[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2624 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 2624

     To provide for comprehensive health care and health care cost 
                              containment.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 13, 1993

  Mr. Peterson of Minnesota introduced the following bill; which was 
  referred jointly to the Committees on Energy and Commerce, Ways and 
  Means, Education and Labor, the Judiciary, Armed Services, and Post 
                        Office and Civil Service

_______________________________________________________________________

                                 A BILL


 
     To provide for comprehensive health care and health care cost 
                              containment.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Comprehensive 
Health Care and Cost Containment Act of 1993''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings and program goals.
Sec. 3. Definitions.
               TITLE I--FEDERAL AND STATE ADMINISTRATION

                   Subtitle A--Federal Administration

Sec. 101. Federal Health Board.
Sec. 102. Federal Health Education Commission.
                    Subtitle B--State Administration

Sec. 111. State Health Boards.
Sec. 112. Health care districts and boards.
Sec. 113. State Health Care Education Commissions.
                     TITLE II--HEALTH CARE SERVICES

             Subtitle A--National Health Insurance Program

Sec. 201. National standards for health insurance; requirement of 
                            enrollment.
Sec. 202. Coverage of all necessary and appropriate health care 
                            practitioner services.
Sec. 203. Premiums; reduction in premiums for low income individuals.
Sec. 204. Use of standardized forms.
Sec. 205. Payments to practitioners.
 Subtitle B--Payment Amounts for Health Care Practitioner Services and 
               for Covered District Health Care Services

               Part 1--Health Care Practitioner Services

Sec. 211. State-chartered practitioners associations.
Sec. 212. Establishment of fee schedules.
       Part 2--Payments for Covered District Health Care Services

Sec. 221. Establishment of annual per capita rates.
Sec. 222. State budgets for covered district health care services.
Sec. 223. District budgets for covered district health care services.
Sec. 224. Payments from Federal government to States for covered 
                            district health care services.
Sec. 225. State program budgets.
                TITLE III--MALPRACTICE INSURANCE REFORM

Sec. 301. Eligibility requirements for Federal payments for State 
                            plans.
Sec. 302. State-chartered practitioners association assumption of 
                            responsibility for malpractice insurance 
                            coverage and payment of damages.
Sec. 303. Prohibition against punitive damages.
Sec. 304. Medical malpractice claim defined.
TITLE IV--PROVISIONS RELATING TO ERISA AND FEDERAL AND STATE ANTITRUST 
                                  LAWS

Sec. 401. Relation to ERISA.
Sec. 402. Relation to Federal and State Antitrust laws.
               TITLE V--HEALTH CARE EDUCATION TRUST FUND

Sec. 501. Health Care Education Trust Fund.
Sec. 502. Increase in taxes on cigarettes and distilled spirits.
          TITLE VI--TAX TREATMENT OF HEALTH INSURANCE PREMIUMS

Sec. 601. Deduction for health insurance premiums.
                       TITLE VII--PRIVATE OPTIONS

Sec. 701. Additional insurance.
               TITLE VIII--PRESCRIPTION DRUG REVIEW BOARD

Sec. 801. Establishment of Board.
Sec. 802. Powers of Board.
Sec. 803. Functions of the Board.
Sec. 804. Sanctions and remedies.
Sec. 805. Manufacturers.
Sec. 806. Study.
                   TITLE IX--TERMINATION OF PROGRAMS

Sec. 901. Termination of certain Federal health care programs.
Sec. 902. Transition.

SEC. 2. FINDINGS AND PROGRAM GOALS.

    (a) Findings.--Congress finds the following:
            (1) Rising costs of health care.--(A) Health care spending 
        in the United States has grown at a rate that substantially 
        exceeds the rise in the gross national product.
            (B) Between 1965 and 1989, national health care spending 
        doubled, increasing from 5.9 percent to 11.6 percent of the 
        gross national product.
            (C) National spending on health care has been increasing at 
        a greater rate than the general cost-of-living index and the 
        growth in the gross national product for a number of years.
            (D) In 1989, spending on health care was $604 billion, an 
        amount which exceeds the proportion of the gross national 
        product spent on health care by every other industrialized 
        nation.
            (E) The high relative expenditure of the United States on 
        health care diminishes American incomes, productivity, and 
        competitiveness in global trade.
            (F) Administrative, marketing, and liability costs are 
        among those components of health care costs that have grown the 
        fastest.
            (G) Cost-shifting, the rising cost of insurance premiums, 
        and declining coverage are leaving Americans without access (or 
        without adequate access) to important health services.
            (2) Limited access to health care.--(A) A growing number of 
        Americans are uninsured or inadequately insured to meet their 
        health care needs.
            (B) All Americans have a right to at least a basic level of 
        health care services that are continuously available and 
        determined to be cost-effective.
            (C) At least 33 million Americans currently lack access to 
        basic health services at any point in time.
            (D) It is estimated that during any 2-year period, 
        approximately 25 percent of the non-elderly population of the 
        United States has neither health insurance nor public health 
        care coverage for some period of time, and that an additional 
        13 percent of the population are underinsured for health care.
            (3) National problem.--(A) The growing costs of health 
        care, coupled with declining access to services, represent a 
        growing national problem.
            (B) Despite growing expenditures on health care, health 
        status indicators in the United States lag well behind those of 
        other industrialized nations.
            (C) Studies indicate that person who are uninsured or 
        underinsured are less likely to receive adequate health care 
        services.
            (D) Studies also find that insufficient access to health 
        care services has a negative impact on health status and also 
        increased health care expenditures in the longer term.
            (E) The current system of financing health care in the 
        United States is complex, confusing, and frustrating to many 
        Americans, including physicians and other providers of health 
        care.
            (F) National expenditures on health care cannot continue to 
        expand faster than inflation and the rate of national economic 
        growth without endangering the domestic standard of living and 
        international economic competitiveness.
    (b) Program Goals.--The goals of the program of comprehensive 
health care and cost containment contained in this Act are as follows:
            (1) To provide universal access to health care services for 
        all Americans regardless of their financial and medical 
        conditions.
            (2) To establish the institutional and political capacity 
        to control the escalating health care costs in the United 
        States and to eliminate administrative waste.
            (3) To ensure the portability of health care coverage to 
        all regions of the United States.
            (4) To build on the strengths of the Federal system, with 
        the Federal Government contributing progressive financing while 
        State government and units of local government supply 
        additional funding and administer the program with the 
        flexibility to address the specific concerns of each region.
            (5) To utilize community care networks and local control to 
        maximize our ability to expand access while containing costs.
            (6) To maintain the proven advantages of the American 
        health care delivery system, including private practice, the 
        freedom to choose among practitioners, and superiority in 
        biomedical technology.
            (7) To encourage the effective use of preventive and 
        primary care.
            (8) To enhance the autonomy of practitioners by limiting 
        the intrusiveness of government intervention in the actual 
        delivery of care.
            (9) To promote the role of competition and collaboration 
        among practitioners and insurers to encourage innovation that 
        results in higher quality and more efficient care.
            (10) To reduce the incentives providers face to perform 
        medically unnecessary or inappropriate services.
            (11) To reinforce the public accountability of the health 
        care system, permitting explicit and open deliberation about 
        the allocation of resources to health care.
            (12) To provide that all Americans share in the 
        responsibility of maintaining an efficient health care system.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) The term ``approved health insurance policy'' means a 
        health insurance policy which has been approved by the Federal 
        Health Board under section 201(a).
            (2) The term ``covered district health care services'' 
        means the following services:
                    (A) Ambulance services.
                    (B) Dialysis.
                    (C) Hospice care.
                    (D) Inpatient and outpatient hospital services 
                (including such services provided for treatment of 
                mental illness), including--
                            (i) accommodation and meals at the standard 
                        level (and preferred accommodation if medically 
                        required),
                            (ii) nursing services,
                            (iii) laboratory, radiological, and other 
                        diagnostic procedures (together with necessary 
                        interpretations),
                            (iv) drugs, biologicals, and related 
                        preparations when administered in the hospital,
                            (v) use of operating room, case room, and 
                        anesthetic facilities, including necessary 
                        equipment and supplies,
                            (vi) medical and surgical equipment and 
                        supplies,
                            (vii) emergency room services,
                            (viii) use of radiotherapy facilities,
                            (ix) use of physiotherapy facilities,
                            (x) services of hospital-based health care 
                        practitioners (such as anesthesiologists, 
                        certified registered nurse anesthetists, 
                        pathologists, and radiologists), as specified 
                        by the Federal Health Board, and
                            (xi) services provided by other persons who 
                        receive remuneration therefore from the 
                        hospital;
                but excluding health care practitioner services 
                furnished on an outpatient basis and for which 
                remuneration is not paid by the hospital.
                    (E) Inhalation services.
                    (F) Partial hospitalization or day treatment 
                services for treatment of mental illness, excluding 
                health care practitioner services furnished on an 
                outpatient basis and for which remuneration is not paid 
                by the hospital.
                    (G) Nuclear medicine.
                    (H) Nursing care in an individual's place of 
                residence.
                    (I) Inpatient, outpatient, and residential 
                substance abuse treatment services.
                    (J) Home care services (other than health care 
                practitioner services)--
                            (i) for treatment of a diagnosed medical 
                        condition or rehabilitation,
                            (ii) for treatment of a long-term 
                        disability, or
                            (iii) for frail individuals at risk of 
                        institutionalization in the absence of such 
                        services.
                    (K) Nursing facility services, including long-term 
                residential care.
                    (L) Respite care.
            (3) The term ``district board'' refers to a Health Care 
        District Board appointed under section 202.
            (4) The term ``Federal Health Board'' refers to the Federal 
        Health Board established under section 101.
            (5) The term ``Federal Health Education Commission'' refers 
        to the Federal Health Education Commission established under 
        section 102.
            (6) The term ``global budget'' means, with respect to a 
        district for a 12-month period, a comprehensive annual budget 
        established by the district board for the district and setting 
        forth, in advance of the period--
                    (A) aggregate receipts anticipated by the board 
                from the Federal and State governments for the 
                provision of health care services in the year, and
                    (B) aggregate expenditures for the provision of 
                such services in the period, broken down by (i) capital 
                expenditures, and (ii) other expenditures.
            (7) The term ``health care practitioner'' means an 
        individual lawfully entitled under the law of the State to 
        provide health services in the place in which the services are 
        provided by the individual.
            (8) The term ``health care practitioner services'' means 
        medical, chiropractic, dental, mental health, and vision 
        services provided by a health care practitioner, other than 
        services described in paragraph (2)(D)(x) (except for such 
        services furnished on an outpatient basis and for which 
        remuneration is not paid by a hospital).
            (9) The term ``State Health Board'' refers to a State 
        Health Board established under section 111.
            (10) The term ``State-chartered practitioners association'' 
        means an organization of health care practitioners that is 
        chartered by the State in accordance with section 211.

               TITLE I--FEDERAL AND STATE ADMINISTRATION

                   Subtitle A--Federal Administration

SEC. 101. FEDERAL HEALTH BOARD.

    (a) Establishment.--
            (1) In general.--There is established within the Department 
        of Health and Human Services a Federal Health Board.
            (2) Membership; appointment.--The Board shall consist of 5 
        individuals, appointed by the President by and with the advice 
        and consent of the Senate.
            (3) Terms.--Members of the Board shall serve for terms of 5 
        years, except that the terms of the members initially appointed 
        shall be for terms of 1, 2, 3, 4, and 5 years, as specified by 
        the President at the time of appointment.
            (4) Compensation.--Members of the Board are entitled, 
        subject to amounts provided in advance in appropriations Acts, 
        to compensation at the rate provided for level V of the 
        Executive Schedule.
    (b) Duties.--The Board is responsible for the following:
            (1) Determination of national per capita spending rates.--
                    (A) Covered district health care services.--The 
                Board shall determine, in accordance with section 
                221(a), national per capita spending rates for covered 
                district health care services. In determining such 
                rates, the Board shall use data provided by the State.
                    (B) Practitioner services.--The Board shall 
                determine national per capita spending rates for health 
                care practitioner services. In determining such rates, 
                the Board shall use data provided by the insurance 
                companies.
            (2) Establishment of single national insurance premiums.--
        The Board shall establish a single national insurance premium 
        for each of the following categories of enrollment:
                    (A) Individuals.
                    (B) Married couples without children and an 
                unmarried individual with a child.
                    (C) Married couples with one child and an unmarried 
                individual with two children.
                    (D) Married couples with two children and an 
                unmarried individual with three or more children.
                    (E) Married couples with three or more children.
            (3) Payment.--The Board shall make Federal payments to 
        States and insurers under this Act.
            (4) Certification.--The Board shall determine whether 
        States comply with the goals and guidelines for implementing 
        provisions under this Act.
            (5) Reciprocity.--The Board shall enter into reciprocity 
        agreements with foreign countries which agree to provide health 
        care services to United States citizens in a manner similar to 
        the provision of services under this Act.
            (6) Review of duplicative programs.--Within 1 year after 
        the date of the enactment of this Act, the Board shall submit 
        to Congress a report that identifies Federal health care 
        programs (other than provided in this Act) which duplicate the 
        services provided in this Act. The Board may include in the 
        report such recommendations for the revision or elimination of 
        such programs as may be appropriate.
            (7) Annual report.--The Board shall submit to Congress an 
        annual report on the status of the health care system in the 
        United States.

SEC. 102. FEDERAL HEALTH EDUCATION COMMISSION.

    (a) Establishment.--
            (1) In general.--There is established within the Department 
        of Education a Federal Health Education Commission.
            (2) Membership; appointment.--The Commission shall consist 
        of 5 individuals, appointed by the President by and with the 
        advise and consent of the Senate.
            (3) Terms.--Members of the Board shall serve for terms of 5 
        years, except that the terms of the members initially appointed 
        shall be for terms of 1, 2, 3, 4, and 5 years, as specified by 
        the President at the time of appointment.
            (4) Compensation.--Members of the Board are entitled, 
        subject to amounts provided in advance in appropriations Acts, 
        to compensation at the rate provided for level V of the 
        Executive Schedule.
    (b) Duties.--The Commission is responsible for the following:
            (1) Consumer education grants.--The Commission shall manage 
        the program of Federal grants to States for consumer education 
        programs, under section 113 and title V.
            (2) Primary care practitioner training grants.--The 
        Commission shall manage the program of Federal grants to States 
        for primary care practitioner training, under section 113 and 
        title V.
            (3) Annual report.--The Commission shall submit to Congress 
        an annual report on its activities under this Act.

                    Subtitle B--State Administration

SEC. 111. STATE HEALTH BOARDS.

    (a) Establishment.--Each State shall provide for the establishment 
of a State Health Board that meets the requirements of this section.
    (b) Membership.--
            (1) In general.--Each State Health Board shall--
                    (A) include representatives of the organizations 
                described in paragraph (2),
                    (B) include representatives of the interests 
                described in paragraph (3), and
                    (C) assure that at least 60 percent of the 
                membership represents the interests described in 
                paragraph (3).
            (2) Health provider organizations.--The organizations 
        described in this paragraph are as follows:
                    (A) The State-chartered medical association.
                    (B) The State-chartered nurses association.
                    (C) The State-chartered chiropractic physicians 
                association.
                    (D) The State-chartered mental health providers 
                association.
                    (E) The State hospital association.
                    (F) The State nursing home association.
            (3) Non-provider interests.--The interests described in 
        this paragraph are the interests of--
                    (A) consumers,
                    (B) the State legislature, and
                    (C) the insurance industry.
    (c) Duties.--Each State Health Board shall have responsibility for 
the following:
            (1) To establish health districts in the State and to 
        appoint a district health care board for each such district, in 
        accordance with section 112.
            (2) To set the global budget (as defined in section 3(6)) 
        for each health care district in the State.
            (3) To establish fee schedules for each practitioner group 
        in the State.
            (4) To develop a long-range plan for future health care 
        infrastructure in the State.
    (d) Submission of Programs.--Not later than October 1, 1995, each 
State shall submit to the Board the State program in the State.
    (e) Review and Approval of Programs.--The Board shall review 
programs submitted under subsection (d) and determine whether such 
programs meet the requirements for approval, not later than October 1, 
1996. The Board shall not approve such a program unless it finds that 
the program provides, consistent with the provisions of this Act, for--
            (1) adequate financing of covered district health care 
        services, including the annual submission of the State program 
        budget to the Board,
            (2) adequate administration and sufficient provisions to 
        ensure against fraud and abuse,
            (3) an organized grievance procedure available to consumers 
        through which complaints about the organization and 
        administration of the State program may be filed, heard, and 
        resolved, and
            (4) the modification of State law as it relates to medical 
        malpractice, consistent with title III.
    (f) Operational Status.--A State program in a State shall not be 
considered operational unless it is approved and remains approved under 
subsection (e).
    (g) Failure To Comply With This Act.--Whenever the Board, after 
reasonable notice and opportunity for hearing to the designated State 
agency finds that in the administration of the State program there is a 
failure to comply with any provision of this Act, the Board may--
            (1) withhold further payments to the State under this Act, 
        or
            (2) place the State program, or specific portions of such 
        program, in receivership under the jurisdiction of the Board,
until such failure has been corrected.
    (h) Judicial Review.--
            (1) In general.--If any State is dissatisfied with the 
        Board's action in denying approval of such State's program or 
        finding a failure under subsection (g) with respect to such 
        program, such State may, within 60 days after notice of such 
        action, file with the United States court of appeals for the 
        circuit in which such State is located a petition for review of 
        that action. A copy of the petition shall be forthwith 
        transmitted by the clerk of the court to the Board. The Board 
        thereupon shall file in the court the record of the proceedings 
        upon which the Board's action was based, as provided in section 
        2112 of title 28, United States Code.
            (2) Findings of fact.--The findings of fact by the Board, 
        if supported by substantial evidence, shall be conclusive; but 
        the court, for good cause shown, may remand the case to the 
        Board to take further evidence, and the Board may thereupon 
        make new or modified findings of fact and may modify the 
        Board's previous action, and shall file in the court the record 
        of the further proceedings. Such new or modified findings of 
        fact shall likewise be conclusive if supported by substantial 
        evidence.
            (3) Jurisdiction of court.--Upon the filing of such 
        petition, the court shall have jurisdiction to affirm the 
        action of the Board or to set it aside, in whole or in part. 
        The judgment of the court shall be subject to review by the 
        Supreme Court of the United States upon certiorari or 
        certification as provided in section 1254 of title 28, United 
        States Code.

SEC. 112. HEALTH CARE DISTRICTS AND BOARDS.

    (a) Establishment of Districts.--
            (1) In general.--Subject to paragraph (3), each State 
        Health Board shall establish health care districts in the State 
        of such number and size as such Board deems appropriate area 
        for the effective planning, development, and delivery of 
        covered district health care services in the State under this 
        Act.
            (2) Statewide district.--A State Health Board may treat the 
        entire State as a single district in the case of a State with a 
        population under 1,000,000.
            (3) Treatment of indian reservations.--Each State Health 
        Board shall provide the designation of each Indian reservation 
        as a separate district.
    (b) Appointment of Boards.--
            (1) In general.--Each State Health Board shall provide for 
        the appointment of a Health Care District Board for each 
        district established under subsection (a). Subject to 
        paragraphs (2) and (3), each such board shall consist of 7 
        members appointed by the State Board, of whom at least 3 shall 
        represent providers of covered district health care services.
            (2) Statewide districts.--If the State has elected to treat 
        the entire State as a single district under subsection (a)(2), 
        the State Health Board shall serve as the Health Care District 
        Board for the entire State.
            (3) Indian reservations.--The Health Care District Board 
        for an Indian reservation designated under subsection (a)(3) 
        shall consist of 7 members appointed by the Chairman of the 
        reservation, at least 3 of whom shall represent providers of 
        covered district health care services in the area of the 
        reservation.
    (c) Responsibilities of District Boards.--Each Health Care District 
Board is responsible--
            (1) through contracts with health care facilities and 
        service providers, for ensuring that covered district health 
        care services are provided to residents of the district; and
            (2) for developing, and submitting to the State Board, a 
        global budget for the district.

SEC. 113. STATE HEALTH CARE EDUCATION COMMISSIONS.

    (a) In General.--Each State Health Board shall establish a State 
Health Care Education Commission.
    (b) Composition and Appointment.--The Commission shall consist of 5 
members, appointed by the State Health Board, of whom 2 shall be 
professional educators.
    (c) Duties.--Each State Health Care Education Commission shall be 
responsible for the following activities:
            (1) Receipt of transfers from the Health Education Trust 
        Fund.
            (2) Providing grants to local school districts to conduct 
        health education and preventive care programs, in accordance 
        with guidelines developed by the National Health Care Education 
        Commission.
            (3) Providing grants to other organizations to promote 
        health education, in accordance with guidelines developed by 
        the National Health Care Education Commission.
            (4) Providing grants to individuals for training as primary 
        care practitioners, in accordance with guidelines developed by 
        the National Health Care Education Commission.

                     TITLE II--HEALTH CARE SERVICES

             Subtitle A--National Health Insurance Program

SEC. 201. NATIONAL STANDARDS FOR HEALTH INSURANCE; REQUIREMENT OF 
              ENROLLMENT.

    (a) In General.--No health insurance policy which provides for 
coverage of either covered district health care services or health care 
practitioner services may be in effect on or after January 1, 1995, 
unless the Federal Health Board has determined that the policy meets 
the requirements of sections 202 through 205.
    (b) Enrollment Requirement.--
            (1) In general.--Each legal resident of the United States 
        shall be enrolled in an approved insurance policy.
            (2) Assignment of unenrolled individuals.--If a State 
        determines that an individual who is a resident of the State is 
        not enrolled in an approved health insurance policy in 
        accordance with paragraph (1), the State shall provide for the 
        enrollment of the individual in such a policy. In providing for 
        such enrollment, the State shall assign such individuals to 
        such a policy in an appropriate random manner.

SEC. 202. COVERAGE OF ALL NECESSARY AND APPROPRIATE HEALTH CARE 
              PRACTITIONER SERVICES.

    (a) In General.--Each approved health insurance policy shall cover 
all health care practitioner services that are necessary and 
appropriate for the maintenance of health or for the diagnosis or 
treatment of, or rehabilitation following, injury, disability, or 
disease, if furnished anywhere in the United States (or in any country 
with which the Federal Health Board has a reciprocity agreement under 
section 101(b)(5)).
    (b) Limitation on Services Covered.--
            (1) In general.--An approved health insurance policy shall 
        not cover services other than services described in paragraph 
        (1).
            (2) Reference to additional insurance.--For provision 
        permitting separate insurance coverage for certain other health 
        care services, see section 701.

SEC. 203. PREMIUMS; REDUCTION IN PREMIUMS FOR LOW INCOME INDIVIDUALS.

    (a) In General.--The premium rates that may be charged by an 
approved health insurance policy shall be such rates as are approved by 
the Federal Health Board.
    (b) Premium Assistance.--
            (1) In general.--In the case of an individual or family who 
        is a legal resident of the United States who is enrolled under 
        an approved health insurance policy and who is determined by 
        the issuer of the policy (in accordance with guidelines 
        specified by the Federal Health Board) to have total adjusted 
        gross income (as determined for purposes of the Internal 
        Revenue Code of 1986 for the individual and all members of the 
        family) below maximum income level specified under paragraph 
        (3)--
                    (A) the individual or family is entitled to a 
                percentage reduction specified under paragraph (2) in 
                the premium rates charged under subsection (a), and
                    (B) the issuer of the policy is entitled to payment 
                by the Federal Health Board of an amount equal to the 
                amount of such reduction.
            (2) Percentage reduction.--In the case of an individual or 
        family the total adjusted gross income of whose members--
                    (A) does not exceed the Federal poverty line 
                (applicable to a family of the size involved), the 
                percentage reduction is 100 percent, or
                    (B) exceeds such line, the percentage reduction is 
                100 percent less 10 percent for each dollar unit 
                (specified in paragraph (4)) by which such total 
                adjusted gross income exceeds the applicable Federal 
                poverty line.
            (3) Maximum income level.--The maximum income level 
        specified in this subparagraph for a family is the sum of--
                    (A) the Federal poverty line, and
                    (B) 10 times the dollar unit specified in paragraph 
                (4),
        applicable to a family of the size involved.
            (4) Dollar unit.--The dollar unit specified in this 
        paragraph is--
                    (A) for a family of four, $1,000, and
                    (B) for a family of other size (including a family 
                consisting only of an individual), such amount as bears 
                the same ratio to the amount specified in subparagraph 
                (A) as the ratio of the Federal poverty line applicable 
                to a family of the size involves bears to the Federal 
                poverty line applicable to a family of four.
        The amounts determined under subparagraph (B) may be rounded by 
        the Federal Health Board to an appropriate multiple of $10.
            (5) Federal poverty line.--In this subsection, the term 
        ``Federal poverty line'' means the official poverty line as 
        defined by the Office of Management and Budget and revised 
        annually in accordance with section 673(2) of the Omnibus 
        Budget Reconciliation Act of 1981.
    (c) Employer Contributions.--Nothing in this section shall be 
construed as preventing an employer of an individual from paying some 
or all of the premiums for coverage of employees and family members 
under health insurance policies.
    (d) Special Provisions Relating to Native Americans.--In the case 
of an individual who is a Native American and who is an enrolled member 
of a Federally-recognized Indian tribe or otherwise qualifies under 
regulations promulgated by the Federal Health Board (in consultation 
with the Secretary of the Interior)--
            (1) the individual is entitled to a 100 percent reduction 
        in the premium rates charged under subsection (a), and
            (2) the issuer of the policy is entitled to payment by the 
        Federal Health Board of an amount equal to the amount of such 
        reduction.
A reduction and payment under this subsection for such an individual 
shall be instead of any reduction or payment otherwise provided under 
subsection (b).
    (e) Expansion of Tax Deductibility of Premiums.--For provision 
making payment of premiums under this section fully tax deductible, see 
title VI of this Act.

SEC. 204. USE OF STANDARDIZED FORMS.

    Each approved health insurance policy shall provide for the use of 
such standardized claims forms as the Federal Health Board specifies, 
after consultation with State Health Boards and other interested 
parties.

SEC. 205. PAYMENTS TO PRACTITIONERS.

    (a) In General.--Each approved health insurance policy shall 
provide for payment for health care practitioner services based on the 
fee schedules established under part 1 of subtitle B.
    (b) Mandatory Assignment.--Payment for health care practitioner 
services may only be made to the practitioner furnishing the services 
and only if the practitioner agrees to accept payment of such fee 
schedule amounts as payment in full for the services.

 Subtitle B--Payment Amounts for Health Care Practitioner Services and 
               for Covered District Health Care Services

               Part 1--Health Care Practitioner Services

SEC. 211. STATE-CHARTERED PRACTITIONERS ASSOCIATIONS.

    Each State shall provide for the chartering of practitioner 
associations--
            (1) to represent licensed members of the discipline in the 
        establishment of fee schedules in the State under this part, 
        and
            (2) to provide medical malpractice insurance under section 
        302.

SEC. 212. ESTABLISHMENT OF FEE SCHEDULES.

    (a) In General.--Each State Health Board, in conjunction with 
State-chartered practitioners associations provided for under section 
211, shall develop fee schedules of amounts that may be paid for health 
care practitioner services by approved health insurance policies under 
subtitle A. The Board shall provide for the review and revision (if 
appropriate) of the structure of such schedules not less often than 
once every 10 years.
    (b) Basis.--Such schedules may take into consideration regional 
cost variations, practitioner expertise, outcome-based measures, and 
any other factors deemed relevant by the Board.
    (c) Negotiations.--Each State Health Board shall provide for annual 
negotiations with State-chartered practitioners associations regarding 
the changes in the amounts specified in fee schedules developed under 
this section. Such negotiations shall consider changes in the cost of 
living, the cost of supplies, and other elements which affect the costs 
of delivering health care services by the practitioners.
    (d) Special Nonphysician Practitioner Provisions.--In the 
establishment of fee schedule amounts for nonphysician practitioners, 
in the case of health care practitioner services which may be provided 
by nonphysician practitioners and physicians, basic reimbursement rates 
for those same services shall be the same regardless of the type of 
practitioner providing such services.

       Part 2--Payments for Covered District Health Care Services

SEC. 221. ESTABLISHMENT OF ANNUAL PER CAPITA RATES.

    (a) In General.--The Federal Health Board, using data from State 
Health Boards and Health Care District Boards, shall determine an 
annual per capita rate for costs of covered district health care 
services provided by such Boards.
    (b) Division of Rate.--The Federal Health Board shall specify the 
portion of the annual per capita rate under subsection (a) that is 
attributable to nursing facility services and the portion not 
attributable to such services. Such portions shall reflect the average 
of approved State budgets under section 222 which are attributable to 
the different services.

SEC. 222. STATE BUDGETS FOR COVERED DISTRICT HEALTH CARE SERVICES.

    (a) Development.--
            (1) In general.--Each State Health Board shall develop and 
        approve a State budget for covered district health care 
        services for all districts in the State. Such budget shall be 
        the sum of the district budgets submitted to and approved by 
        the Board under section 223.
            (2) Development of separate operating and capital 
        budgets.--The State budget under this subsection may consist of 
        separate components for operating and capital expenditures 
        under guidelines established by the Federal Health Board.
    (b) Payments to District Boards.--
            (1) In general.--Each State Health Board shall establish 
        procedures for payment of each district board of amounts under 
        its approved budget in a manner that provides for an adequate 
        cash flow to allow the timely payment of obligations for the 
        provision of covered district health care services.
            (2) Treatment of native americans.--Under guidelines 
        established by the Federal Health Board, State Health Boards 
        shall establish such procedures as assure full payment of 
        amounts due to Native American districts established under 
        section 112(a)(4).

SEC. 223. DISTRICT BUDGETS FOR COVERED DISTRICT HEALTH CARE SERVICES.

    (a) Development and Submission.--
            (1) Global budgets.--Each health care district board shall 
        develop and submit to the State Health Board, in a manner and 
        at a time consistent with guidelines developed by the 
        appropriate State Health Board, a global budget for the 
        district that reflects the funding levels necessary to provide 
        for adequate covered district health care services in the 
        district for a fiscal year.
            (2) Treatment of capital.--Such a budget shall provide for 
        separate components for operating and capital expenditures if 
        the State has elected to provide for such separate components 
        under its State budget under section 222.
    (b) Negotiations.--After the receipts of all district budgets 
submitted under subsection (a), each State Health Board shall provide 
an opportunity for district boards to negotiate over the final district 
budgets to be approved by the State Health Board and submitted by such 
Board to the Federal Health Board.
    (c) Limitation on Payments.--
            (1) In general.--Subject to paragraph (2), each district 
        board shall not make total payments for covered district health 
        care services in a fiscal year that exceed the amount of the 
        district budget approved under subsection (b).
            (2) Emergencies.--Under guidelines established by the 
        Federal Health Board or the State Health Board, a district 
        board may provide in the case of unforeseen emergencies for 
        payment of amounts in excess of the amounts provided under the 
        approved budget.

SEC. 224. PAYMENTS FROM FEDERAL GOVERNMENT TO STATES FOR COVERED 
              DISTRICT HEALTH CARE SERVICES.

    (a) In General.--The Federal Health Board shall provide for payment 
each fiscal year to each State Health Board of an amount, on an 
annualized basis, equal to the sum of the following:
            (1) 25 percent of the product of (A) the portion of the 
        national per capita health care facilities rate not 
        attributable to nursing facility services (determined under 
        section 221) and (B) the total number of eligible State 
        residents (other than native Americans) in the State.
            (2) 10 percent of the product of (A) the portion of the 
        national per capita health care facilities rate attributable to 
        nursing facility services (as determined under section 221) and 
        (B) the total number of eligible State residents (other than 
        native Americans) in the State.
            (3) Subject to subsection (b), 100 percent of the product 
        of (A) the national per capita health care facilities rate (as 
        determined under section 221) and (B) the total number of 
        native Americans who are eligible State residents in the State.
    (b) Treatment of Native Americans.--Instead of the payment amounts 
provided under subsection (a)(3), the Federal Health Board may pay to a 
State such amounts as may be required in order to provide for full 
payment of the amounts of the global budgets for district boards 
established pursuant to section 112(b)(3).
    (c) Periodic Payments.--Payments under this section shall be made 
on a periodic base (not less often than monthly).
    (d) Payments for Health Education and Primary Health Care 
Practitioner Training.--For provisions relating to payments to State 
Health Education Commissions for grants for health education and 
training of primary health care practitioners, see section 501 of this 
Act.
    (e) Additional Expenditures.--Nothing in this section shall be 
construed as preventing a district board from providing for payments 
for health care services in addition to the amounts provided under this 
section.

SEC. 225. STATE PROGRAM BUDGETS.

    (a) In General.--Each State program shall establish an annual 
fiscal year State program budget which provides for--
            (1) the total expenditures to be made under the State 
        program in such fiscal year for covered district health care 
        services (including administrative and associated costs), and
            (2) the revenues to meet such expenditures.
    (b) State Share.--
            (1) In general.--Each State program shall cover the State 
        share of program costs through the use of tax revenues and 
        other financing methods.
            (2) Additions to state share.--Each State shall raise the 
        revenues necessary to cover at least the State share of the 
        State health budget established by the State Health Board.
    (c) Establishment of Annual Budgets Under State Plans.--
            (1) Submission of estimated plan expenditures.--Not later 
        than 3 months before the beginning of each calendar year, each 
        district board in each State shall submit to the State Health 
        Care Board the estimated plan expenditures for the district for 
        that year.
            (2) State plan budget.--
                    (A) In general.--The State plan budget for a year 
                shall be equal to the sum of the estimated negotiated 
                expenditures for all district boards in the State 
                submitted under paragraph (1).
                    (B) Permitting retroactive adjustment.--The State 
                Health Care Board may make a retroactive adjustment to 
                the State plan budget for a year under subparagraph (A) 
                to take into account differences between the budget and 
                total amount of expenditures under the State plan 
                during the year.

                TITLE III--MALPRACTICE INSURANCE REFORM

SEC. 301. ELIGIBILITY REQUIREMENTS FOR FEDERAL PAYMENTS FOR STATE 
              PLANS.

    For purposes of section 111(e)(4), a State has enacted and is 
enforcing laws, rules, or regulations relating to physician medical 
malpractice liability that meet the requirements of this title if State 
law meets the requirements of sections 302 through 304.

SEC. 302. STATE-CHARTERED PRACTITIONERS ASSOCIATION ASSUMPTION OF 
              RESPONSIBILITY FOR MALPRACTICE INSURANCE COVERAGE AND 
              PAYMENT OF DAMAGES.

    (a) State-Chartered Practitioners Association Responsible for 
Obtaining Insurance.--With respect to each class of health care 
practitioners in a State, the State-chartered practitioners association 
in the State shall provide (either directly or through contracts with 
insurance companies) medical malpractice insurance for each 
practitioner member of the association.
    (b) State-Chartered Practitioners Association Responsible for 
Paying Damages Arising From Medical Malpractice Claims.--Any damages 
assessed with respect to any medical malpractice claim filed in the 
State against a health care practitioner who is a member of a State-
chartered practitioners association shall be assessed against the 
association or other entity providing the medical malpractice insurance 
under subsection (a), and the individual or entity to whom the damages 
are awarded may not collect the damages from the practitioner.

SEC. 303. PROHIBITION AGAINST PUNITIVE DAMAGES.

    No punitive damages may be assessed with respect to any medical 
malpractice claim filed in the State against any provider of health 
care services.

SEC. 304. MEDICAL MALPRACTICE CLAIM DEFINED.

    (a) In General.--In this title, the term ``medical malpractice 
claim'' means (subject to subsection (b)) any claim relating to the 
provision of (or the failure to provide) health care services without 
regard to the theory of liability asserted.
    (b) Medical Product Liability Claims Not Included.--The term 
``medical malpractice claim'' does not include any claim in which the 
claimant alleges an injury arising from or relating to the use of a 
device (as defined in section 201(h) of the Federal Food, Drug, and 
Cosmetic Act) or a drug (as defined in section 201(g)(1) of such Act) 
that is filed against any entity that is the designer, manufacturer, 
producer, or seller of the device or drug.

TITLE IV--PROVISIONS RELATING TO ERISA AND FEDERAL AND STATE ANTITRUST 
                                  LAWS

SEC. 401. RELATION TO ERISA.

    The provisions of the Employee Retirement Income Security Act are 
superseded to the extent inconsistent with the requirements of this 
Act.

SEC. 402. RELATION TO FEDERAL AND STATE ANTITRUST LAWS.

    (a) In General.--The Antitrust laws, or any State law similar to 
the Antitrust laws, shall not apply to any hospital, nursing home, 
long-term care facility, or other entity with the potential to deliver 
health services provided under this Act, entering or attempting to 
enter into contracts with any State, unit of local government or Board 
or entity established by a State or unit of local government under this 
Act.
    (b) Antitrust Laws Defined.--The term ``Antitrust laws'' has the 
meaning given such term in section 1(a) of the Clayton Act (15 U.S.C. 
12(a)), except that such term includes section 5 of the Federal Trade 
Commission Act (15 U.S.C. 45), to the extent that such section applies 
to unfair methods of competition.

               TITLE V--HEALTH CARE EDUCATION TRUST FUND

SEC. 501. HEALTH CARE EDUCATION TRUST FUND.

    (a) Establishment.--There is hereby created on the books of the 
Treasury of the United States a trust fund to be known as the ``Health 
Care Education Trust Fund'' (in this section referred to as the 
``Fund''). The Fund shall consist of such gifts and bequests as are 
hereby authorized to be received and such amounts as may be deposited 
in, or appropriated to, such Fund as provided in this section.
    (b) Operation.--The Federal Health Care Education Commission shall 
administer the Fund and shall provide for grants under subsection (c) 
from the amounts in the Fund.
    (c) Use of Funds.--
            (1) State health care education.--
                    (A) In general.--The Federal Health Care Education 
                Commission shall make annual grants to State Health 
                Care Education Commissions to provide for health care 
                consumer education and health care education in a 
                manner consistent with guidelines issued by the 
                Commission.
                    (B) Per capita formula.--The amounts of the grants 
                made to the States under this paragraph shall be in 
                proportion to the population of each of the States.
            (2) Primary care health care practitioner training.--The 
        Federal Health Care Education Commission shall provide for 
        grants to States to provide for payment for primary health care 
        practitioner training.
            (3) Limitation.--In no case shall the total amount of 
        grants made under this subsection in any fiscal year exceed the 
        amount available in the Fund to make such grants in such year.
    (d) Appropriation.--There are hereby appropriated to the Fund for 
each fiscal year, out of any moneys in the Treasury not otherwise 
appropriated, amounts equivalent to 100 percent of the increase in 
taxes resulting from the amendments made by section 502. The amounts 
appropriated by the preceding sentence shall be transferred from time 
to time from the general fund in the Treasury to the Fund, such amounts 
to be determined on the basis of estimates by the Secretary of the 
Treasury of the additional taxes, specified in the preceding sentence, 
paid to or deposited into the Treasury; and proper adjustments shall be 
made in amounts subsequently transferred to the extent prior estimates 
were in excess of or were less than the additional taxes specified in 
such sentence.

SEC. 502. INCREASE IN TAXES ON CIGARETTES AND DISTILLED SPIRITS.

    (a) Increase in Tax on Cigarettes.--
            (1) Rate of tax.--Subsection (b) of section 5701 of the 
        Internal Revenue Code of 1986 (relating to rate of tax on 
        cigarettes) is amended--
                    (A) by striking ``$12 per thousand ($10 per 
                thousand on cigarettes removed during 1991 or 1992)'' 
                in paragraph (1) and inserting ``$30.50 per thousand''; 
                and
                    (B) by striking ``$25.20 per thousand ($21 per 
                thousand on cigarettes removed during 1991 or 1992)'' 
                in paragraph (2) and inserting ``$64.05 per thousand''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply with respect to articles removed after December 31, 
        1994.
            (3) Floor stocks.--
                    (A) Imposition of tax.--On cigarettes manufactured 
                in or imported into the United States which are removed 
                before January 1, 1995, and held on such date for sale 
                by any person, there shall be imposed the following 
                taxes:
                            (i) Small cigarettes.--On cigarettes, 
                        weighing not more than 3 pounds per thousand, 
                        $20.50 per thousand;
                            (ii) Large cigarettes.--On cigarettes, 
                        weighing more than 3 pounds per thousand, 
                        $43.05 per thousand; except that, if more than 
                        6\1/2\ inches in length, they shall be taxable 
                        at the rate prescribed for cigarettes weighing 
                        not more than 3 pounds per thousand, counting 
                        each 2\3/4\ inches, or fraction thereof, of the 
                        length of each as one cigarette.
                    (B) Liability for tax and method of payment.--
                            (i) Liability for tax.--A person holding 
                        cigarettes on January 1, 1995, to which any tax 
                        imposed by subparagraph (A) applies shall be 
                        liable for such tax.
                            (ii) Method of payment.--The tax imposed by 
                        subparagraph (A) shall be treated as a tax 
                        imposed under section 5701 of the Internal 
                        Revenue Code of 1986 and shall be due and 
                        payable on February 15, 1995, in the same 
                        manner as the tax imposed under such section is 
                        payable with respect to cigarettes removed on 
                        January 1, 1995.
                    (C) Cigarette.--For purposes of this paragraph, the 
                term ``cigarette'' shall have the meaning given to such 
                term by subsection (b) of section 5702 of the Internal 
                Revenue Code of 1986.
                    (D) Exception for retail stocks.--The taxes imposed 
                by subparagraph (A) shall not apply to cigarettes in 
                retail stocks held on January 1, 1995, at the place 
                where intended to be sold at retail.
                    (E) Foreign trade zones.--Notwithstanding the Act 
                of June 18, 1934 (19 U.S.C. 81a et seq.) or any other 
                provision of law--
                            (i) cigarettes--
                                    (I) on which taxes imposed by 
                                Federal law are determined, or customs 
                                duties are liquidated, by a customs 
                                officer pursuant to a request made 
                                under the first proviso of section 3(a) 
                                of the Act of June 18, 1934 (19 U.S.C. 
                                81c(a)) before January 1, 1995, and
                                    (II) which are entered into the 
                                customs territory of the United States 
                                on or after January 1, 1995, from a 
                                foreign trade zone, and
                            (ii) cigarettes which--
                                    (I) are placed under the 
                                supervision of a customs officer 
                                pursuant to the provisions of the 
                                second proviso of section 3(a) of the 
                                Act of June 18, 1934 (19 U.S.C. 81c(a)) 
                                before January 1, 1995, and
                                    (II) are entered into the customs 
                                territory of the United States on or 
                                after January 1, 1995, from a foreign 
                                trade zone,
                shall be subject to the tax imposed by subparagraph (A) 
                and such cigarettes shall, for purposes of subparagraph 
                (A), be treated as being held on January 1, 1995, for 
                sale.
    (b) Increase in Tax on Distilled Spirits.--
            (1) In general.--Section 5001(a) of the Internal Revenue 
        Code of 1986 (relating to rate of tax on distilled spirits) is 
        amended by striking ``$13.50'' each place it appears in 
        paragraphs (1) and (3) and inserting ``$50.00''.
            (2) Technical amendment.--Section 5010 of such Code 
        (relating to credit for wine and flavors content) is amended by 
        striking ``$13.50'' each place it appears in paragraphs (1)(A) 
        and (2) and inserting ``$50.00''.
            (3) Floor stocks.--
                    (A) Imposition of tax.--On any item subject to tax 
                under section 5001 of the Internal Revenue Code of 1986 
                that is removed before January 1, 1995, and held after 
                such date for sale by any person, there shall be 
                imposed a tax equal to $36.50.
                    (B) Liability for tax and method of payment.--
                            (i) Liability for tax.--A person holding an 
                        item to which any tax imposed by subparagraph 
                        (A) applies shall be liable for such tax.
                            (ii) Method of payment.--The tax imposed on 
                        any item by subparagraph (A) shall be treated 
                        as a tax imposed under section 5001 of the 
                        Internal Revenue Code of 1986 and shall be due 
                        and payable on February 13, 1995, in the same 
                        manner as the tax imposed under such section is 
                        payable with respect to such items removed on 
                        January 1, 1995.
                    (C) Exception for retailers.--To the extent 
                provided in regulations prescribed by the Secretary of 
                the Treasury or the Secretary's delegate, the tax 
                imposed by subparagraph (A) shall not apply to items in 
                retail stocks held after December 31, 1994, on the 
                premises of a retail establishment where alcoholic 
                beverages are sold for consumption on the premises 
                only.
                    (D) Treatment of items in foreign trade zones.--
                Notwithstanding the Act of June 18, 1934 (48 Stat. 998, 
                19 U.S.C. 81a), or any other provision of law, any item 
                which is located in a foreign trade zone on January 1, 
                1995, shall be subject to the tax imposed by 
                subparagraph (A) and shall be treated for purposes of 
                this paragraph as held on such date for sale if--
                            (i) internal revenue taxes have been 
                        determined, or customs duties liquidated, with 
                        respect to such item before such date pursuant 
                        to a request made under the first proviso of 
                        section 3(a) of such Act, or
                            (ii) such item is held on such date under 
                        the supervision of a customs officer pursuant 
                        to the second proviso of such section 3(a).
                Under regulations prescribed by the Secretary of the 
                Treasury or the Secretary's delegate, provisions 
                similar to sections 5062 and 5064 of such Code shall 
                apply to any item with respect to which tax is imposed 
                by subparagraph (A) by reason of this subparagraph.
                    (E) Other laws applicable.--All provisions of law, 
                including penalties, applicable with respect to the 
                excise taxes imposed under section 5001 of the Internal 
                Revenue Code of 1986 shall, insofar as applicable and 
                not inconsistent with the provisions of this paragraph, 
                apply in respect of the taxes imposed by subparagraph 
                (A).
            (4) Effective date.--The amendments made by this subsection 
        shall apply to items removed after December 31, 1994.

          TITLE VI--TAX TREATMENT OF HEALTH INSURANCE PREMIUMS

SEC. 601. DEDUCTION FOR HEALTH INSURANCE PREMIUMS.

    (a) In General.--Subsection (a) of section 213 of the Internal 
Revenue Code of 1986 (relating to medical, dental, etc., expenses) is 
amended to read as follows:
    ``(a) Allowance of Deduction.--There shall be allowed as a 
deduction the following amounts, not compensated for by insurance or 
otherwise--
            ``(1) the amount by which the amount of the expenses paid 
        during the taxable year (reduced by any amount deductible under 
        paragraph (2)) for medical care of the taxpayer, his spouse, or 
        a dependent (as defined in section 152) exceeds 7.5 percent of 
        adjusted gross income, and
            ``(2) the amount of the expenses paid during the taxable 
        year for insurance which constitutes medical care for the 
        taxpayer, his spouse, and dependents.''
    (b) Deduction for Insurance Allowed Whether or Not Taxpayer 
Itemizes Other Deductions.--Subsection (a) of section 62 of such Code 
(defining adjusted gross income) is amended by adding at the end 
thereof the following new paragraph:
            ``(14) Expenses for health insurance.--The deduction 
        allowed by section 213(a)(2).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1994.

                       TITLE VII--PRIVATE OPTIONS

SEC. 701. ADDITIONAL INSURANCE.

    Nothing in this Act shall be construed as preventing individuals 
from obtaining insurance for services that are not covered by health 
care services.

               TITLE VIII--PRESCRIPTION DRUG REVIEW BOARD

SEC. 801. ESTABLISHMENT OF BOARD.

    (a) Establishment.--There is established in the executive branch 
the Prescription Drug Price Review Board (in this title referred to as 
the ``Board'').
    (b) Membership.--
            (1) Number and appointment.--The Board shall be composed of 
        5 members appointed by the President, by and with the advice 
        and consent of the Senate, from among individuals--
                    (A) who are recognized experts in the fields of 
                consumer advocacy, medicine, pharmacology, pharmacy, 
                and prescription drug reimbursement; and
                    (B) who have not worked in the pharmaceutical 
                manufacturing industry during the 3-year period ending 
                on the date of appointment.
            (2) Initial appointments.--Initial appointments under 
        paragraph (1) shall be made not later than 90 days after the 
        date of the enactment of this Act.
            (3) Terms.--
                    (A) In general.--Except as provided in 
                subparagraphs (B) and (C), each member shall be 
                appointed for a term of 5 years.
                    (B) Terms of initial appointees.--As designated by 
                the President at the time of appointment, of the 
                members first appointed--
                            (i) 1 member shall be appointed for a term 
                        of 1 year;
                            (ii) 1 member shall be appointed for a term 
                        of 2 years;
                            (iii) 1 member shall be appointed for a 
                        term of 3 years;
                            (iv) 1 member shall be appointed for a term 
                        of 4 years; and
                            (v) 1 member shall be appointed for a term 
                        of 5 years.
                    (C) Vacancies.--A vacancy in the Board shall be 
                filled in the manner in which the original appointment 
                was made. Any member appointed to fill a vacancy 
                occurring before the expiration of the term for which 
                the member's predecessor was appointed shall be 
                appointed only for the remainder of that term. A member 
                may serve after the expiration of the member's term 
                until a successor has taken office.
            (4) Initial meeting.--The initial meeting of the Board 
        shall be held not later than 90 days after the date on which 
        the first appointments of the members have been completed.
            (5) Chairperson.--The President shall designate 1 member of 
        the Board to serve as the chairperson.
            (6) Basic pay.--
                    (A) In general.--Members shall be paid at a rate 
                not to exceed the daily equivalent of the maximum 
                annual rate of basic pay payable under section 5376 of 
                title 5, United States Code, for each day during which 
                the members are engaged in the actual performance of 
                the duties of the Board.
                    (B) Travel expenses.--Members shall receive travel 
                expenses, including per diem in lieu of subsistence, in 
                accordance with sections 5702 and 5703 of title 5, 
                United States Code.
    (c) Director and Staff.--
            (1) Director.--The Board shall have a director who shall be 
        appointed by the chairperson, subject to rules prescribed by 
        the Board.
            (2) Staff.--The chairperson may appoint and fix the pay of 
        such additional personnel as the chairperson considers 
        appropriate, subject to rules prescribed by the Board.
            (3) Applicability of certain civil service laws.--The 
        director and staff of the Board shall be appointed subject to 
        the provisions of title 5, United States Code, governing 
        appointments in the competitive service, and shall be paid in 
        accordance with the requirements of chapter 51 and subchapter 
        III of chapter 53 of such title relating to classification and 
        General Schedule pay rates; except that an individual so 
        appointed may not receive pay in excess of the maximum annual 
        rate of basic pay payable for grade GS-15 of the General 
        Schedule.

SEC. 802. POWERS OF BOARD.

    (a) Obtaining Official Data.--The chairperson of the Board may 
secure directly from any Federal agency information necessary to enable 
the Board to carry out its duties. Upon request of the chairperson, the 
head of the agency shall furnish such information to the Board to the 
extent such information is not prohibited from disclosure by law.
    (b) Mails.--The Board may use the United States mails in the same 
manner and under the same conditions as other Federal agencies.
    (c) Administrative Support Services.--Upon the request of the 
chairperson, the Administrator of General Services shall provide to the 
Board on a reimbursable basis the administrative support services 
necessary for the Board to carry out its duties.
    (d) Contract Authority.--The chairperson may contract with and 
compensate government and private agencies or persons for the purpose 
of conducting research, surveys, and other services necessary to enable 
the Board to carry out its duties.
    (e) Investigations.--The Board may make such investigations as it 
considers necessary to determine whether there is or may be a violation 
of any regulation promulgated under this title and may require or 
permit any person to file with it a statement in writing, under oath or 
otherwise as the Board shall determine, as to all the facts and 
circumstances concerning the matter to be investigated.
    (f) Subpoena Power.--
            (1) In general.--The Board may issue subpoenas requiring 
        the attendance and testimony of witnesses and the production of 
        any evidence relating to any matter under investigation by the 
        Board. The attendance of witnesses and the production of 
        evidence may be required from any place within the United 
        States at any designated place of hearing within the United 
        States.
            (2) Failure to obey a subpoena.--If a person refuses to 
        obey a subpoena issued under paragraph (1), the Board may apply 
        to a United States district court for an order requiring that 
        person to appear before the Board to give testimony, produce 
        evidence, or both, relating to the matter under investigation. 
        The application may be made within the judicial district where 
        the hearing is conducted or where that person is found, 
        resides, or transacts business. Any failure to obey the order 
        of the court may be punished by the court as civil contempt.
            (3) Service of subpoenas.--The subpoenas of the Board shall 
        be served in the manner provided for subpoenas issued by a 
        United States district court under the Federal Rules of Civil 
        Procedure for the United States district courts.
            (4) Service of process.--All process of any court to which 
        application is made under paragraph (2) may be served in the 
        judicial district in which the person required to be served 
        resides or may be found.

SEC. 803. FUNCTIONS OF THE BOARD.

    (a) Guidelines.--The Board shall--
            (1) develop and publish within 9 months of the date of the 
        establishment of the Board the initial guidelines that the 
        Board will use in determining whether an existing price or an 
        increase in the price of any prescription drug is excessive,
            (2) develop and publish within 12 months of the date of the 
        establishment of the Board the initial guidelines that the 
        Board will use in determining whether the initial price at 
        which a prescription drug is first sold is excessive, and
            (3) periodically review the guidelines developed under 
        paragraphs (1) and (2) and make appropriate revisions.
    (b) Determinations and Reviews.--The Board shall--
            (1) within 24 months of the date of the establishment of 
        the Board, make an initial determination of whether the price 
        of each prescription drug approved for sale on the date of the 
        enactment of this Act is excessive,
            (2) promptly make an initial determination of whether the 
        price of each prescription drug first approved for sale after 
        the date of the enactment of this Act is excessive,
            (3) review, on an ongoing basis, each increase in the price 
        of a drug reviewed under paragraphs (1) and (2) to determine if 
        the price increase is excessive, and
            (4) consider whether determinations and reviews similar to 
        the ones carried out under paragraphs (1), (2), and (3) should 
        be made for non-prescription drugs and make such determinations 
        and reviews if appropriate.
    (c) Factors.--In making determinations under subsection (b) as to 
whether the price of a prescription drug is excessive, the Board shall 
take into consideration--
            (1) changes in the producer price index (published by the 
        Bureau of Labor Statistics of the Department of Labor),
            (2) changes in the prescription drug component of such 
        producer price index,
            (3) the price at which such drug was sold to wholesalers in 
        the United States during the preceding 10 years,
            (4) the price at which such drug was sold to wholesalers in 
        other countries during the preceding 10 years,
            (5) the price at which other drugs in the same therapeutic 
        class were sold to wholesalers in the United States during the 
        preceding 10 years,
            (6) the therapeutic potential rating of such drug by the 
        Food and Drug Administration,
            (7) the percentage of such drug's research and development 
        costs paid by the United States,
            (8) the cost of manufacturing and marketing such drug, and
            (9) such other factors as the Board considers relevant.
    (d) Reporting.--The Board shall--
            (1) promptly provide to consumers and health care providers 
        the results of the Board's determinations under subsection (b) 
        and the method used in each such determination,
            (2) provide information to consumers and health care 
        providers regarding prescription drug pricing and price 
        increases by therapeutic class and manufacturer,
            (3) provide to consumers and health care providers 
        information regarding the Food and Drug Administration 
        therapeutic potential rating of each prescription drug and the 
        percentage of the research and development of each such drug 
        paid by the United States,
            (4) provide to consumers such other information as the 
        Board determines will assist consumers in reducing their 
        expenses for prescription drugs,
            (5) publish an easy to understand consumer's guide to 
        prescription drug prices, including the information described 
        in paragraphs (1), (2), (3), and (4), within 24 months of the 
        date of the establishment of the Board and update and publish 
        such guide annually thereafter, and
            (6) provide to the President and the Congress a report of 
        its determinations under subsection (b) within 24 months of the 
        date of the establishment of the Board and update and report 
        such determinations annually thereafter.

SEC. 804. SANCTIONS AND REMEDIES.

    (a) Hearings.--After making a determination under section 803(b) 
that the price of a prescription drug or an increase in the price of 
such a drug is excessive, the Board shall--
            (1) notify, in writing, the manufacturer of such drug of 
        such determination,
            (2) fix a date on which a public hearing before the Board 
        respecting such determination shall be held and hold such 
        hearing,
            (3) request from such manufacturer such additional 
        information as the Board deems necessary for such public 
        hearing, and
            (4) notify such manufacturer of the Board's recommendation 
        as to the pricing of the drug at a rate which is not excessive.
    (b) Settlement.--If, after a public hearing under subsection (a), 
the Board finds that the price or an increase in the price of a 
prescription drug is not excessive, the Board shall--
            (1) notify the manufacturer of such drug of the Board's 
        finding, and
            (2) remove from all publications and reports of the Board 
        after the date of such finding any statement that the price or 
        increase in the price of such drug is excessive.
    (c) Patent Revocation.--If, after a public hearing under subsection 
(a), the Board finds that the price or an increase in the price of a 
prescription drug is excessive, the Board shall--
            (1) notify the manufacturer of such drug of the Board's 
        finding,
            (2) notify the manufacturer of such drug of the Board's 
        intent to revoke the patent for such drug if the drug is 
        patented or to revoke the patent of another drug of such 
        manufacturer if such drug is not patented, and
            (3) take such action as may be necessary to revoke a drug 
        patent under paragraph (2) if the manufacturer of such drug 
        does not reduce the price of the drug to a level that is not 
        excessive.

SEC. 805. MANUFACTURERS.

    Each manufacturer of a prescription drug subject to review under 
section 803 shall--
            (1) provide to the Board such information as the Board may 
        require to make the determinations under section 803, 
        including--
                    (A) information identifying such drug,
                    (B) the price at which such drug is being sold or 
                has been sold in any market,
                    (C) the cost of manufacturing and marketing such 
                drug, and
                    (D) such other information as the Board considers 
                necessary to be provided in such form and manner and at 
                such time as the Board prescribes by regulation, and
            (2) notify the Board immediately of any increase in the 
        wholesale price of any prescription drug marketed by the 
        manufacturer.

SEC. 806. STUDY.

    The Board shall engage the Institute of Medicine of the National 
Academy of Sciences to conduct a study of prescription drug research 
and development and pricing practices, the difficulties many Americans 
have in affording prescription drugs, and options for making 
prescription drugs available to all that need them. Such study shall--
            (1) examine Federal incentives for research and development 
        and determine which incentives are most effective and what 
        changes would better encourage the development of low cost, 
        effective drugs,
            (2) examine the Federal regulatory process and identify 
        ways it might be streamlined without jeopardizing consumer 
        safety,
            (3) consider whether the authority of the Food and Drug 
        Administration should be enhanced and whether the funding for 
        such agency should be increased to improve Federal regulation 
        of drugs,
            (4) consider steps the United States might take (including 
        possible trade sanctions) to protect manufacturers of drugs in 
        the United States from product pirating and other unfair trade 
        practices by foreign competitors,
            (5) consider changes in the patent laws (including delaying 
        the start of a product's 17 years patent protection until after 
        the product has been approved under the Federal Food, Drug, and 
        Cosmetic Act) to allow manufacturers to charge lower prices and 
        still recoup their research and development costs,
            (6) consider whether a Board review of non-prescription 
        drug prices would have a positive effect on consumer costs of 
        such drugs,
            (7) consider mechanisms to assist consumers with the high 
        cost of prescription drugs (including providing reimbursement 
        under title XVIII of the Social Security Act for prescription 
        drugs at lower prices negotiated with manufacturers of drugs),
            (8) examine Federal policies regarding the licensing of 
        drugs discovered and developed by federally funded researchers 
        and recommend actions that would allow the United States to 
        recoup its costs or to influence the pricing of such drugs, and
            (9) examine the effects on retail pharmacies of disparities 
        in drug prices wherein the drug manufacturers charge hospitals, 
        mail order pharmacies, and health maintenance organizations 
        significantly lower prices than those charged wholesalers for 
        such drugs.

                   TITLE IX--TERMINATION OF PROGRAMS

SEC. 901. TERMINATION OF CERTAIN FEDERAL HEALTH CARE PROGRAMS.

    (a) Medicare and Medicaid.--Titles XVIII and XIX of the Social 
Security Act are repealed.
    (b) Repeal of CHAMPUS Provisions.--
            (1) Amendments to chapter 55 of title 10.--Sections 1079 
        through 1083, 1086, and 1097 through 1100 of title 10, United 
        States Code, are repealed.
            (2) Table of sections.--The table of sections at the 
        beginning of chapter 55 of title 10, United States Code, is 
        amended by striking out the items relating to the sections 
        referred to in paragraph (1).
            (3) Conforming amendments.--Chapter 55 of title 10, United 
        States Code, is amended as follows:
                    (A) Definition.--Section 1072 is amended by 
                striking out paragraph (4).
                    (B) Reimbursement of the department of veterans 
                affairs.--Section 1104(b) is amended--
                            (i) in the subsection heading, by striking 
                        out ``from CHAMPUS funds''; and
                            (ii) by striking out ``from funds'' and all 
                        that follows and inserting in lieu thereof 
                        ``for medical care provided by the Department 
                        of Veterans Affairs pursuant to such 
                        agreement.''.
    (c) Repeal of Federal Employees Health Benefits Program.--Chapter 
89 of title 5, United States Code, is repealed.
    (d) Effective Date.--The repeals and amendments made by this 
section shall take effect on October 1, 1998.

SEC. 902. TRANSITION.

    (a) In General.--The Federal Health Board shall issue such 
regulations as are necessary to provide for a transition to this Act 
from the programs repealed under section 901.
    (b) Relation to Other Programs.--The Federal Health Board shall 
recommend to the Congress appropriate legislative proposals for the 
amendment or repeal of any other Federal program inconsistent with, or 
duplicative of, the principles of this Act.

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