This bill establishes the Improve Health Insurance Affordability Fund. States must use allocated funds to (1) issue reinsurance payments to health insurers (i.e., reimbursements to protect insurers against exceedingly high claims) for individual health insurance coverage, or (2) provide other assistance to reduce out-of-pocket costs (e.g., copayments, coinsurance, and deductibles) for qualified health plans offered in the individual market.

The Centers for Medicare & Medicaid Services must distribute funding to states in accordance with a specified methodology.

This bill establishes and provides funding for the Improve Health Insurance Affordability Fund. States must use allocated funds to (1) issue reinsurance payments to health insurers (i.e., reimbursements to protect insurers against exceedingly high claims) for individual health insurance coverage, or (2) provide other assistance to reduce out-of-pocket costs (e.g., copayments, coinsurance, and deductibles) for qualified health plans offered in the individual market through an exchange.

Reinsurance payments using such funds may not be applied to (1) grandfathered health plans in place on March 23, 2010, (2) non-grandfathered transitional plans meeting specified requirements identified by the Centers for Medicare & Medicaid Services (CMS), or (3) student health insurance plans provided by institutions of higher education.

The bill appropriates $10 billion per year for the fund, which the CMS must distribute to states in accordance with a specified methodology based on the estimated amount of reinsurance payments for individuals in a state during the given year, subject to specified deductions. Additionally, states must submit applications explaining how they will use such funds. In the event that a state does not submit an application, the bill directs the CMS to allocate the calculated funding amount to reinsurance programs in that state.

• extends through FY2024 the minimum payment requirements for primary care services;
• permanently extends CHIP funding and eligibility, enrollment, and quality assurance provisions;
• increases the permissible family income threshold for children whom states may make eligible for Medicaid and CHIP;
• extends Medicaid coverage to residents of the Freely Associated States (i.e., Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau); and
• increases the federal medical assistance percentage for services provided through Indian Health Care Services.

The bill also establishes the Fair Drug Pricing Program that directs HHS to negotiate with manufacturers to set the price for selected drugs and biological products. HHS must select certain drugs and biological products that are among the most costly based on spending under Medicare and enter a voluntary negotiation with manufacturers to establish a maximum price for each drug or product. The negotiation must consider, among other factors, the cost of research and development of the selected drug or biological product, the cost of production, national sales data, and information about alternative products.

The bill establishes an excise tax on manufacturers that do not comply with a negotiated fair price agreement in the amount of specified percentages of the sales of such drug or product. The bill also creates a fund to implement the Fair Drug Pricing Program.