Updated, 4:55 p.m.:

House Bill 1514, which would add a special label to the health insurance cards of people receiving financial assistance under the Affordable Care Act, tentatively passed the Texas House on Friday afternoon.

After Democrats unsuccessfully sought to derail the bill — authored by J. D. Sheffield, R-Gatesville — the bill cleared the House with a 90-46 vote. It now heads to the Senate.

Original story:

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Roughly a million Texans with government-subsidized health coverage could see a new label on their health insurance cards, and critics say the designation is akin to a “scarlet letter.”

But instead of Hester Prynne’s infamous “A,” insurance cards for Texans with coverage under the federal Affordable Care Act would bear the letter “S,” for subsidy.

Supporters of House Bill 1514 by state Rep. J.D. Sheffield, R-Gatesville, say it’s necessary to standardize insurance cards and clarify the type of health coverage a patient has.

The House will take up the legislation, which easily passed out of the Insurance Committee, on Friday.

Doctors’ groups say the bill would also help physicians “remind the patient about the importance of continuing his or her portion” of payments toward the health insurance premium, said Sara Austin, an Austin-based neurologist, in written testimony in favor of the bill.

Under the Affordable Care Act, there is a 90-day grace period in which insurance companies must continue providing health coverage for people who purchased subsidized health plans, even if those people have fallen behind on their monthly payments. About 1.2 million Texans purchased health plans on the exchange, according to federal officials, and the vast majority of them qualified for subsidies.

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But for services used in the final 60 days of the grace period, an insurer seeking repayment can retroactively demand that doctors refund the cost of those services, according to the Texas Medical Association, a physician lobby group. Doctors say the legislation by Sheffield, a family practice physician, would allow them to explain that situation to patients in order to not get stuck with an unpaid bill.

But critics suggest a more nefarious motive.

“Other than creating a group that you’re going to discriminate against, I don’t see any purpose for indicating that people are getting a subsidy,” said Jose E. Camacho, executive director of the Texas Association of Community Health Centers.

Jamie Dudensing, chief executive of the Texas Association of Health Plans, which lobbies on behalf of several major insurers, said recently that she was similarly worried the bill could create a “scarlet letter” effect where some doctors could decide not to see a patient they learned to be on an “Obamacare” plan.

“Right now, providers are not really supposed to be discriminating against consumers if they have a contract with a health plan,” Dudensing said this week at an event hosted by The Texas Tribune, adding that insurers were “very concerned” about the bill.

Doctors say the concerns are overblown, in part because the income information revealed by the “S” would be nonspecific — hardly different, Austin said, from the amount of information revealed by the knowledge that a person is enrolled in a Medicaid managed care plan.

“The only thing the ‘S’ indicator discloses is that the patient earns some amount less than $95,000 for a family of four and is eligible for a subsidy,” she said in her testimony.

Regardless of the bill’s outcome in the Capitol, the future of those subsidies remains uncertain. The U.S. Supreme Court recently heard arguments in a case over whether Texans purchasing health plans on the insurance marketplace were legally entitled to the federal tax credits. That court is expected to issue its decision in June, a few weeks after the state's regular legislative session concludes.

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This story was produced in partnership with Kaiser Health News, an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.

Disclosure: The Texas Medical Association and the Texas Association of Community Health Centers are corporate sponsors of The Texas Tribune. The Texas Association of Health Plans was a corporate sponsor of the Tribune in 2011 and 2013. A complete list of Tribune donors and sponsors can be viewed here.

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