and Human Services (DHHS).
None of the types of funds that will be expended by the public option or
by the "affordability credit" program can properly be described as
"private funds." These funds are without question "public funds."
Some of the people who are attempting to label these funds as "private"
are doing so for a transparently political purpose: To conceal the
reality that H.R. 3200 would establish direct federal government funding
of elective abortion by the government insurance plan, and would
also result in large-scale federal subsidies for private health plans
that pay for elective abortions. Both of those effects would be sharp
departures from longstanding federal policy.
Those in the news media who adopt the inaccurate characterization that
the funds involved are "private," or who embrace the inaccurate claim
that "federal funds" will not be spent on abortions, are allowing
themselves to be manipulated in a way that misleads the
public regarding the important public policy issues that are at stake.
(Many of the lawmakers, such as Pelosi, who are currently trying to
snooker the public into believing that the Department of Health and
Human Services would be expending "private funds" for abortion payments,
probably would recoil from any suggestion that other federal agencies --
say, the CIA, or the Pentagon, or the Department of the Interior --
could expend federal Treasury funds in transactions that would be
considered "private.")
WHAT CONSTITUTES FEDERAL GOVERNMENT FUNDS?
In this memorandum, we will refer to (1) the CBO's glossary
here; (2) the Government Accountability Office (GAO)
publication titled, "A Glossary of Terms Used in the Federal
Budget Process: September 2005,"
here; (3) a Congressional Research Service memorandum,
"Availability of Funds in the Health Insurance Exchange Trust
Fund in Section 207 of H.R. 3200," August 28, 2009,
here; and (4) a Congressional Research Service memorandum,
"Availability of Funds in the Public Health Insurance Option
Account in Section 222(b)(1) of H.R. 3200," August 31, 2009,
here.
The glossary section of the Government Accountability Office
(GAO) document cited above does not formally define the term "public
funds," but the GAO document employs the term "public funds" (for
example, in the section headed "GAO's Mission," page 178) to refer
to all of the classes of funds that are under the control of
agencies of the federal government.
The GAO glossary is also instructive in what constitutes "federal
government funds." For example, on page 20, the GAO glossary
explains that the term "Budget Authority" means: "Authority provided
by federal law to enter into financial obligations that will result
in immediate or future outlays involving federal government
funds." [emphasis added] Basically, any funds that are held or
expended by a federal agency in accord with provisions of law are
"federal government funds." The provisions of H.R. 3200 that would
create the "public option" and the "accountability credit"
program would establish precisely such statutory authorities, which
are summarized in the two Congressional Research Service memoranda
linked above.
"budget authority: Authority provided by law to incur
financial obligations that will result in immediate or
future outlays of federal government funds. Budget
authority may be provided in an appropriation act or
authorization act and may take the form of borrowing
authority, contract authority, entitlement authority, or
authority to obligate and expend offsetting collections or
receipts." [emphasis added]
(Under both the GAO and CBO glossaries, there is a technical
distinction made between two different types of accounts in which
federal government funds are held: "federal fund accounts" and
"trust fund accounts." Under H.R. 3200, the "public option" would
be a "federal fund account," while the accountability credits would
be paid out of a "trust fund," but the distinction is not important
for the points under discussion in this memorandum, because
both types of accounts constitute "public funds" as the GAO employs
the term, and both types contain federal government funds.)
CAN THE "PUBLIC OPTION" EXPEND "PRIVATE FUNDS"?
H.R. 3200, Section 222(b)(1), provides: "There is established
in the Treasury of the United States an Account for the receipts
and disbursements attributable to the operation of the public
health insurance option, including the start-up funding . . ."
[Page 119] The bill authorizes and appropriates $2 billion in
general Treasury revenues to start the "public option"
(supposedly to be repaid within 10 years) [p. 120]. H.R. 3200
also appropriates to the Secretary of HHS funding to cover 90
days worth of claims reserves, out of any funds in the Treasury
not otherwise appropriated [p. 120].
As the August 31 Congressional Research Service memo notes:
"Section 222(b)(1) of H.R. 3200 creates in the Treasury an
Account 'for the receipts and disbursements attributable to the
operation of the public health insurance option, including the
start-up funding' provided in Section 222(b)(2). Based on the
authorities provided to the Secretary, as described in the above
paragraph, it appears that the Secretary would be able to credit
any premiums to the Account, and make payments from the Account,
without any subsequent legislative action, such as a further
appropriation in a subsequent act."
In short, tax funds will provide a major portion of the
monies used to start the "public option," and all of the
start-up funds are clearly federal funds.
Once the "public option" is fully underway, it will receive funding
from two main sources. One of these is the proposed new federal
premium-subsidy program ("affordability credits"). This
program will be funded largely by different types of taxes, and it
is discussed in more detail in the next section.
The second funding source will be payments from enrollees, referred
to in the bill as "premiums." The distorted claim currently being
propagated by many supporters of H.R. 3200 is that when DHHS spends
the funds raised through "premiums," the agency will be expending
"private" funds. This is, as a matter of law, absurd. For example,
the funds in a citizen's bank account are private, but once he or
she writes a check to the IRS to pay income taxes, the funds become
federal government funds, public funds, deposited in a U.S. Treasury
account. The same is true here. Once an enrollee makes a "premium"
payment to DHHS, the funds are no longer "private" -- they
are federal government funds, as truly and completely as the funds
that the government gathers from incomes taxes, user fees, fines,
and other sources.
Dennis G. Smith, formerly director of the federal Center for
Medicaid and State Operations in DHHS (now Senior Fellow in Health
Care Reform, Center for Health Policy Studies, the Heritage
Foundation), explained it this way:
"All funds controlled by the federal government originate from
its citizens. Congress must appropriate the expenditure of funds.
When premiums are collected from individuals and dispensed by the
federal government, the funds are considered to be federal funds.
For example, consider that individuals pay Part B premiums under
Medicare for physician coverage and payments are subsequently made
to providers. Those expenditures are certainly considered to be
federal funds. The same would be true of the 'premiums' expended by
DHHS under the public plan." (Communication to NRLC, September
7, 2009)
Under H.R. 3200, as amended by the Capps-Waxman Amendment (see
below) the public plan is explicitly authorized to cover
elective abortions. Thus, abortion providers would send their
bills to the Department of Health and Human Services. They
would receive payment checks drawn on a federal Treasury
account. The payments would be in "federal funds," both in the
technical sense and in the common usage sense. This would
be direct federal government funding of elective abortions.
WHAT THE CAPPS AMENDMENT SAYS ABOUT "PUBLIC FUNDS"
On July 30, 2009, the House Energy and Commerce Committee adopted
(over the opposition of pro-life members) an amendment crafted by
staff to Chairman Henry Waxman (D-Ca.) and offered by his ally, Rep.
Lois Capps (D-Ca.). The complete text of the amendment is posted
here.
The Capps Amendment was crafted to look like a Hyde Amendment to a
superficial observer (unfortunately, that includes all too many
journalists and "factcheckers"), but its legal effect is really an
inversion of the Hyde Amendment principle. The Capps Amendment
explicitly authorizes the Secretary of HHS to pay for elective
abortions under the proposed "public option." The Obama
Administration would certainly do so -- not only because of
Secretary Sebelius's strong pro-abortion policy views, but because
Barack Obama himself directly promised Planned Parenthood in 2007
that his public plan "will provide all essential services, including
reproductive services," and that such services would be "at the
center, and at the heart of the plan that I propose." (He admitted,
and no one disputes, that "reproductive services" includes elective
abortion.) Obama has never repudiated this promise. You can
watch Obama make the promises in a video clip here:
http://stoptheabortionagenda.com/
or here:
http://www.youtube.com/watch?v=Cqww8jmizug
An otherwise insightful August 21 analysis of the Capps
Amendment by FactCheck.org (" Abortion;
Which Side is Fabricating?") contained one misconception.
It said, "The Capps amendment does contain a statement . . .
that prohibits the use of public money to pay for
abortions, except in cases of rape, incest and to save the life
of the mother. That would still allow the public plan to cover
all abortions . . ." [emphasis added] Thus, FactCheck.org
apparently adopted (perhaps without realizing it) the mistaken
notion that DHHS will hold and expend funds in the public plan
that will not be "public money."
It is true that the Capps Amendment contains a paragraph
caption on page 6, that reads, "Prohibition of Use of
Public Funds for Abortion Coverage." But this is merely a red
herring -- a paragraph caption has no legal effect.
One must look to the operative language that immediately follows
the paragraph caption, which states simply, "An affordability
credit may not be used for payment for [abortion] services
described in section 122(d)(4)(A)." This merely means that
abortions cannot be charged on the books against one type
of public funds -- the "affordability credits." This is not a
general prohibition on the use of "public funds" to pay for
abortions. By design, the Capps Amendment leaves DHHS-run
public fund
completely free to fund all abortions with the federal
government funds that originated with enrollees, which are just
as much federal government funds and public funds as the
affordability credits.
There are also two references to "public funding" in
subparagraph captions on page 2 of the Capps Amendment. But
these references are to Medicaid funds (which everyone admits
are "public funds"), not to the funds in the public option or
the affordability-credit programs. Medicaid is funded through
the annual Health and Human Services appropriations bill, which
currently contains the "Hyde Amendment" provision that limits
funding of abortion to rare circumstances.
As demonstrated in a separate memo, the public option and
affordability-credit programs in H.R. 3200 rely entirely on new
funding streams created by H.R. 3200, and not on any funds that
would pass through the HHS appropriations bill. (This
conclusion is supported by memoranda issued in late August 2009
by the nonpartisan Congressional Research Service, linked
below.) Thus, the Hyde Amendment will not apply to any of the
funds that would be spent for abortions and for insurance plans
that cover abortions under H.R. 3200.
THE PREMIUM-SUBSIDY PROGRAM ("AFFORDABILITY CREDITS") AND
FEDERAL FUNDS
Aside from the public fund, H.R. 3200 creates a new premium
subsidy program to help tens of millions of Americans buy health
insurance, referred to as "affordability credits."
Funds for these subsidies will be kept in the "Health Insurance
Exchange Trust Fund," which is an account in the U.S. Treasury,
created by the bill for this purpose. The funds in the Trust
Fund are federal government funds. The Trust Fund will be
administered by the "Health Choices Commissioner," a new federal
office created by the bill.
Under the bill, when a person who qualifies for the new subsidy
enrolls in the public plan, the subsidies will be sent by the
Health Choices Commissioner from the Health Insurance Exchange
Trust Fund to the Secretary of HHS [see p. 129], who is the
official in charge of the public option [see pp. 12, 118]. When
a person who qualifies for subsidies chooses to purchase private
health insurance, the subsidies will be sent from the Trust Fund
to the private insurer.
H.R. 3200 provides that the "affordability credit" program will
be funded entirely by general funds from the Treasury, as well
as special new taxes. As the August 28 Congressional Research
Service memo explains, the bill "appropriates to the Fund
amounts equal to three specified taxes . . . In addition,
Section 207(c)(2) appropriates to the Fund amounts equal to the
difference between the payments made from the Fund . . . and the
amounts from the three specified taxes." In other words,
whatever amount is spent from the Fund that is not covered by
the special taxes will be paid from general revenues.
Thus, all of the funds that flow into the Trust Fund are
"federal government funds," as that term is used by the GAO and
the CBO. Once the money is in the new Trust Fund, the funds are
still "federal government funds" as the GAO defines the term.
Dennis G. Smith, formerly director of the federal Center for
Medicaid and State Operations in DHHS (now Senior Fellow in
Health Care Reform, Center for Health Policy Studies, the
Heritage Foundation), explained:
"The Individual Affordability Credits (premium subsidies)
are clearly federal funds. An individual applies to the federal
Health Choices Commissioner for the credit; the Commissioner
determines the individual’s eligibility; the Commissioner then
pays the qualified health plan. In reality, when the
Commissioner plays this role, there is no distinction between
'private' and 'public' funds, they are all public."
(Communication to NRLC, September 7, 2009)
H.R. 3200 with the Capps Amendment explicitly allows the
tax-generated funds in the premium subsidy program to go to
private plans that cover abortion on demand. This would be a
drastic departure from the status quo, because under current
law, federal funds do not flow into health plans that cover
abortions, except to save the life of the mother, or (in some
programs) cases of rape or incest. This currently applies, for
example, not only to Medicaid and military, but also to the
health plans that cover members of Congress and their staffs --
as Kathleen Sebelius herself pointed out in a letter submitted
to the Senate on April 2, 2009, in which she wrote, "Most
private plans do not cover abortion services except in limited
instances, but do cover family planning, and Congress has
limited the Federal Employee Health Benefit Plan to covering
abortion services only in cases of rape or incest, or when the
life of the mother is in danger.”
CONCLUSIONS
H.R. 3200 would create two new programs that would use federal
government funds to subsidize abortions, in ways that would not
be permitted under the current laws that govern the Medicaid
program or other current federal health programs. It is a
distortion, and factually erroneous, to claim that any of the
funds used to pay for abortions in the public option, or any of
the government funds used to subsidize insurance coverage of
abortion, under the proposed new programs, would be "private"
funds.
The government insurance plan (public option) created by H.R.
3200 would directly pay for elective abortions with federal
government funds. This would be direct federal government
funding of elective abortion. The Hyde Amendment does not cover
these federal funds.
In addition, under H.R. 3200, the premium subsidy program would
employ a federal trust fund filled with funds from general
Treasury revenues and special taxes, all of which are federal
funds. From this trust fund, subsidies would be paid for
private insurance plans that cover elective abortions (and also
to the public plan). The Hyde Amendment does not allow funds
appropriated through the annual Health and Human Services
appropriations bill to flow into any trust fund that covers
elective abortions, but H.R. 3200 creates a new funding stream
for the premium subsidy trust fund, which would not be subject
to the Hyde Amendment.
September 7, 2009
*****
The documents linked in the memorandum above are linked
again here for convenience:
The CBO's glossary is
here.
The Government Accountability Office (GAO) publication
titled, "A Glossary of Terms Used in the Federal Budget
Process: September 2005," is
here. (PDF document, 178 pages)
The Congressional Research Service memorandum, "Availability
of Funds in the Health Insurance Exchange Trust Fund in
Section 207 of H.R. 3200," August 28, 2009, is
here. (PDF document, one page)
The Congressional Research Service memorandum, "Availability
of Funds in the Public Health Insurance Option Account in
Section 222(b)(1) of H.R. 3200," August 31, 2009, is here.
(PDF document, one page)
The NRLC memorandum, "Why the 'Hyde Amendment' Will Not
Prevent Government Funding of Abortion Under H.R. 3200,"
September 3, 2009, is
here.
The NRLC memorandum, "What do the health care bills backed
by President Obama have to do with abortion?," August 13,
2009, is
here (PDF document -- 11 pages)
The NRLC factsheet, "Key Points on Pro-Abortion Provisions
in Obama-backed Health Care Bills," August 26, 2009, is
here (PDF document -- two pages)
To view or download the PDF version of this
memorandum, with embedded links, click
here.
To go to the Abortion in Health
Care index, click here.
To go to the NRLC Home page, click
here.
To go to the NRLC Legislative Action Center, click
here. |
|
