Insurance Issues after Dobbs: Fundamental Considerations

By: The Lexis Practical Guidance Attorney Team

This article is part of a series discussing the United States Supreme Court decision that reversed Roe v. Wade,¹ and its significant impacts on insurance. 

THE REVERSAL OF ROE—OFTEN CITED AS THE 40-PLUS-year-old precedent holding that there is a federal constitutional right to obtain an abortion—came in the June 24, 2022, decision in Dobbs v. Jackson Women’s Health Org.² Dobbs also effectively overruled Planned Parenthood of Southeastern Pennsylvania v. Casey,³ which followed Roe. The immediate impact of Dobbs, within hours of its issuance, was a public uproar over a perceived dismantling of nearly 50 years of precedent woven into the social fabric of generations of Americans. But the impacts are widespread—and in less obvious places—like insurance.

The insurance industry and persons involved in it, insurance entities of all types, less-conventional risk-bearing structures, and occupations that Roe touched must be alert to the changes wrought by Dobbs, made ready to react, and counseled on how to adapt. Attorneys will need to guide many of their clients on how they should conduct their businesses and acclimate themselves to this potentially momentous change in the insurance landscape.

Overview of Dobbs and the Mississippi Gestational Age Act

The context of Dobbs was a challenge to the constitutionality of Mississippi’s Gestational Age Act.⁴ The challengers contended that the Mississippi statute violated Roe by imposing more stringent limitations on when and the circumstances under which an elective abortion could be had. Specifically, the law provided that except in a medical emergency, severe danger to maternal health, or in the event of a severe fetal abnormality, no one could perform, induce, or attempt to perform or induce an abortion after 15 weeks of gestation. The statute defined terms including abortion, conception, gestation, gestational age, medical emergency, and severe fetal abnormality.

The Mississippi statute recited factors upon which the legislature relied in implementing the abortion limitations. They included:

• That the United States is one of only seven countries that permits elective abortions after the 20th week of gestation except, in most cases, to preserve the health of the mother
• Factors related to advanced and recent scientific knowledge about prenatal development, such as pre-birth physiological function, movement, and reaction to outside stimuli
• The State’s “important and legitimate interest in protecting the potentiality of human life” as stated in Roe, and that “the State has an interest in protecting the life of the unborn” as held in Casey
• The procedures used to perform abortions, which the legislature characterized as “barbaric,” dangerous for the maternal patient, and demeaning to the medical profession if used for nontherapeutic or elective purposes
• That most obstetricians and gynecologists in Mississippi do not offer or perform nontherapeutic or elective abortions, and fewer offer dilation and evacuation procedures

The Supreme Court rejected the statutory challenge and upheld the Mississippi law. It found that Mississippi was within its rights to impose more stringent limitations on abortions than Roe or Casey provided. It did not, however, stray from its holding in those cases that states have important and legitimate interests in protecting life; indeed, that was integral to the Dobbs ruling.

The Reasoning of Dobbs

The Supreme Court’s decision was based essentially on a finding of faulty reasoning by the Roe court and that the reasoning was neither questioned nor corrected by the Casey court. The main points raised by the Supreme Court in Dobbs as the basis for overruling Roe rested in what might be considered a strict construction of the Constitution and included:

• No explicit right to abortion is found in the Constitution.
• A right to an abortion cannot be found within an individual’s right to privacy nor within an amorphous right to liberty.
• There is no such right rooted in American history.
• The Due Process Clause of the 14th Amendment is unavailing because it protects only two classes of rights: those in the first eight amendments and those that are deemed fundamental rights but are not mentioned elsewhere in the Constitution. Fundamental rights are a group of rights that have been recognized by the Supreme Court as requiring a high degree of protection from government encroachment. They are specifically identified in the Constitution (especially in the Bill of Rights) or have been determined to exist as part of due process.
• Ordered liberty sets limits and defines boundaries between competing interests (i.e., favoring vs. opposing abortion). Citizens of states may evaluate those interests differently.
• The Mississippi law is supported by the state’s findings that include its interest in protecting the life of the unborn. State health and welfare laws, such as those regarding abortion, are entitled to a strong presumption of validity and must be sustained if there is a rational basis for them. The Court found a rational basis and refrained from second-guessing the Mississippi legislature.

Beyond Mississippi

A Mississippi statute was involved in Dobbs. But significantly, many states restrict abortions irrespective of the Dobbs decision. Most contain exceptions when the mother’s life is jeopardized, but many do not, except in cases of incest or rape. Other states have statutes prohibiting abortions that are set to be triggered within weeks or months after Dobbs. Some states have pre-Roe laws that can be reimplemented now that the Dobbs decision has been issued, and others are promulgating new statutes, some of which may be similar to Mississippi’s. In all, nearly 50% of states have or will have prohibited or placed more restrictions on the ability to obtain an abortion.

Insurance Tumult Looms from the Dobbs Decision

Insurance tumult looms because of the Dobbs decision. How could a U.S. Supreme Court decision that is expected to result in nearly half of the jurisdictions in the nation prohibiting or restricting abortion not have a drastic impact on a state-based practice area? The effect of Dobbs cuts through the entire industry and across coverages.

Health Insurance Companies and Managed Health Care Plans

Health coverage may be the first kind of coverage that comes to mind when considering abortions. Although not all health plans cover it, many do. Because insurance is state-regulated, there is a patchwork of sometimes inconsistent state laws governing insurance. There can also be federal implications, such as Patient Protection and Affordable Care Act Marketplace plans, Medicaid regulations, and the Employee Retirement Insurance Security Act
(ERISA), which make things even more complex.

The regulation of abortion also varies by state. The applicable law is usually statutory, with some states being more restrictive than others. Factors include the viability, health, and stage of development of the unborn and the health risk to the mother in continuing with the pregnancy. Nowhere is there an unfettered right to an abortion.

Each state also regulates insurance conducted within its jurisdiction. A few jurisdictions (California, Illinois, Maine, New York, Oregon, and Washington) mandate coverage for abortion in all private insurance policies. Nearly half of all states limit coverage to situations involving risk to the mother’s health, fetal abnormality (as in the Dobbs decision), and other severe exigent circumstances. Currently, half of all states prohibit abortion coverage in insurance offered through insurance exchanges except when rape or incest has occurred or when the mother’s life is jeopardized.

Dobbs returns to the states the right to determine the timing and circumstances under which an abortion may be had. That is, the states are no longer obliged to follow timelines or guidelines established by Roe. Private insurers may design their health plans to include, exclude, or provide limited or contingent benefits for abortion consistent with applicable state law. That fact underscores that while Dobbs overruled Roe, it had the overarching result of leaving to each state the power to regulate abortion and insurance for it as its legislature sees fit.

Employers

Much health insurance comes through employer-based group plans. Employer-sponsored group plans can be, and usually are, subject to ERISA. The plans can be fully-insured or self-funded. A fully-insured plan is one where a licensed insurer is financially responsible for the payment of claims.

Because of Dobbs, whether abortion services are covered or permitted and to what degree will depend on state law and the plan design. State insurance law is involved because insurance statutes may dictate that abortion benefits must be provided to some extent. The design of the plan is a factor because an employer, as a plan sponsor, is broadly free to offer the benefits that it desires.

Complexities can result because a plan may cover employees or members in several states. Therefore, whether or not there is abortion coverage may vary by state depending on whether the state allows, prohibits, or restricts abortion. Again, Dobbs removed the bright-line test for abortion that Roe and some of its progeny provided (trimesters and informed consent, for example) and replaced it with state autonomy about abortions. That state autonomy existed pre-Roe. Consequently, a lawyer representing a health insurer that issues group health insurance policies to employers that provide benefits for abortion must analyze the law of the states in which benefits will be offered and determine the circumstances when abortion is permissible, if at all. An existing policy or plan may need to be altered to comply with changes in state law resulting from Dobbs if the state changes its position on abortion. Stated otherwise, master policy forms (and certificates delivered to employees as evidence of coverage) may need changes in wording to clarify the extent of benefits available to the certificate holder if there are changes in state law concerning abortion.

In addition, since the scope of coverage may effectively be reduced, there can be other regulatory concerns, including about rates. Rates can become an issue because the rate initially charged may have included an element attributable to abortion benefits. If the benefit is eliminated, it might be argued that the rate should be reduced due to the removal. However, the abortion element of the rate may be de minimus so as not to warrant a dispute.

Self-Funded Group Health Plans

A self-funded group health plan is one where the plan’s sponsor, usually an employer, a union, or another kind of bona fide group, is itself financially responsible for the payment of claims. Such plans are entirely governed by a body of federal law under ERISA. In contrast, an ERISA plan that an insurer funds is subject to dual regulation—a state insurance regulator governs the insurer funding the plan, and the federal government, by ERISA, governs the benefit plan itself. As such, self-funded group health plans can be more flexible than fully-insured group health plans in what they can cover or exclude because they are not subject to state-mandated coverage. A self-funded ERISA plan may or may not offer abortion benefits to members as it deems fit. Therefore, Dobbs should have less impact on fully self-funded plans.

Providers and Hospitals

The overturning of Roe v. Wade by the recent Dobbs decision and the resulting elimination of a federal constitutional right to abortion, however limited it may have been, has created a morass of problems for medical providers and hospitals that perform abortions.

The immediate outgrowth of Dobbs has been confusion among providers and hospitals regarding how to conduct themselves professionally while still upholding their responsibilities to patients. That confusion has existed since Roe was earnestly called into question. But it reached a fevered pitch with the leak of a draft of the Dobbs decision, made only worse by its final release.

Dobbs removes all predictability for providers and multistate hospitals and requires them to re-think their abortion policies based on the location of their facilities and practices. It also raises questions about their ability to transfer patients interstate to another hospital located where there are different, presumably stricter, abortion laws. What are the consequences if they do? If they don’t? If the patient must have a prohibited procedure but cannot or does not get it due to the legal restrictions on abortion? How is the balance to be resolved between state abortion restrictions and the Emergency Medical Treatment and Labor Act?

Medical Malpractice Insurance

Exclusions for illegal or criminal acts are common in all types of insurance, medical malpractice included. Furthermore, insurers frequently take other adverse action against policyholders who engage in those acts, such as canceling an existing policy, refusing to insure in the future, limiting the breadth of future coverage by exclusions, or charging substantially higher premiums. To the extent that performing abortions may become illegal in more jurisdictions because of Dobbs, a provider who performs one is likely guilty of an unlawful or criminal act and rendered unable to obtain malpractice insurance. Because malpractice insurance is typically required to practice medicine or operate a healthcare facility, the provider may be unable to do so. In response, legislators in some states, like New York, have introduced legislation prohibiting insurers from taking adverse action against abortion providers who provide abortions to out-of-state patients.⁵

Individuals/Patients

While not detrimental reliance in the legal sense, in other ways, Dobbs has much changed patients’ expectations and what they perceived as a right to a type of medical care based on the long-standing Roe rules. Immediately after the issuance of the opinion, many patients faced canceled appointments at private medical offices for scheduled abortions, including declinations of the procedure after arrival. Doors and windows were sometimes shuttered at abortion clinics serving patients with insurance and those who relied on public benefits for abortions. Hereafter, each state will be free to enact its own rules about abortion, limiting it as desired and unfettered by the dictates of Roe.

Looking Ahead

In conclusion, the plethora of issues raised by Dobbs is boggling. They are both social and personal. They relate to the practice of medicine and the delivery of healthcare services. They relate to how healthcare services are financed, including by insurance. They relate to how businesses not directly related to either healthcare or insurance were run in the past and can be run henceforth. They relate to the interaction between individuals with other individuals, legal entities, and government. They relate to issues as yet unforeseen and perhaps foreseeable. What is predictable, however, is that as long as Dobbs remains the law, things will be different from what they have been for two generations.

The following article explores implications the Dobbs decision will have on health insurers and health insurance. 

To find this article in Practical Guidance, follow this research path:

RESEARCH PATH: Insurance > Trends & Insights > Articles

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1. 410 U.S. 113 (1973). 2. 142 S. Ct. 2228 (2022). 3. 505 U.S. 833 (1992). 4. Miss. Code Ann. § 41-41-191. 5. See 2021 NY S.B. 9080.