[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 1807 Introduced in Senate (IS)]

103d CONGRESS
  2d Session
                                S. 1807

To guarantee individuals and families continued choice and control over 
their doctors, hospitals, and health care services, to secure access to 
quality health care for all, to ensure that health coverage is portable 
    and renewable, to control medical cost inflation through market 
 incentives and tax reform, to reform medical malpractice litigation, 
                        and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

             January 27 (legislative day, January 25), 1994

     Mr. Gramm (for himself, Mr. McCain, Mr. Coats, Mr. Brown, Mr. 
   Coverdell, Mrs. Hutchison, Mr. Bennett, Mr. Helms, Mr. Lott, Mr. 
  Faircloth, and Mr. Wallop) introduced the following bill; which was 
                          read the first time

_______________________________________________________________________

                                 A BILL


 
To guarantee individuals and families continued choice and control over 
their doctors, hospitals, and health care services, to secure access to 
quality health care for all, to ensure that health coverage is portable 
    and renewable, to control medical cost inflation through market 
 incentives and tax reform, to reform medical malpractice litigation, 
                        and for other purposes.

    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; DEFINITIONS.

    (a) Short Title.--This Act may be cited as the ``Comprehensive 
Family Health Access and Savings Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; definitions; table of contents.
        TITLE I--PORTABLE AND PERMANENT PRIVATE HEALTH INSURANCE

                        Subtitle A--Portability

Sec. 101. Amendments to COBRA.
Sec. 102. Penalty-free withdrawals from qualified retirement plans for 
                            COBRA coverage.
                         Subtitle B--Permanence

Sec. 111. General renewability requirements.
Sec. 112. Individual health insurance plans.
Sec. 113. Group health plans.
Sec. 114. Failure of health plans to meet portability and permanence 
                            requirements.
               TITLE II--EXPANSION OF HEALTH CARE CHOICES

             Subtitle A--Employer-Provided Health Insurance

Sec. 201. Tax treatment of employer-provided health insurance.
                  Subtitle B--Medical Savings Accounts

Sec. 211. Individuals allowed deduction from gross income for cost of 
                            catastrophic health insurance plan.
Sec. 212. Medical savings accounts.
 TITLE III--EQUAL TAX TREATMENT FOR HEALTH INSURANCE OF SELF-EMPLOYED 
                             AND UNINSURED

Sec. 301. Equal exclusion from gross income of health insurance 
                            coverage costs.
            TITLE IV--SMALL BUSINESS HEALTH INSURANCE POOLS

Sec. 401. Prohibition of restrictions on groups purchasing health 
                            insurance.
Sec. 402. Prohibition of State benefit mandates for group health plans.
Sec. 403. Prohibition of restrictions on managed care.
   TITLE V--ASSISTANCE TO INDIVIDUALS WITH PREEXISTING CONDITIONS IN 
                      PURCHASING HEALTH INSURANCE

Sec. 501. Preexisting condition insurance pool allotment program.
  TITLE VI--ENCOURAGE RESPONSIBLE BEHAVIOR BY THE FINANCIALLY CAPABLE

Sec. 601. One year window to purchase health insurance coverage.
Sec. 602. Prohibition of restrictions relating to the use of collection 
                            procedures.
    TITLE VII--ASSISTANCE TO LOW-INCOME WORKERS TO PURCHASE HEALTH 
                               INSURANCE

Sec. 701. Refundable catastrophic health insurance plan credit.
     TITLE VIII--REWARD PREVENTIVE MEDICINE AND HEALTHY LIFESTYLES

Sec. 801. Reward preventive medicine and healthy lifestyles.
      TITLE IX--REFORM MEDICAID AND EXPAND CHOICES UNDER MEDICARE

                          Subtitle A--Medicaid

Sec. 901. Cap on Federal payments made for medical assistance under the 
                            medicaid program.
Sec. 902. Waivers for furnishing medical assistance under the medicaid 
                            program.
                          Subtitle B--Medicare

Sec. 951. Individual election for type of coverage.
Sec. 952. Health care coverage under a private health care arrangement.
        TITLE X--ENHANCED EFFICIENCY THROUGH PAPERWORK REDUCTION

Sec. 1001. Federal paperwork reduction and efficiency requirements.
Sec. 1002. State paperwork reduction and efficiency requirements.
Sec. 1003. Standardized Forms Commission.
             TITLE XI--MEANINGFUL MEDICAL LIABILITY REFORM

Sec. 1101. Applicability and preemption.
Sec. 1102. Statute of limitations.
Sec. 1103. Scope of liability.
Sec. 1104. Discovery; failure to make or cooperate in discovery.
Sec. 1105. Limitation on noneconomic damages.
Sec. 1106. Treatment of payments for future economic losses.
Sec. 1107. Treatment of costs and attorney's fees.
Sec. 1108. Contribution and indemnification.
Sec. 1109. Collateral sources.
Sec. 1110. Damages relating to medical product liability claims.
Sec. 1111. Class actions.
Sec. 1112. Definitions.
Sec. 1113. Severability.
Sec. 1114. Effective date.
                      TITLE XII--ANTITRUST REFORMS

Sec. 1201. Establishment of limited exemption program for health care 
                            joint ventures.
Sec. 1202. Issuance of health care certificates of public advantage.
Sec. 1203. Interagency Advisory Committee on Competition, Antitrust 
                            Policy, and Health Care.
Sec. 1204. Definitions.
 TITLE XIII--EXPENDITURE TARGETS FOR THE MEDICAID AND MEDICARE PROGRAMS

Sec. 1301. Determination of expenditures under the medicaid and 
                            medicare programs.
Sec. 1302. Delay of health insurance benefits due to excess 
                            expenditures.
    (c) Definitions.--For purposes of this Act:
            (1) Employer.--The term ``employer'' shall have the meaning 
        applicable under section 3(5) of the Employee Retirement Income 
        Security Act of 1974.
            (2) Group health plan.--The term ``group health plan'' has 
        the meaning given such term by section 5000(b)(1) of the 
        Internal Revenue Code of 1986, but does not include any type of 
        coverage excluded from the definition of a health insurance 
        plan under paragraph (2).
            (3) Health insurance plan.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the term ``health insurance plan'' means any 
                hospital or medical service policy or certificate, 
                hospital or medical service plan contract, or health 
                maintenance organization group contract offered by an 
                insurer.
                    (B) Exception.--Such term does not include any of 
                the following--
                            (i) coverage only for accident, dental, 
                        vision, disability income, or long-term care 
                        insurance, or any combination thereof,
                            (ii) medicare supplemental health 
                        insurance,
                            (iii) coverage issued as a supplement to 
                        liability insurance,
                            (iv) worker's compensation or similar 
                        insurance, or
                            (v) automobile medical-payment insurance,
                or any combination thereof.
            (4) Health maintenance organization.--The term ``health 
        maintenance organization'' includes a health insurance plan 
        that offers to provide health services on a prepaid, at-risk 
        basis primarily through a defined set of providers.
            (5) Insurer.--The term ``insurer'' means a licensed 
        insurance company, a prepaid hospital or medical service plan, 
        or a health maintenance organization offering such a plan to an 
        employer, and includes a similar organization regulated under 
        State law for solvency.
            (6) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (7) State.--The term ``State'' means each of the several 
        States of the United States, the District of Columbia, the 
        Commonwealth of Puerto Rico, the United States Virgin Islands, 
        Guam, American Samoa, and the Commonwealth of the Northern 
        Mariana Islands.

        TITLE I--PORTABLE AND PERMANENT PRIVATE HEALTH INSURANCE

                        Subtitle A--Portability

SEC. 101. AMENDMENTS TO COBRA.

    (a) Lower Cost Coverage Options.--Subparagraph (A) of section 
4980B(f)(2) of the Internal Revenue Code of 1986 (relating to 
continuation coverage requirements of group health plans) is amended to 
read as follows:
                    ``(A) Type of benefit coverage.--The coverage must 
                consist of coverage which, as of the time the coverage 
                is being provided--
                            ``(i) is identical to the coverage provided 
                        under the plan to similarly situated 
                        beneficiaries under the plan with respect to 
                        whom a qualifying event has not occurred,
                            ``(ii) is so identical, except such 
                        coverage is offered with an annual $1,000 
                        deductible, and
                            ``(iii) is so identical, except such 
                        coverage is offered with an annual $3,000 
                        deductible.
                If coverage under the plan is modified for any group of 
                similarly situated beneficiaries, the coverage shall 
                also be modified in the same manner for all individuals 
                who are qualified beneficiaries under the plan pursuant 
                to this subsection in connection with such group.''
    (b) Termination of COBRA Coverage After Eligible for Employer-Based 
Coverage for 90 Days.--Clause (iv) of section 4980B(f)(2)(B) of the 
Internal Revenue Code of 1986 (relating to period of coverage) is 
amended--
            (1) by striking ``or'' at the end of subclause (I),
            (2) by redesignating subclause (II) as subclause (III), and
            (3) by inserting after subclause (I) the following new 
        subclause:
                                    ``(II) eligible for such employer-
                                based coverage for more than 90 days, 
                                or''.
    (c) Effective Date.--The amendments made by this section shall 
apply to qualifying events occurring after the date of the enactment of 
this Act.

SEC. 102. PENALTY-FREE WITHDRAWALS FROM QUALIFIED RETIREMENT PLANS FOR 
              COBRA COVERAGE.

    (a) In General.--Subparagraph (A) of section 72(t)(2) of the 
Internal Revenue Code of 1986 (relating to additional tax not to apply 
to certain distributions) is amended--
            (1) by striking ``or'' at the end of clauses (iv) and (v),
            (2) by striking the period at the end of clause (vi) and 
        inserting ``, or'', and
            (3) by adding at the end the following new clause:
                            ``(vii) made to an employee who is a 
                        qualified beneficiary during the period of 
                        continuation coverage under section 4980B(f).''
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to distributions made after the date of the enactment of this 
Act.

                         Subtitle B--Permanence

SEC. 111. GENERAL RENEWABILITY REQUIREMENTS.

    (a) Insurers.--
            (1) In general.--An insurer may not cancel an individual 
        health insurance plan or group health plan or deny renewal of 
        coverage under such a plan other than--
                    (A) for nonpayment of premiums,
                    (B) for fraud or other misrepresentation by the 
                insured,
                    (C) for noncompliance with plan provisions, or
                    (D) because the insurer is ceasing to provide any 
                health insurance plan in a State, or, in the case of a 
                health maintenance organization, in a geographic area.
            (2) Limitation on market reentry.--If an insurer terminates 
        the offering of health insurance plans or group health plans in 
        an area, the insurer may not offer such a plan in the area 
        until 5 years after the date of the termination.
    (b) Employers.--An employer may not cancel a self-insured group 
health plan or deny renewal of coverage under such a plan other than--
            (1) for nonpayment of premiums,
            (2) for fraud or other misrepresentation by the insured,
            (3) for noncompliance with plan provisions, or
            (4) because the plan is ceasing to provide any coverage in 
        a geographic area.
    (c) Effective Date.--The provisions of this section shall apply to 
any plan on or after the date of the enactment of this Act.

SEC. 112. INDIVIDUAL HEALTH INSURANCE PLANS.

    (a) Existing Plans.--With respect to any individual health 
insurance plan in effect on the date of the enactment of this Act, the 
insurer shall offer the insured the option to purchase a new individual 
health insurance described in subsection (b).
    (b) New Plans.--With respect to any individual health insurance 
plan, the effective date of which with respect to the insured occurs 
after the date of the enactment of this Act, the insurer may not 
increase the premium for such a plan based on the health of the 
insured.

SEC. 113. GROUP HEALTH PLANS.

    (a) Existing Plans.--With respect to any group health plan (other 
than a self-insured group health plan) in effect on the date of the 
enactment of this Act, the insurer shall offer--
            (1) any insured of such plan the option to purchase upon 
        leaving the group a new individual health insurance plan, the 
        premium of which shall be rated based on actuarial data, may be 
        based on any preexisting condition of the insured, and may be 
        increased based on the health of such insured, and
            (2) the employer or group sponsor of such plan the option 
        to purchase a new group health plan described in subsection 
        (b).
    (b) New Plans.--With respect to any group health plan (other than a 
self-insured group health plan), the effective date of which with 
respect to the employer or group sponsor occurs after the date of the 
enactment of this Act, the insurer--
            (1) may not increase the premium for such a plan based on 
        the health of the group's insured, and
            (2) shall offer any insured of such plan the option to 
        purchase upon leaving the group a new individual health 
        insurance plan, the premium of which shall be rated based on 
        actuarial data, may not be based on any preexisting condition 
        of the insured, and may not be increased based on the health of 
        such insured.
    (c) Self-Insured Group Health Plans.--With respect to a self-
insured group health plan--
            (1) in effect on the date of the enactment of this Act--
                    (A) subsection (a)(1) shall apply through 1 or more 
                insurers contracted with by such plan, and
                    (B) subsection (a)(2) shall not apply, and
            (2) the effective date of which with respect to the 
        employer or group sponsor occurs after the date of the 
        enactment of this Act, subsection (b) shall apply through 1 or 
        more insurers contracted with by such plan.

SEC. 114. FAILURE OF HEALTH PLANS TO MEET PORTABILITY AND PERMANENCE 
              REQUIREMENTS.

    (a) Deduction for Individual Health Insurance Plans.--Paragraph (1) 
of section 213(d) of the Internal Revenue Code of 1986 (defining 
medical care) is amended--
            (1) by striking ``or'' at the end of subparagraph (B), and
            (2) by striking subparagraph (C) and inserting the 
        following new subparagraphs:
                    ``(C) for insurance--
                            ``(i) meeting the requirements of section 
                        112 of the Comprehensive Family Health Access 
                        and Savings Act, and
                            ``(ii) covering medical care referred to in 
                        subparagraphs (A) and (B), or
                    ``(D) as premiums under part B of title XVIII of 
                the Social Security Act, relating to supplementary 
                medical insurance for the aged.
    (b) Tax Exclusions for Employer-Provided Health Insurance.--Section 
106 of the Internal Revenue Code of 1986 (relating to contributions by 
employer to accident and health plans) is amended by striking ``an 
accident or health plan'' and inserting ``an accident or health plan 
meeting the requirements of section 113 of the Comprehensive Family 
Health Access and Savings Act''.
    (c) Business Expense Deduction for Health Insurance.--Section 162 
of the Internal Revenue Code of 1986 (relating to trade or business 
expenses) is amended by redesignating subsection (o) as subsection (p) 
and by inserting after subsection (n) the following new subsection:
    ``(o) Group Health Plans.--The expenses paid or incurred by an 
employer for a group health plan shall not be allowed as a deduction 
under this section unless such plan meets the requirements of section 
113 of the Comprehensive Family Health Access and Savings Act.''
    (d) Payroll Tax Exclusion for Employer-Provided Health Insurance.--
Section 209(a)(2) of the Social Security Act (42 U.S.C. 409(a)(2)) is 
amended by inserting ``or group health insurance'' after ``group-term 
life insurance''.
    (e) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

               TITLE II--EXPANSION OF HEALTH CARE CHOICES

             Subtitle A--Employer-Provided Health Insurance

SEC. 201. TAX TREATMENT OF EMPLOYER-PROVIDED HEALTH INSURANCE.

    (a) Tax Exclusions for Employer-Provided Health Insurance.--Section 
106 of the Internal Revenue Code of 1986 (relating to contributions by 
employer to accident and health plans), as amended by section 115(b), 
is amended by striking ``an accident or health plan meeting the 
requirements of section 113 of the Comprehensive Family Health Access 
and Savings Act'' and inserting ``a qualified health insurance package 
(as defined in section 162(o)(2)), which meets the requirements of 
section 113 of the Comprehensive Family Health Access and Savings Act, 
to the extent the employer contribution does not exceed the actual cost 
of such coverage''.
    (b) Business Expense Deduction for Health Insurance.--Subsection 
(o) of section 162 of the Internal Revenue Code of 1986 (relating to 
trade or business expenses), as added by section 115(c), is amended to 
read as follows:
    ``(o) Group Health Plans.--
            ``(1) In general.--The expenses paid or incurred by an 
        employer for a group health plan shall not be allowed as a 
        deduction under this section unless--
                    ``(A) such plan meets the requirements of section 
                113 of the Comprehensive Family Health Access and 
                Savings Act,
                    ``(B) such plan is offered through a qualified 
                health insurance package, and
                    ``(C) such employer's contribution per employee--
                            ``(i) for coverage described in 
                        subparagraph (B) or (C) of paragraph (2) is not 
                        less than such contribution for coverage 
                        described in paragraph (2)(A) (determined 
                        either on an average cost or actual cost basis 
                        as elected by the employer), and
                            ``(ii) for coverage described in paragraph 
                        (2)(C) does not exceed such contribution for 
                        coverage described in subparagraph (A) or (B) 
                        of paragraph (2), whichever is higher (as so 
                        determined).
            ``(2) Qualified health insurance package.--For purposes of 
        paragraph (1), the term `qualified health insurance package' 
        means an annual option provided to each employee of the 
        employer during a 2-month election period to select 1 of the 
        following health insurance coverages for the following calendar 
        year:
                    ``(A) The health insurance coverage provided by the 
                employer on the date of the enactment of the 
                Comprehensive Family Health Access and Savings Act.
                    ``(B) Coverage in a health maintenance 
                organization, managed care arrangement, or preferred 
                provider organization.
                    ``(C) Medical savings account under section 220.''
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to any taxable year beginning after the date of the 
enactment of this Act.

                  Subtitle B--Medical Savings Accounts

SEC. 211. INDIVIDUALS ALLOWED DEDUCTION FROM GROSS INCOME FOR COST OF 
              CATASTROPHIC HEALTH INSURANCE PLAN.

    (a) In General.--Subsection (a) of section 62 of the Internal 
Revenue Code of 1986 (defining adjusted gross income) is amended--
            (1) by striking the flush sentence immediately following 
        paragraph (14), and
            (2) by inserting after paragraph (15) the following:
            ``(16) Medical expenses attributable to catastrophic health 
        insurance plan coverage.--
                    ``(A) In general.--The deduction allowed by section 
                213 to the extent attributable to coverage under a 
                catastrophic health insurance plan (as defined in 
                section 220(c)(2)).
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                to coverage of an individual who has coverage described 
                in section 220(c)(1)(B).
Nothing in this section shall permit the same item to be deducted more 
than once.''
    (b) Coordination With Deduction for Other Medical Expenses.--
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 expenses paid during the taxable year, not compensated by 
insurance or otherwise, for medical care of the taxpayer, his spouse, 
or a dependent (as defined in section 152) in an amount equal to the 
sum of--
            ``(1) the portion of such expenses attributable to coverage 
        under a catastrophic health insurance plan (as defined in 
        section 220(c)(2)), and
            ``(2) the excess of such expenses (other than expenses 
        described in paragraph (1)) over 7.5 percent of the adjusted 
        gross income of the taxpayer.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 212. MEDICAL SAVINGS ACCOUNTS.

    (a) In General.--Part VII of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to additional itemized 
deductions for individuals) is amended by redesignating section 220 as 
section 221 and by inserting after section 219 the following new 
section:

``SEC. 220. MEDICAL SAVINGS ACCOUNTS.

    ``(a) Deduction Allowed.--In the case of an eligible individual, 
there shall be allowed as a deduction the amounts paid in cash during 
the taxable year by or on behalf of such individual to a medical 
savings account for the benefit of such individual and (if any) such 
individual's spouse and dependents if such spouse and dependents are 
eligible individuals.
    ``(b) Limitations.--
            ``(1) Only 1 account per family.--Except as provided in 
        regulations prescribed by this Secretary, no deduction shall be 
        allowed under subsection (a) for amounts paid to any medical 
        savings account for the benefit of an individual, such 
        individual's spouse, or any dependent of such individual or 
        spouse if such individual, spouse, or dependent is a 
        beneficiary of any other medical savings account.
            ``(2) Dollar limitation.--The amount allowable as a 
        deduction under subsection (a) for the taxable year shall not 
        exceed $3,000, or such higher amounts as may be specified in 
        subparagraph (c)(2)(C).
    ``(c) Definitions.--For purposes of this section:
            ``(1) Eligible individual.--
                    ``(A) In general.--The term `eligible individual' 
                means any individual who is covered under a 
                catastrophic health insurance plan throughout the 
                calendar year in which or with which the taxable year 
                ends.
                    ``(B) Limitations.--Such term does not include an 
                individual who is 65 years of age or older, unless the 
                individual is covered under a catastrophic health 
                insurance plan that is a primary plan (within the 
                meaning of section 1862(b)(2)(A) of the Social Security 
                Act).
            ``(2) Catastrophic health insurance plan.--
                    ``(A) In general.--The term `catastrophic health 
                insurance plan' means a health plan covering specified 
                expenses incurred by an individual for medical care (as 
                defined in subparagraph (B)) for such individual and 
                the spouse and dependents (as defined in section 152) 
                of such individual only to the extent such expenses 
                covered by the plan for any calendar year exceed $3,000 
                or such higher amounts as may be specified by the plan.
                    ``(B) Medical care.--The term `medical care' 
                means--
                            ``(i) medical care as defined in section 
                        213(d) (without regard to non-emergency 
                        transportation under paragraph (1)(B) and 
                        amounts described in paragraph (2)), and
                            ``(ii) services and care not less than such 
                        services and care identified (but not in the 
                        manner prescribed) in paragraphs (1), (2), (3), 
                        (4)(A), (4)(B), (5), (17), and (21) of section 
                        1905(a).
                    ``(C) Cost-of-living adjustment.--In the case of 
                any calendar year after 1995, the dollar amount in 
                subparagraph (A) and paragraph (b)(2) shall be 
                increased by an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for such 
                        calendar year.
                If any increase under the preceding sentence is not a 
                multiple of $50, such increase shall be rounded to the 
                nearest multiple of $50.
    ``(d) Medical Savings Account.--For purposes of this section:
            ``(1) Medical savings account defined.--
                    ``(A) In general.--The term `medical savings 
                account' means a trust created or organized in the 
                United States exclusively for the purpose of paying the 
                medical expenses of the beneficiaries of such trust, 
                but only if the written governing instrument creating 
                the trust meets the following requirements:
                            ``(i) Except in the case of a rollover 
                        contribution described in subsection (e)(5), no 
                        contribution will be accepted unless it is in 
                        cash, and contributions will not be accepted in 
                        excess of the amount allowed as a deduction 
                        under this section for the taxable year.
                            ``(ii) The trustee is a bank (as defined in 
                        section 408(n)) or another person who 
                        demonstrates to the satisfaction of the 
                        Secretary that the manner in which such person 
                        will administer the trust will be consistent 
                        with the requirements of this section.
                            ``(iii) No part of the trust assets will be 
                        invested in life insurance contracts.
                            ``(iv) The assets of the trust will not be 
                        commingled with other property except in a 
                        common trust fund or common investment fund.
                            ``(v) The interest of an individual in the 
                        balance in his account is nonforfeitable.
                            ``(vi) Under regulations prescribed by the 
                        Secretary, rules similar to the rules of 
                        section 401(a)(9) shall apply to the 
                        distribution of the entire interest of 
                        beneficiaries of such trust.
                    ``(B) Treatment of comparable accounts held by 
                insurance companies.--For purposes of this section, an 
                account held by an insurance company in the United 
                States shall be treated as a medical savings account 
                (and such company shall be treated as a bank) if--
                            ``(i) such account is part of a health 
                        insurance plan that includes a catastrophic 
                        health insurance plan (as defined in subsection 
                        (c)(2)),
                            ``(ii) such account is exclusively for the 
                        purpose of paying the medical expenses of the 
                        beneficiaries of such account who are covered 
                        under such catastrophic health insurance plan, 
                        and
                            ``(iii) the written instrument governing 
                        the account meets the requirements of clauses 
                        (i), (v), and (vi) of subparagraph (A).
            ``(2) Medical expenses.--
                    ``(A) In general.--The term `medical expenses' 
                means, with respect to an individual, amounts paid or 
                incurred by such individual for medical care for such 
                individual, the spouse of such individual, and any 
                dependent (as defined in section 152) of such 
                individual, but only to the extent such amounts--
                            ``(i) are not compensated for by insurance 
                        or otherwise, and
                            ``(ii) are counted towards a deductible 
                        under the terms of such individual's 
                        catastrophic health insurance plan.
                    ``(B) Health plan coverage may not be purchased 
                from account.--Such term shall not include any amount 
                paid for coverage under a health plan.
            ``(3) Time when contributions deemed made.--A contribution 
        shall be deemed to be made on the last day of the preceding 
        taxable year if the contribution is made on account of such 
        taxable year and is made not later than the time prescribed by 
        law for filing the return for such taxable year (not including 
        extensions thereof).
    ``(e) Tax Treatment of Distributions.--
            ``(1) In general.--Except as provided in paragraphs (2), 
        (3), and (5), any amount paid or distributed out of a medical 
        savings account shall be included in the gross income of the 
        individual for whose benefit such account was established.
            ``(2) Exception for medical and long term care expenses.--
                    ``(A) In general.--Paragraph (1) shall not apply if 
                such amount paid or distributed is used exclusively to 
                pay--
                            ``(i) the medical expenses of such 
                        individual, or
                            ``(ii) except as provided in subparagraph 
                        (B), the expenses for long term care services 
                        of the type identified in section 1931(e)(3) of 
                        the Social Security Act for the individual.
                    ``(B) Nonqualified payments or distributions for 
                long term expenses.--Paragraph (1) shall apply to any 
                portion of a payment or distribution for expenses for 
                long term care services equal to the amount by which, 
                after such payment or distribution--
                            ``(i) the amount of the deductible under 
                        the catastrophic health insurance plan covering 
                        the individual, exceeds
                            ``(ii) the aggregate balance of all medical 
                        savings accounts established for the benefit of 
                        the individual.
        For purposes of this paragraph, any payment or distribution for 
        medical expenses shall be considered to have been made before 
        any other payment or distribution.
            ``(3) Excess contributions returned before due date of 
        return.--Paragraph (1) shall not apply to the distribution of 
        any contribution paid during a taxable year to a medical 
        savings account to the extent that such contribution exceeds 
        the amount allowable as a deduction under subsection (a) if--
                    ``(A) such distribution is received by the 
                individual on or before the last day prescribed by law 
                (including extensions of time) for filing such 
                individual's return for such taxable year, and
                    ``(B) such distribution is accompanied by the 
                amount of net income attributable to such excess 
                contribution.
        Any net income described in subparagraph (B) shall be included 
        in the gross income of the individual for the taxable year in 
        which it is received.
            ``(4) Penalty for distributions not used for medical 
        expenses which leave an amount less than the catastrophic 
        deductible in the account.--
                    ``(A) In general.--The tax imposed by this chapter 
                for any taxable year in which there is a payment or 
                distribution from a medical savings account which is 
                includible in gross income under paragraph (1) shall be 
                increased by 10 percent with respect to the penalty 
                portion of such payment or distribution.
                    ``(B) Penalty portion.--For purposes of 
                subparagraph (A), the penalty portion of any payment or 
                distribution is equal to the amount by which, after 
                such payment or distribution--
                            ``(i) the amount of the deductible under 
                        the catastrophic health insurance plan covering 
                        the individual, exceeds
                            ``(ii) the aggregate balance of all medical 
                        savings accounts established for the benefit of 
                        the individual.
        For purposes of this paragraph, any payment or distribution for 
        medical expenses shall be considered to have been made before 
        any other payment or distribution.
            ``(5) Rollovers.--Paragraph (1) shall not apply to any 
        amount paid or distributed out of a medical savings account to 
        the individual for whose benefit the account is maintained if 
        the entire amount received (including money and any other 
        property) is paid into another medical savings account for the 
        benefit of such individual not later than the 60th day after 
        the day on which he received the payment or distribution.
    ``(f) Tax Treatment of Accounts.--
            ``(1) Exemption from tax.--Any medical savings account is 
        exempt from taxation under this subtitle unless such account 
        has ceased to be a medical savings account by reason of 
        paragraph (2) or (3). Notwithstanding the preceding sentence, 
        any such account shall be subject to the taxes imposed by 
        section 511 (relating to imposition of tax on unrelated 
        business income of charitable, etc. organizations).
            ``(2) Account terminates if individual engages in 
        prohibited transaction.--
                    ``(A) In general.--If, during any taxable year of 
                the individual for whose benefit the medical savings 
                account was established, such individual engages in any 
                transaction prohibited by section 4975 with respect to 
                the account, the account ceases to be a medical savings 
                account as of the first day of that taxable year.
                    ``(B) Account treated as distributing all its 
                assets.--In any case in which any account ceases to be 
                a medical savings account by reason of subparagraph (A) 
                on the first day of any taxable year, paragraph (1) of 
                subsection (e) shall be applied as if there were a 
                distribution on such first day in an amount equal to 
                the fair market value (on such first day) of all assets 
                in the account (on such first day) and no portion of 
                such distribution were used to pay medical expenses.
            ``(3) Effect of pledging account as security.--If, during 
        any taxable year, the individual for whose benefit a medical 
        savings account was established uses the account or any portion 
        thereof as security for a loan, the portion so used is treated 
        as distributed to that individual and not used to pay medical 
        expenses.
    ``(g) Custodial Accounts.--For purposes of this section, a 
custodial account shall be treated as a trust if--
            ``(1) the assets of such account are held by a bank (as 
        defined in section 408(n)) or another person who demonstrates 
        to the satisfaction of the Secretary that the manner in which 
        he will administer the account will be consistent with the 
        requirements of this section, and
            ``(2) the custodial account would, except for the fact that 
        it is not a trust, constitute a medical savings account 
        described in subsection (d).
For purposes of this title, in the case of a custodial account treated 
as a trust by reason of the preceding sentence, the custodian of such 
account shall be treated as the trustee thereof.
    ``(h) Reports.--The trustee of a medical savings account shall make 
such reports regarding such account to the Secretary and to the 
individual for whose benefit the account is maintained with respect to 
contributions, distributions, and such other matters as the Secretary 
may require under regulations. The reports required by this subsection 
shall be filed at such time and in such manner and furnished to such 
individuals at such time and in such manner as may be required by those 
regulations.''
    (b) Deduction Allowed Whether or Not Individual Itemizes Other 
Deductions.--Subsection (a) of section 62 of the Internal Revenue Code 
of 1986 (defining adjusted gross income), as amended by section 211, is 
amended by inserting after paragraph (16) the following new paragraph:
            ``(17) Medical savings accounts.--The deduction allowed by 
        section 220.''
    (c) Distributions From Medical Savings Accounts Not Allowed As 
Medical Expense Deduction.--Section 213 of the Internal Revenue Code of 
1986 (relating to medical, dental, etc., expenses) is amended by adding 
at the end the following new subsection:
    ``(g) Coordination With Medical Savings Accounts.--The amount 
otherwise taken into account under subsection (a) as expenses paid for 
medical care shall be reduced by the amount (if any) of the 
distributions from any medical savings account of the taxpayer during 
the taxable year which is not includible in gross income by reason of 
being used for medical care.''
    (d) Exclusion of Employer Contributions To Medical Savings Accounts 
From Employment Taxes.--
            (1) Social security taxes.--
                    (A) Subsection (a) of section 3121 of the Internal 
                Revenue Code of 1986 (defining wages) is amended by 
                striking ``or'' at the end of paragraph (20), by 
                striking the period at the end of paragraph (21) and 
                inserting ``; or'', and by inserting after paragraph 
                (21) the following new paragraph:
            ``(22) remuneration paid to or on behalf of an employee if 
        (and to the extent that) at the time of payment of such 
        remuneration it is reasonable to believe that a corresponding 
        deduction is allowable under section 220.''
                    (B) Subsection (a) of section 209 of the Social 
                Security Act is amended by striking ``or'' at the end 
                of paragraph (17), by striking the period at the end of 
                paragraph (18) and inserting ``; or'', and by inserting 
                after paragraph (18) the following new paragraph:
            ``(19) remuneration paid to or on behalf of an employee if 
        (and to the extent that) at the time of payment of such 
        remuneration it is reasonable to believe that a corresponding 
        deduction is allowable under section 220 of the Internal 
        Revenue Code of 1986.''
            (2) Railroad retirement tax.--Subsection (e) of section 
        3231 of such Code (defining compensation) is amended by adding 
        at the end the following new paragraph:
            ``(10) Employer contributions to medical savings 
        accounts.--The term `compensation' shall not include any 
        payment made to or on behalf of an employee if (and to the 
        extent that) at the time of payment of such remuneration it is 
        reasonable to believe that a corresponding deduction is 
        allowable under section 220.''
            (3) Unemployment tax.--Subsection (b) of section 3306 of 
        such Code (defining wages) is amended by striking ``or'' at the 
        end of paragraph (15), by striking the period at the end of 
        paragraph (16) and inserting ``; or'', and by inserting after 
        paragraph (16) the following new paragraph:
            ``(17) remuneration paid to or on behalf of an employee if 
        (and to the extent that) at the time of payment of such 
        remuneration it is reasonable to believe that a corresponding 
        deduction is allowable under section 220.''
            (4) Withholding tax.--Subsection (a) of section 3401 of 
        such Code (defining wages) is amended by striking ``or'' at the 
        end of paragraph (19), by striking the period at the end of 
        paragraph (20) and inserting ``; or'', and by inserting after 
        paragraph (20) the following new paragraph:
            ``(21) remuneration paid to or on behalf of an employee if 
        (and to the extent that) at the time of payment of such 
        remuneration it is reasonable to believe that a corresponding 
        deduction is allowable under section 220.''
    (e) Tax on Excess Contributions.--Section 4973 of the Internal 
Revenue Code of 1986 (relating to tax on excess contributions to 
individual retirement accounts, certain section 403(b) contracts, and 
certain individual retirement annuities) is amended--
            (1) by inserting ``medical savings accounts,'' after 
        ``accounts,'' in the heading of such section,
            (2) by redesignating paragraph (2) of subsection (a) as 
        paragraph (3) and by inserting after paragraph (1) the 
        following:
            ``(2) a medical savings account (within the meaning of 
        section 220(d)),'',
            (3) by striking ``or'' at the end of paragraph (1) of 
        subsection (a), and
            (4) by adding at the end the following new subsection:
    ``(d) Excess Contributions to Medical Savings Accounts.--For 
purposes of this section, in the case of a medical savings account 
(within the meaning of section 220(d)), the term `excess contributions' 
means the amount by which the amount contributed for the taxable year 
to the account exceeds the amount excludable from gross income under 
section 220 for such taxable year. For purposes of this subsection, any 
contribution which is distributed out of the medical savings account in 
a distribution to which section 220(e)(3) applies shall be treated as 
an amount not contributed.''
    (f) Tax on Prohibited Transactions.--Section 4975 of the Internal 
Revenue Code of 1986 (relating to prohibited transactions) is amended--
            (1) by adding at the end of subsection (c) the following 
        new paragraph:
            ``(4) Special rule for medical savings accounts.--An 
        individual for whose benefit a medical savings account (within 
        the meaning of section 220(d)) is established shall be exempt 
        from the tax imposed by this section with respect to any 
        transaction concerning such account (which would otherwise be 
        taxable under this section) if, with respect to such 
        transaction, the account ceases to be a medical savings account 
        by reason of the application of section 220(f)(2)(A) to such 
        account.'', and
            (2) by inserting ``or a medical savings account described 
        in section 220(d)'' in subsection (e)(1) after ``described in 
        section 408(a)''.
    (g) Failure To Provide Reports on Medical Savings Accounts.--
Section 6693 of the Internal Revenue Code of 1986 (relating to failure 
to provide reports on individual retirement account or annuities) is 
amended--
            (1) by inserting ``or on medical savings accounts'' after 
        ``annuities'' in the heading of such section, and
            (2) by adding at the end of subsection (a) the following: 
        ``The person required by section 220(h) to file a report 
        regarding a medical savings account at the time and in the 
        manner required by such section shall pay a penalty of $50 for 
        each failure unless it is shown that such failure is due to 
        reasonable cause.''
    (h) Clerical Amendments.--
            (1) The table of sections for part VII of subchapter B of 
        chapter 1 of the Internal Revenue Code of 1986 is amended by 
        striking the last item and inserting the following:

                              ``Sec. 220. Medical savings accounts.
                              ``Sec. 221. Cross reference.''
            (2) The table of sections for chapter 43 of such Code is 
        amended by striking the item relating to section 4973 and 
        inserting the following:

                              ``Sec. 4973. Tax on excess contributions 
                                        to individual retirement 
                                        accounts, medical savings 
                                        accounts, certain 403(b) 
                                        contracts, and certain 
                                        individual retirement 
                                        annuities.''
            (3) The table of sections for subchapter B of chapter 68 of 
        such Code is amended by inserting ``or on medical savings 
        accounts'' after ``annuities'' in the item relating to section 
        6693.
    (i) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

 TITLE III--EQUAL TAX TREATMENT FOR HEALTH INSURANCE OF SELF-EMPLOYED 
                             AND UNINSURED.

SEC. 301. EQUAL EXCLUSION FROM GROSS INCOME OF HEALTH INSURANCE 
              COVERAGE COSTS.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to items specifically excluded 
from gross income) is amended by inserting after section 106 the 
following new section:

``SEC. 106A. CERTAIN HEALTH INSURANCE COVERAGE COSTS.

    ``(a) In General.--Gross income does not include the applicable 
percentage of so much of--
            ``(1) the amounts paid by the taxpayer for coverage under a 
        health insurance plan (as defined in section 1(3) of the 
        Comprehensive Family Health Access and Savings Act), plus
            ``(2) the contributions made by such taxpayer to a medical 
        savings account under section 220,
during the taxable year as do not exceed the national per employee 
average of employer-provided contributions excluded under section 106 
for the preceding taxable year.
    ``(b) Exclusion Not Allowed to Individuals Eligible for Employer-
Subsidized Coverage.--
            ``(1) In general.--Subsection (a) shall not apply to any 
        individual--
                    ``(A) who is eligible to participate in any 
                subsidized health plan maintained by an employer of 
                such individual or the spouse of such individual, or
                    ``(B) who is (or whose spouse is) a member of a 
                subsidized class of employees of an employer.
            ``(2) Subsidized class.--For purposes of paragraph (1), an 
        individual is a member of a subsidized class of employees of an 
        employer if, at any time during the 3 calendar years ending 
        with or within the taxable year, any member of such class was 
        eligible to participate in any subsidized health plan 
        maintained by such employer.
            ``(3) Special rules.--
                    ``(A) Controlled groups.--All persons treated as a 
                single employer under subsection (a) or (b) of section 
                52 or subsection (m) or (o) of section 414 shall be 
                treated as a single employer for purposes of paragraph 
                (2).
                    ``(B) Classes.--Classes of employees shall be 
                determined under regulations prescribed by the 
                Secretary based on such factors as the Secretary 
                determines appropriate to carry out the purposes of 
                this subsection.
    ``(c) Applicable Percentage.--
            ``(1) In general.--For purposes of subsection (a), the term 
        `applicable percentage' means--
                    ``(A) 33 percent for any taxable year beginning in 
                1996 or, if later, the alternate year,
                    ``(B) 46 percent for any taxable year beginning in 
                1997 or, if later, the alternate year,
                    ``(C) 60 percent for any taxable year beginning in 
                1998 or, if later, the alternate year,
                    ``(D) 73 percent for any taxable year beginning in 
                1999 or, if later, the alternate year,
                    ``(E) 86 percent for any taxable year beginning in 
                2000 or, if later, the alternate year, and
                    ``(F) 100 percent for taxable years beginning with 
                2001 or, if later, the alternate year.
            ``(2) Alternate year.--For purposes of paragraph (1), the 
        term `alternate year' means any taxable year other than the 
        taxable year described the applicable subparagraph of paragraph 
        (1) as determined under section 1302 of the Comprehensive 
        Family Health Access and Savings Act.
    ``(d) Coordination With Deductions.--No amount excluded from the 
gross income of the taxpayer for any taxable year under this section 
shall be taken into account for purposes of determining the allowable 
deduction for such year under sections 162(l), 213, and 220.
    ``(e) Coordination With Health Care Expenses Credit.--The amount 
otherwise taken into account under subsection (a) as expenses paid for 
medical care shall be reduced by the amount (if any) of the amount 
taken into account under section 34A for the taxable year.''
    (b) Exclusion of Certain Health Insurance Coverage Costs From 
Employment Taxes.--
            (1) Social security taxes.--
                    (A) Subsection (a) of section 3121 of the Internal 
                Revenue Code of 1986 (defining wages), as amended by 
                section 212(d), is amended by striking ``or'' at the 
                end of paragraph (21), by striking the period at the 
                end of paragraph (22) and inserting ``; or'', and by 
                inserting after paragraph (22) the following new 
                paragraph:
            ``(23) remuneration paid to or on behalf of an employee if 
        (and to the extent that) at the time of payment of such 
        remuneration it is reasonable to believe that a corresponding 
        exclusion is allowable under section 106A.''
                    (B) Subsection (a) of section 209 of the Social 
                Security Act, as amended by section 212(d), is amended 
                by striking ``or'' at the end of paragraph (18), by 
                striking the period at the end of paragraph (19) and 
                inserting ``; or'', and by inserting after paragraph 
                (19) the following new paragraph:
            ``(20) remuneration paid to or on behalf of an employee if 
        (and to the extent that) at the time of payment of such 
        remuneration it is reasonable to believe that a corresponding 
        exclusion is allowable under section 106A of the Internal 
        Revenue Code of 1986.''
            (2) Railroad retirement tax.--Subsection (e) of section 
        3231 of such Code (defining compensation), as amended by 
        section 212(d), is amended by adding at the end the following 
        new paragraph:
            ``(11) Employer contributions to medical savings 
        accounts.--The term `compensation' shall not include any 
        payment made to or on behalf of an employee if (and to the 
        extent that) at the time of payment of such remuneration it is 
        reasonable to believe that a corresponding exclusion is 
        allowable under section 106A.''
            (3) Unemployment tax.--Subsection (b) of section 3306 of 
        such Code (defining wages), as amended by section 212(d), is 
        amended by striking ``or'' at the end of paragraph (16), by 
        striking the period at the end of paragraph (17) and inserting 
        ``; or'', and by inserting after paragraph (17) the following 
        new paragraph:
            ``(18) remuneration paid to or on behalf of an employee if 
        (and to the extent that) at the time of payment of such 
        remuneration it is reasonable to believe that a corresponding 
        exclusion is allowable under section 106A.''
            (4) Withholding tax.--Subsection (a) of section 3401 of 
        such Code (defining wages), as amended by section 212(d), is 
        amended by striking ``or'' at the end of paragraph (20), by 
        striking the period at the end of paragraph (21) and inserting 
        ``; or'', and by inserting after paragraph (21) the following 
        new paragraph:
            ``(22) remuneration paid to or on behalf of an employee if 
        (and to the extent that) at the time of payment of such 
        remuneration it is reasonable to believe that a corresponding 
        exclusion is allowable under section 106A.''
    (c) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is 
amended by inserting after the item relating to section 106 the 
following:

                              ``Sec. 106A. Certain health insurance 
                                        coverage costs.''
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

            TITLE IV--SMALL BUSINESS HEALTH INSURANCE POOLS

SEC. 401. PROHIBITION OF RESTRICTIONS ON GROUPS PURCHASING HEALTH 
              INSURANCE.

    (a) In General.--No provision of State or local law shall apply 
that prohibits 2 or more employers or groups from obtaining coverage 
under a multiple employer health plan.
    (b) Multiple Employer Health Plan.--For purposes of subsection (a), 
the term ``multiple employer health plan'' means a multiple employer 
welfare arrangement (as defined in section 3(40) of the Employee 
Retirement Income Security Act of 1974).

SEC. 402. PROHIBITION OF STATE BENEFIT MANDATES FOR GROUP HEALTH PLANS.

    In the case of a group health plan, no provision of State or local 
law shall apply that requires the coverage of 1 or more specific 
benefits, services, or categories of health care, or services of any 
class or type of provider of health care.

SEC. 403. PROHIBITION OF RESTRICTIONS ON MANAGED CARE.

    (a) Preemption of State Law Provisions.--Subject to subsection (c), 
the following provisions of State law are preempted and may not be 
enforced:
            (1) Restrictions on reimbursement rates or selective 
        contracting.--Any law that restricts the ability of a group 
        health plan to negotiate reimbursement rates with providers or 
        to contract selectively with 1 provider or a limited number of 
        providers.
            (2) Restrictions on differential financial incentives.--Any 
        law that limits the financial incentives that a group health 
        plan may require a beneficiary to pay when a non-plan provider 
        is used on a non-emergency basis.
            (3) Restrictions on utilization review methods.--Any law 
        that--
                    (A) prohibits utilization review of any or all 
                treatments and conditions,
                    (B) requires that such review be made (i) by a 
                resident of the State in which the treatment is to be 
                offered or by an individual licensed in such State, or 
                (ii) by a physician in any particular specialty or with 
                any board certified specialty of the same medical 
                specialty as the provider whose services are being 
                reviewed,
                    (C) requires the use of specified standards of 
                health care practice in such reviews or requires the 
                disclosure of the specific criteria used in such 
                reviews,
                    (D) requires payments to providers for the expenses 
                of responding to utilization review requests, or
                    (E) imposes liability for delays in performing such 
                review.
        Nothing in subparagraph (B) shall be construed as prohibiting a 
        State from (i) requiring a licensed physician or other health 
        care professional be available at some time in the review or 
        appeal process, or (ii) requiring that any decision in an 
        appeal from such a review be made by a licensed physician.
    (b) GAO Study.--
            (1) In general.--The Comptroller General of the United 
        States shall conduct a study of the regulatory and legal 
        impediments at the Federal, State, and local levels of 
        government that restrict the ability of small businesses and 
        other organizations to group together voluntarily to allow 
        their employees or members to pool their health insurance 
        purchases.
            (2) Report.--By not later than 2 years after the date of 
        the enactment of this Act, the Comptroller General shall submit 
        a report to Congress on the study conducted under paragraph (1) 
        and shall include in the report such recommendations (including 
        whether the provisions of subsection (a) should be extended) as 
        may be appropriate.
    (c) Sunset.--Unless otherwise provided, subsection (a) shall not 
apply 5 years after the date of the enactment of this Act.

   TITLE V--ASSISTANCE TO INDIVIDUALS WITH PREEXISTING CONDITIONS IN 
                      PURCHASING HEALTH INSURANCE

SEC. 501. PREEXISTING CONDITION INSURANCE POOL ALLOTMENT PROGRAM.

    (a) Definitions.--As used in this section:
            (1) Catastrophic health insurance plan.--The term 
        ``catastrophic health insurance plan'' has the meaning given 
        such term by section 220(c)(2) of the Internal Revenue Code of 
        1986 (determined without regard to subparagraph (B)(i)).
            (2) Preexisting condition.--The term ``preexisting 
        condition'' means, with respect to coverage under a health 
        insurance plan, a condition that has been diagnosed or treated 
        during the 6-month period ending on the day before the first 
        date of such coverage (without regard to any waiting period).
            (3) Program administrator.--The term ``program 
        administrator'' means the entity responsible for the 
        administration of the program established under subsection 
        (e)(2).
    (b) Establishment.--The Secretary shall establish and administer a 
program to provide allotments to States to enable such States to 
operate State-wide insurance risk pools to provide health insurance 
coverage to individuals with preexisting conditions.
    (c) Allotments to States.--The Secretary shall allot to a State 
under this section for each fiscal year an amount equal to the State 
expected loss amount for such fiscal year as determined under 
subsection (e)(3)(B)(v).
    (d) Application.--To be eligible to receive an allotment for a 
fiscal year under this section, a State shall prepare and submit an 
application to the Secretary at such time, in such manner, and 
containing such information as the Secretary may by rule require. Such 
application shall include an assurance by the State that all 
administrative costs of the insurance pool program shall be borne by 
the State from resources other than such allotment.
    (e) State Program.--
            (1) Use of funds.--The State shall use amounts received 
        under this section to provide premium assistance under the 
        program established under paragraph (2).
            (2) Establishment.--The State shall establish an insurance 
        pool program to provide premium assistance to an individual who 
        has a preexisting condition and who is otherwise unable to 
        purchase coverage under an affordable health insurance policy, 
        to enable such individual to obtain such coverage.
            (3) Bid process.--
                    (A) In general.--With respect to a program 
                established under paragraph (2), the State shall, for 
                each fiscal year, accept bids from private insurance 
                carriers that desire to administer the program and 
                provide catastrophic health insurance plans to 
                individuals with preexisting conditions under the 
                program. The State may accept such a bid or, after 
                determining that no such bids are acceptable, 
                administer the program itself.
                    (B) Consideration of bids.--In considering bids 
                submitted under subparagraph (A), the State, in 
                consultation with private insurance carriers, shall 
                compile a profile of individuals with preexisting 
                conditions. Such profile shall consider--
                            (i) the number of individuals who may be 
                        eligible for premium assistance under the State 
                        program for the fiscal year involved;
                            (ii) the estimated cost of providing 
                        medical services for the eligible individuals 
                        for the fiscal year involved;
                            (iii) the estimated amount of premiums to 
                        be paid by such eligible individuals for the 
                        fiscal year involved;
                            (iv) the estimated amount by which the 
                        medical service costs will exceed the premiums 
                        received for the fiscal year involved;
                            (v) the estimated amount of Federal 
                        assistance needed under this section to cover 
                        the losses estimated under clause (iv); and
                            (vi) any other information determined 
                        appropriate by the State.
            (4) Provision of premium assistance.--
                    (A) Eligibility.--To be eligible to receive premium 
                assistance under a State program under this section, an 
                individual shall be determined by the program 
                administrator--
                            (i) to have a preexisting condition;
                            (ii) to be charged under a catastrophic 
                        health insurance plan, a premium which exceeds 
                        150 percent of the average premium paid for 
                        catastrophic health insurance plans 
                        (considering residence, age and gender);
                            (iii) not to have any avoidable health 
                        conditions, including medical conditions 
                        related to smoking, alcohol abuse, drug abuse, 
                        and other activities harmful to health, which 
                        are the sole reason for the excess described in 
                        clause (ii); and
                            (iv) not to be described in section 601.
                    (B) Amount.--An individual determined to be 
                eligible under subparagraph (A) shall receive premium 
                assistance under this section in an amount that equals 
                the amount by which the premium paid by such individual 
                for a catastrophic health insurance plan exceeds the 
                greater of--
                            (i) 150 percent of the average premium paid 
                        for catastrophic health insurance plans 
                        (considering residence, age and gender), or
                            (ii) 7.5 percent of the individual or 
                        family adjusted gross income of the individual,
                but only to the extent such excess is not attributable 
                to any avoidable health conditions, including medical 
                conditions related to smoking, alcohol abuse, drug 
                abuse, and other activities harmful to health.
    (f) Payments.--
            (1) In general.--The Secretary shall pay to each State for 
        which an application has been approved under this section for 
        each fiscal year an amount not to exceed its allotment under 
        subsection (c) to be expended by the State in accordance with 
        the terms of the application for the fiscal year for which the 
        allotment is to be made.
            (2) Method of payments.--The Secretary may make payments to 
        a State in installments, and in advance or, by way of 
        reimbursement, with necessary adjustments due to overpayments 
        or underpayments, as the Secretary may determine appropriate.
            (3) State spending of payments.--Payments to a State from 
        the allotment under subsection (c) for any fiscal year must be 
        expended by the State in that fiscal year or in the succeeding 
        fiscal year.
    (g) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary to carry out this section.
    (h) Effective Date.--
            (1) In general.--The provisions of this title shall apply 
        with respect to payments made to individuals in calendar years 
        beginning with 1996 or, if later, with the alternate year.
            (2) Alternate year.--For purposes of paragraph (1), the 
        term ``alternate year'' means any calendar year other than 1996 
        as determined under section 1302 of the Comprehensive Family 
        Health Access and Savings Act.

  TITLE VI--ENCOURAGE RESPONSIBLE BEHAVIOR BY THE FINANCIALLY CAPABLE

SEC. 601. ONE YEAR WINDOW TO PURCHASE HEALTH INSURANCE COVERAGE.

    Any individual with family income exceeding 200 percent of the 
income official poverty line (as determined under section 34A of the 
Internal Revenue Code of 1986), or who is eligible for a partial or 
full credit to purchase a catastrophic health insurance plan under such 
section, but who fails to purchase coverage under a health insurance 
plan providing coverage at least equal to such a catastrophic health 
insurance plan within 1 year of the date of the enactment of this Act, 
shall not be eligible for the insurance pool program under title V of 
this Act.

SEC. 602. PROHIBITION OF RESTRICTIONS RELATING TO THE USE OF COLLECTION 
              PROCEDURES.

    No provision of Federal, State, or local law shall apply that 
prohibits the use of any statutory procedure for the collection of 
unpaid debts for medical expenses incurred by individuals described in 
section 601.

  TITLE VII--ASSISTANCE TO LOW-INCOME WORKERS TO PURCHASE HEALTH CARE 
                               INSURANCE

SEC. 701. REFUNDABLE CATASTROPHIC HEALTH INSURANCE PLAN CREDIT.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable personal 
credits) is amended by inserting after section 34 the following new 
section:

``SEC. 34A. CATASTROPHIC HEALTH INSURANCE PLAN PREMIUMS.

    ``(a) Allowance of Credit.--In the case of a qualified individual, 
there shall be allowed as a credit against the tax imposed by this 
subtitle for the taxable year an amount equal to the applicable 
percentage of the premiums for a catastrophic health insurance plan 
paid by such individual during the taxable year.
    ``(b) Qualified Individuals.--For purposes of this section:
            ``(1) In general.--The term `qualified individual' means 
        the taxpayer, the spouse of the taxpayer, and each dependent of 
        the taxpayer (as defined in section 152) who is enrolled in a 
        catastrophic health insurance plan.
            ``(2) Federally covered individuals.--The term `qualified 
        individual' does not include any individual whose medical care 
        is covered under titles XIX and XVIII of the Social Security 
        Act.
            ``(3) Special rule in the case of child of divorced 
        parents, etc.--Any child to whom section 152(e) applies shall 
        be treated as a dependent of both parents.
            ``(4) Marriage rules.--The determination of whether an 
        individual is married at any time during the taxable year shall 
        be made in accordance with the provisions of section 6013(d) 
        (relating to determination of status as husband and wife).
    ``(c) Applicable Percentage.--For purposes of subsection (a), the 
applicable percentage for any taxable year is 100 percent reduced (but 
not below zero percent) by 1 percentage point for each 1 percentage 
point (or portion thereof) the qualified individual's family income 
exceeds 100 percent of the income 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) 
applicable to a family of the size involved.
    ``(d) Catastrophic Health Insurance Plan.--For purposes of this 
section, the term `catastrophic health insurance plan' means a health 
plan covering specified expenses incurred by an individual for medical 
care (as defined in section 220(c)(2)(B)(ii)) for such individual and 
the spouse and dependents (as so defined) of such individual only to 
the extent such expenses covered by the plan for any calendar year 
exceed the greater of--
            ``(1) 20 percent of the adjusted gross income of such 
        individual for such year, or
            ``(2) $3,000.
    ``(e) Other Definitions and Special Rules.--For purposes of this 
section:
            ``(1) Determinations of income.--
                    ``(A) In general.--The term `income' means adjusted 
                gross income (as defined in section 62(a))--
                            ``(i) determined without regard to sections 
                        135, 162(l), 911, 931, and 933; and
                            ``(ii) increased by--
                                    ``(I) the amount of interest 
                                received or accrued which is exempt 
                                from tax, plus
                                    ``(II) the amount of social 
                                security benefits (described in section 
                                86(d)) which is not includible in gross 
                                income under section 86.
                    ``(B) Family income.--The term `family income' 
                means, with respect to a family, the sum of the income 
                for all members of the family, not including the income 
                of a dependent child with respect to which no return is 
                required.
                    ``(C) Family size.--The family size to be applied 
                under this section, with respect to family income, is 
                the number of individuals included in the family for 
                purposes of coverage under a catastrophic health 
                insurance plan.
            ``(2) Coordination with advance payment and minimum tax.--
        Rules similar to the rules of subsections (g) and (h) of 
        section 32 shall apply to any credit to which this section 
        applies.
    ``(f) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out the purposes of this section.
    ``(g) Application of Section.--
            ``(1) In general.--This section shall apply with respect 
        to--
                    ``(A) any individual with a filing status described 
                in subsection (a), (b), or (d) of section 1 and whose 
                family income is less than 100 percent of the income 
                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) applicable to a family of 
                the size involved, in any taxable year beginning with 
                1997 or, if later, the alternate year,
                    ``(B) any individual with a filing status described 
                in subsection (c) of section 1 and whose family income 
                is less than 100 percent of such income official 
                poverty line, in any taxable year beginning with 1998 
                or, if later, the alternate year,
                    ``(C) any individual with a filing status described 
                in subsection (a), (b), or (d) of section 1 and whose 
                family income is equal to or exceeds 100 percent of 
                such income official poverty line, but only to the 
                extent of 33 percent of the credit allowable under this 
                section, in any taxable year beginning with 1999 or, if 
                later, the alternate year, and
                    ``(D) any individual with a filing status described 
                in subsection (a), (b), (c), or (d) of section 1 and 
                whose family income is equal to or exceeds 100 percent 
                of such income official poverty line, in any taxable 
                year beginning with 2000 or, if later, the alternate 
                year.
            ``(2) Alternate year.--For purposes of paragraph (1), the 
        term `alternate year' means any taxable year other than the 
        taxable year described the applicable subparagraph of paragraph 
        (1) as determined under section 1302 of the Comprehensive 
        Family Health Access and Savings Act.
    (b) Advance Payment of Credit.--Chapter 25 of the Internal Revenue 
Code of 1986 (relating to general provisions relating to employment 
taxes) is amended by inserting after section 3507 the following new 
section:

``SEC. 3507A. ADVANCE PAYMENT OF CATASTROPHIC HEALTH INSURANCE PLAN 
              PREMIUMS CREDIT.

    ``(a) General Rule.--Except as otherwise provided in this section, 
every employer making payment of wages with respect to whom a 
catastrophic health insurance plan eligibility certificate is in effect 
shall, at the time of paying such wages, make an additional payment 
equal to such employee's catastrophic health insurance plan advance 
amount.
    ``(b) Catastrophic Health Insurance Plan Eligibility Certificate.--
For purposes of this title, a catastrophic health insurance plan 
eligibility certificate is a statement furnished by an employee to the 
employer which--
            ``(1) certifies that the employee will be eligible to 
        receive the credit provided by section 34A for the taxable 
        year,
            ``(2) certifies that the employee does not have a 
        catastrophic health insurance plan eligibility certificate in 
        effect for the calendar year with respect to the payment of 
        wages by another employer,
            ``(3) states whether or not the employee's spouse has a 
        catastrophic health insurance plan eligibility certificate in 
        effect, and
            ``(4) estimates the amount of premiums for a catastrophic 
        health insurance plan (as defined in section 34A(d)) for the 
        calendar year.
For purposes of this section, a certificate shall be treated as being 
in effect with respect to a spouse if such a certificate will be in 
effect on the first status determination date following the date on 
which the employee furnishes the statement in question.
    ``(c) Catastrophic Health Insurance Plan Advance Amount.--
            ``(1) In general.--For purposes of this title, the term 
        `catastrophic health insurance plan advance amount' means, with 
        respect to any payroll period, the amount determined--
                    ``(A) on the basis of the employee's wages from the 
                employer for such period,
                    ``(B) on the basis of the employee's estimated 
                premiums for a catastrophic health insurance plan (as 
                so defined) included in the catastrophic health 
                insurance plan eligibility certificate, and
                    ``(C) in accordance with tables provided by the 
                Secretary.
            ``(2) Advance amount tables.--The tables referred to in 
        paragraph (1)(C) shall be similar in form to the tables 
        prescribed under section 3402 and, to the maximum extent 
        feasible, shall be coordinated with such tables and the tables 
        prescribed under section 3507(c).
    ``(d) Other Rules.--For purposes of this section, rules similar to 
the rules of subsections (d) and (e) of section 3507 shall apply.
    ``(e) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out the purposes of this section.''
    (c) Credit Amount Not Allowed As Medical Expense Deduction.--
Section 213 of the Internal Revenue Code of 1986 (relating to medical, 
dental, etc., expenses), as amended by section 212(c), is amended by 
adding at the end the following new subsection:
    ``(h) Coordination With Catastrophic Health Insurance Plan Premiums 
Credit.--The amount otherwise taken into account under subsection (a) 
as expenses paid for medical care shall be reduced by the amount (if 
any) of the amount taken into account under section 34A for the taxable 
year.''
    (d) Clerical Amendments.--
            (1) The table of sections for subpart A of part IV of 
        subchapter A of chapter 1 of the Internal Revenue Code of 1986 
        is amended by inserting after the item relating to section 34 
        the following new item:

                              ``Sec. 34A. Catastrophic health insurance 
                                        plan premiums.''
            (2) The table of sections for chapter 25 of such Code is 
        amended by adding after the item relating to section 3507 the 
        following new item:

                              ``Sec. 3507A. Advance payment of 
                                        catastrophic health insurance 
                                        plan premiums credit.''

SEC. 702. PROHIBITION OF RESTRICTIONS RELATING TO THE USE OF COLLECTION 
              PROCEDURES.

    No provision of Federal, State, or local law shall apply that 
prohibits the use of any statutory procedure for the collection of 
unpaid debts for medical expenses incurred by individuals who are 
eligible for the credit allowed under section 34A of the Internal 
Revenue Code of 1986, but who fail to claim such credit.

     TITLE VIII--REWARD PREVENTIVE MEDICINE AND HEALTHY LIFESTYLES

SEC. 801. REWARD PREVENTIVE MEDICINE AND HEALTHY LIFESTYLES.

    In the case of any health insurance plan, no provision of State or 
local law shall apply that restricts the reduction of premiums or the 
allowance of incentives with respect to such plans for individuals who 
pursue healthy lifestyles.

      TITLE IX--REFORM MEDICAID AND EXPAND CHOICES UNDER MEDICARE

                          Subtitle A--Medicaid

SEC. 901. CAP ON FEDERAL PAYMENTS MADE FOR MEDICAL ASSISTANCE UNDER THE 
              MEDICAID PROGRAM.

    (a) In General.--Title XIX (42 U.S.C. 1396 et seq.) is amended by 
redesignating section 1931 as section 1932 and by inserting after 
section 1930 the following new section:

          ``cap on federal payment made for medical assistance

    ``Sec. 1931. (a) Annual Federal Cap.--For purposes of furnishing 
medical assistance to eligible individuals, the Secretary shall pay to 
a State for a fiscal year under section 1903 an amount that does not 
exceed the State total funding amount determined under subsection (b).
    ``(b) State Total Funding Amount.--
            ``(1) In general.--A State's total funding amount for a 
        fiscal year is an amount equal to the sum of--
                    ``(A) the State's acute care funding amount for the 
                fiscal year determined under subsection (c); and
                    ``(B) the State's long-term care funding amount for 
                the fiscal year determined under subsection (d).
            ``(2) Estimations of and adjustments to state total funding 
        amount.--The Secretary shall--
                    ``(A) establish a process for estimating the State 
                total funding amount under this subsection at the 
                beginning of each fiscal year and adjusting such amount 
                during such fiscal year; and
                    ``(B) notify each State of the estimations and 
                adjustments referred to in subparagraph (A).
    ``(c) State Acute Care Funding Amount.--
            ``(1) In general.--A State's acute care funding amount for 
        a fiscal year is an amount equal to the product of--
                    ``(A) the per capita acute care funding amount 
                determined under paragraph (2) for the State for such 
                fiscal year, multiplied by
                    ``(B) the total number of eligible individuals 
                receiving medical assistance in the form of acute 
                medical services in the State during the fiscal year.
            ``(2) Per capita acute care funding amount.--
                    ``(A) In general.--The Secretary shall calculate 
                for each State a per capita acute care funding amount 
                in accordance with subparagraph (B) for each fiscal 
                year.
                    ``(B) Determination of per capita acute care 
                funding amounts.--
                            ``(i) In general.--The per capita acute 
                        care funding amount for a State shall be--
                                    ``(I) for fiscal year 1995, an 
                                amount equal to the base acute care per 
                                capita funding amount (as determined 
                                under clause (ii)) updated by the 
                                estimated change in the medical 
                                consumer price index through the 
                                midpoint of fiscal year 1995; and
                                    ``(II) for fiscal year 1996 and 
                                succeeding fiscal years, an amount 
                                equal to the amount determined under 
                                this clause for the previous fiscal 
                                year updated through the midpoint of 
                                the fiscal year by the estimated 
                                percentage change in the medical 
                                consumer price index during the 12-
                                month period ending at that midpoint, 
                                with appropriate adjustments to reflect 
                                previous underestimations or 
                                overestimations under this clause in 
                                the projected percentage change in the 
                                medical consumer price index.
                            ``(ii) Base per capita acute care funding 
                        amount.--The base per capita acute care funding 
                        amount for a State is an amount equal to the 
                        quotient of--
                                    ``(I) the total amount of Federal 
                                funds paid to such State under section 
                                1903 for fiscal year 1993 for 
                                furnishing medical assistance in the 
                                form of acute medical services to 
                                eligible individuals; divided by
                                    ``(II) the total number of eligible 
                                individuals who received medical 
                                assistance in the form of acute medical 
                                services in such State during fiscal 
                                year 1993.
    ``(d) State Long-Term Care Funding Amount.--
            ``(1) In general.--A State's long-term care funding amount 
        for a fiscal year is an amount equal to the product of--
                    ``(A) the per capita long-term care funding amount 
                determined under paragraph (2) for the State for such 
                fiscal year, multiplied by
                    ``(B) the total number of eligible individuals 
                receiving medical assistance in the form of long-term 
                care services in the State during the fiscal year.
            ``(2) Per capita long-term care funding amount.--
                    ``(A) In general.--The Secretary shall calculate 
                for each State a per capita long-term care funding 
                amount in accordance with subparagraph (B) for each 
                fiscal year.
                    ``(B) Determination of per capita long-term care 
                funding amounts.--
                            ``(i) In general.--The per capita long-term 
                        care funding amount for a State shall be--
                                    ``(I) for fiscal year 1995, an 
                                amount equal to the base long-term care 
                                per capita funding amount (as 
                                determined under clause (ii)) updated 
                                by the estimated change in the medical 
                                consumer price index through the 
                                midpoint of fiscal year 1995; and
                                    ``(II) for fiscal year 1996 and 
                                succeeding fiscal years, an amount 
                                equal to the amount determined under 
                                this clause for the previous fiscal 
                                year updated through the midpoint of 
                                the fiscal year by the estimated 
                                percentage change in the medical 
                                consumer price index during the 12-
                                month period ending at that midpoint, 
                                with appropriate adjustments to reflect 
                                previous underestimations or 
                                overestimations under this clause in 
                                the projected percentage change in the 
                                medical consumer price index.
                            ``(ii) Base per capita long-term care 
                        funding amount.--The base per capita long-term 
                        care funding amount for a State is an amount 
                        equal to the quotient of--
                                    ``(I) the total amount of Federal 
                                funds paid to such State under section 
                                1903 for fiscal year 1993 for 
                                furnishing medical assistance in the 
                                form of long-term care services to 
                                eligible individuals; divided by
                                    ``(II) the total number of eligible 
                                individuals who received medical 
                                assistance in the form of long-term 
                                care medical services in such State 
                                during fiscal year 1993.
    ``(e) Definitions.--For purposes of this section:
            ``(1) Acute medical services.--The term `acute medical 
        services' means all of the care and services furnished to 
        individuals eligible under a State plan under this title other 
        than long-term care services.
            ``(2) Eligible individual.--The term `eligible individual' 
        means an individual who is a member of any group of individuals 
        described in section 1902(a)(10) that is eligible to receive 
        medical assistance under the State plan under this title.
            ``(3) Long-term care services.--The term `long-term care 
        services' means the following care and services furnished to 
        individuals eligible under a State plan under this title:
                    ``(A) Nursing facility services (as defined in 
                section 1905(f)).
                    ``(B) Intermediate care facility for the mentally 
                retarded services (as defined in section 1905(d)).
                    ``(C) Personal care services (as described in 
                section 1905(a)(24)).
                    ``(D) Private duty nursing services (as referred to 
                in section 1905(a)(8)).
                    ``(E) Home or community-based services furnished 
                under a waiver granted under subsection (c), (d), or 
                (e) of section 1915.
                    ``(F) Home and community care furnished to 
                functionally disabled elderly individuals under section 
                1929.
                    ``(G) Community supported living arrangements 
                services under section 1930.
                    ``(H) Case-management services (as described in 
                section 1915(g)(2)).
                    ``(I) Home health care services (as referred to in 
                section 1905(a)(7)).
                    ``(J) Hospice care.
            ``(4) Medical consumer price index.--The term `medical 
        consumer price index' means the consumer price index for 
        medical services as determined by the Bureau of Labor 
        Statistics.''
    (b) Requiring State Maintenance of Effort.--Section 1902(a) (42 
U.S.C. 1369a(a)) is amended--
            (1) by striking ``and'' at the end of paragraph (61);
            (2) by striking the period at the end of paragraph (62) and 
        inserting ``; and''; and
            (3) by adding at the end the following new paragraph:
            ``(63) provide that the State will continue to make 
        eligible for medical assistance under section 1902(a)(10) any 
        class or category of individuals eligible for medical 
        assistance under such section during fiscal year 1993.''
    (c) Effective Date.--The amendments made by this section shall be 
effective with respect to fiscal years beginning on or after October 1, 
1994.

SEC. 902. WAIVERS FOR FURNISHING MEDICAL ASSISTANCE UNDER THE MEDICAID 
              PROGRAM.

    (a) In General.--Title XIX of the Social Security Act (42 U.S.C. 
1396 et seq.), as amended by section 901, is amended by redesignating 
section 1932 as section 1933 and by inserting after section 1931 the 
following new section:

 ``waivers for furnishing medical assistance under the medicaid program

    ``Sec. 1932. (a) In General.--The Secretary shall establish a 
process under which a State with a State plan approved under this title 
may apply for waivers of any of the requirements under this title in 
order to establish innovative and cost-effective programs for 
furnishing medical assistance to eligible individuals (as defined in 
section 1931(e)(2)).
    ``(b) Application for Waivers.--
            ``(1) In general.--In order to receive a waiver under 
        subsection (a), a State shall submit an application to the 
        Secretary at such time and containing such information as the 
        Secretary determines appropriate.
            ``(2) Approval of application.--
                    ``(A) Initial review.--Within 60 days after an 
                application is submitted by the State under this 
                subsection, the Secretary shall review and approve such 
                application or provide the State with a list of the 
                modifications that are necessary for such application 
                to be approved.
                    ``(B) Additional review.--Within 60 days after a 
                State resubmits any application under this subsection, 
                the Secretary shall review and approve such application 
                or provide the State with a summary of which items 
                included on the list provided to the State under 
                subparagraph (A) remain unsatisfied. A State may 
                resubmit an application under this subparagraph as many 
                times as necessary to gain approval.
    ``(c) Duration of Waivers.--Except as provided in subsection (d), 
any waiver under this section shall be granted for a period of 5 years, 
and renewed for subsequent 5-year periods, unless the Secretary 
determines that the State has failed to furnish medical assistance in 
accordance with the terms of the waiver and any provisions of this 
title with respect to which the Secretary has not granted a waiver.
    ``(d) Termination of Waivers.--The Secretary may terminate a waiver 
granted under this section at any time if the Secretary determines that 
the State has failed to furnish medical assistance in accordance with 
the terms of the waiver and any provisions of this title with respect 
to which the Secretary has not granted a waiver.
    ``(e) Reports.--The State shall evaluate the programs operated 
under a waiver granted under this section and submit reports to the 
Secretary at such times and containing such information as the 
Secretary shall require.''
    (b) Effective Date.--The amendment made by subsection (a) shall be 
effective with respect to fiscal years beginning on or after October 1, 
1994.

                          Subtitle B--Medicare

SEC. 951. INDIVIDUAL ELECTION FOR TYPE OF COVERAGE.

    (a) Election for New Eligibles.--
            (1) In general.--Title XVIII of the Social Security Act (42 
        U.S.C. 1395 et seq.) is amended by adding after section 1804 
        the following new section:

               ``individual election for type of coverage

    ``Sec. 1805. (a) An individual may enroll with a private health 
care arrangement under section 1893 or an eligible organization under 
section 1876 only if such individual has elected to enroll with such an 
arrangement or organization within 1 year after the date that the 
individual--
            ``(1) becomes entitled to benefits under part A of this 
        title, or
            ``(2) foregoes a health benefit plan operated, sponsored, 
        or contributed to, by the individual's employer or former 
        employer (or the employer or former employer of the 
        individual's spouse) where such plan was the individual's 
        primary insurer.
    ``(b) If an individual makes an election under subsection (a), such 
individual shall be entitled to payment under this title only if such 
individual remains enrolled with an arrangement or organization 
described in such subsection.''
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply with respect to individuals who become entitled to 
        benefits under part A of title XVIII of the Social Security Act 
        on or after October 1, 1994.
    (b) Election for Current Eligibles.--
            (1) Enrollment with a private health care arrangement or 
        eligible organization.--
                    (A) In general.--If an individual is entitled to 
                benefits under part A of title XVIII of the Social 
                Security Act on or before September 30, 1994, such 
                individual may elect to enroll with a private health 
                care arrangement under section 1893 of such Act or an 
                eligible organization under section 1876 of such Act 
                only if such election is made on or before March 31, 
                1995.
                    (B) Payment.--If an individual makes an election 
                under subparagraph (A), such individual shall be 
                entitled to payment under title XVIII of the Social 
                Security Act only if such individual remains enrolled 
                with an arrangement or organization described in such 
                subparagraph.
            (2) Decision to return to fee for service plan.--If an 
        individual is enrolled with an eligible organization under 
        section 1876 of the Social Security Act (42 U.S.C. 1395mm) on 
        or before September 30, 1994, such individual may terminate the 
        individual's enrollment with such organization on or before 
        March 31, 1995, without being subject to the payment limitation 
        described in paragraph (1)(B).
            (3) Effective date.--This subsection shall take effect on 
        October 1, 1994.

SEC. 952. HEALTH CARE COVERAGE UNDER A PRIVATE HEALTH CARE ARRANGEMENT.

    (a) In General.--Part C of title XVIII of the Social Security Act 
(42 U.S.C. 1395x et seq.) is amended by adding at the end the following 
new section:

             ``payments to private health care arrangements

    ``Sec. 1893. (a) Payments.--
            ``(1) In general.--The Secretary shall make payment as 
        specified in subsection (c) for each individual who is enrolled 
        with a private health care arrangement.
            ``(2) Sole payments.--Payments to an individual under this 
        section shall be in lieu of the amounts that would otherwise be 
        payable pursuant to sections 1814(b) and 1833(a).
    ``(b) Certification.--
            ``(1) In general.--An individual who is enrolled with a 
        private health care arrangement shall certify to the Secretary, 
        by not later than December 15 of each year, the individual's 
        enrollment for the coming calendar year. Such certification 
        shall indicate the individual's annual premium amount.
            ``(2) Failure to certify.--For purposes of determining 
        payment under subsection (c), an individual who fails to 
        provide the certification described in paragraph (1) shall be 
        deemed to be enrolled with the private health care arrangement 
        at the same premium for which the Secretary last received a 
        certification.
    ``(c) Payment Amount Specified.--
            ``(1) Private health care arrangement.--
                    ``(A) In general.--In January of each year, the 
                Secretary shall pay the private health care arrangement 
                certified by the individual under subsection (b)(1), 
                the lesser of--
                            ``(i) the individual's annual premium 
                        amount, or
                            ``(ii) the per capita amount specified 
                        under paragraph (2).
                    ``(B) Return of payment.--In the event of the death 
                of an individual, the private health care arrangement 
                certified by the individual under subsection (b)(1) 
                shall reimburse the Secretary for a prorated portion of 
                the amount received under subparagraph (A), less any 
                amount expended by the private health care arrangement 
                for the health care expenses for such individual. Such 
                amount (if any) shall be deposited in the Federal 
                Hospital Insurance Trust Fund and the Federal 
                Supplementary Medical Insurance Trust Fund in the same 
                proportion as such payment was paid by each trust fund 
                under subsection (e).
            ``(2) Per capita amount.--
                    ``(A) In general.--The Secretary shall annually 
                determine, and shall announce (in a manner intended to 
                provide notice to interested parties) not later than 
                September 7 before the calendar year concerned, the per 
                capita amount.
                    ``(B) Determination of per capita rate of 
                payment.--The per capita amount for each group of 
                individuals (based on residency, age, and gender) is 
                equal to--
                            ``(i) the total estimated government 
                        expenditures for all benefits under parts A and 
                        B of this title in the coming calendar year for 
                        such group (excluding any premiums, 
                        deductibles, and copayments paid by individuals 
                        for benefits under part B), divided by
                            ``(ii) the total estimated number of 
                        individuals in such group expected to be 
                        entitled to benefits under part A and enrolled 
                        in part B in the coming calendar year.
            ``(3) Additional amounts for certain individuals.--
                    ``(A) Low-cost plans.--The Secretary shall pay 
                annually to an individual enrolled with a private 
                health care arrangement one-half of the excess (if any) 
                of--
                            ``(i) the per capita amount under paragraph 
                        (2), over
                            ``(ii) the annual premium for the 
                        individual's private health care arrangement 
                        (or in the case of a private health care 
                        arrangement that is a catastrophic health 
                        insurance plan, the annual premium for such 
                        plan and the annual deductible amount for such 
                        plan).
                    ``(B) Long term care plan.--The Secretary shall pay 
                annually to an individual who has received payment 
                under subparagraph (A) and is enrolled with a long term 
                care plan, an additional payment equal to the amount 
                received by such individual under subparagraph (A).
    ``(d) Definitions.--For purposes of this section:
            ``(1) Catastrophic health insurance plan.--The term 
        `catastrophic health insurance plan' has the meaning given to 
        such term by section 220(c)(2)(A) of the Internal Revenue Code 
        of 1986.
            ``(2) Long term care plan.--The term `long term care plan' 
        means a plan which covers services of the type identified in 
        section 1931(e)(3).
            ``(3) Medical savings account.--The term `medical savings 
        account' has the meaning given to such term by section 
        220(d)(1) of the Internal Revenue Code of 1986.
            ``(4) Private health care arrangement.--The term `private 
        health care arrangement' means--
                    ``(A) any arrangement which offers at least the 
                health care services described in section 
                1876(b)(2)(A), or
                    ``(B) a catastrophic health insurance plan in 
                connection with a medical savings account.
    ``(e) Source of Payment.--The payment to an individual under this 
section shall be made from the Federal Hospital Insurance Trust Fund 
and the Federal Supplementary Medical Insurance Trust Fund. The 
proportion of the payment to be paid by each trust fund shall be 
determined each year by the Secretary based on the relative proportion 
of government expenditures that benefits from each fund contribute to 
the per capita amount determined under subsection (b)(2)(B).''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to payments made on or after October 1, 1994.

        TITLE X--ENHANCED EFFICIENCY THROUGH PAPERWORK REDUCTION

SEC. 1001. FEDERAL PAPERWORK REDUCTION AND EFFICIENCY REQUIREMENTS.

    (a) In General.--The Secretary of Health and Human Services 
(hereafter referred to in this title as the ``Secretary'') shall, in 
consultation with the Director of the Office of Management and Budget, 
the Secretary of Veterans Affairs, the Secretary of Defense, the 
Director of Personnel Management, and other appropriate Federal 
officials, adopt standards to reduce the administrative and paperwork 
burdens of all Federal health care programs by--
            (1) 50 percent within the 2-year period following the date 
        of the enactment of this Act, and
            (2) an additional 50 percent reduction from the balance 
        specified in (1) over a subsequent 3-year period,
for a total reduction of 75 percent over the 5-year period following 
the date of the enactment of this Act.
    (b) Initial Reduction.--In order to achieve a paperwork reduction 
described in subsection (a)(1), the Secretary, shall adopt standards 
for Federal health care programs relating to each of the following:
            (1) Data elements for use in paper and electronic claims 
        processing under health insurance plans, as well as for use in 
        utilization review and management of care (including data 
        fields, formats, and medical nomenclature, and including plan 
        benefit and insurance information).
            (2) Uniform claims forms (including uniform procedure and 
        bill codes for use with such forms and including information on 
        other health insurance plans that may be liable for benefits).
            (3) Uniform electronic transmission of the data elements 
        (for purposes of billing and utilization review).
Standards under paragraph (3) relating to electronic transmission of 
data elements for claims for services shall supersede (to the extent 
specified in such standards) the standards adopted under paragraph (2) 
relating to the submission of paper claims for such services. Standards 
under paragraph (3) shall include protections to assure the 
confidentiality of patient-specific information and to protect against 
the unauthorized use and disclosure of information.
    (c) Subsequent Reduction.--In order to achieve a further paperwork 
reduction described in subsection (a)(2), the Secretary shall modify by 
regulation the standards adopted under subsection (b). The modification 
of the standards may include such recommendations as reported by the 
Standardized Form Commission in section 1003, or any other provisions 
necessary to meet the goals for reduction in the paperwork burden of 
Federal health care programs.
    (d) Definition.--For purposes of this section, the term ``Federal 
health care program'' means all Federal programs related to health 
care, including programs described in--
            (1) title XVIII or XIX of the Social Security Act,
            (2) the Public Health Service Act,
            (3) chapter 55 of title 10, United States Code,
            (4) chapter 17 of title 38, United States Code,
            (5) chapter 89 of title 5, United States Code, or
            (6) the Indian Health Care Improvement Act.

SEC. 1002. STATE PAPERWORK REDUCTION AND EFFICIENCY REQUIREMENTS.

    (a) In General.--In order to be eligible for Federal funds in 
connection with any State-administered health care program, each State 
shall standardize the processing of paper and electronic claims to 
reduce the administrative and paperwork burdens on such programs by 75 
percent during the 5-year period following the date of the enactment of 
this Act.
    (b) Enforcement.--
            (1) Interim evaluation.--If at the end of the 4-year period 
        following the date of the enactment of this Act the Secretary 
        determines that a State has not achieved substantial progress 
        toward the reductions required under subsection (a), the 
        Secretary shall notify such State regarding the proportion of 
        required reductions achieved and the further reduction 
        necessary to achieve compliance with subsection (a).
            (2) Final compliance.--If at the end of the 5-year period 
        following the date of the enactment of this Act the Secretary 
        determines that a State has not achieved the reductions 
        required under subsection (a), the Secretary shall reduce 
        Federal payments for health care programs administered by such 
        State by 10 percent. For each year that such State fails to 
        comply with the requirements of subsection (a), Federal 
        payments for health care programs administered by the State 
        shall be reduced by an additional 10 percent.
            (3) Waivers of payment reductions.--Any State subject to a 
        reduction in Federal payments under paragraph (2) may appeal to 
        the Secretary for a 1-year waiver of such reduction. In 
        granting such a waiver, the Secretary shall make a 
        determination of the good faith effort of such State to comply 
        with the requirements of subsection (a), taking into account 
        the technical, practical, and financial capabilities of the 
        State in meeting such requirements.

SEC. 1003. STANDARDIZED FORMS COMMISSION.

    (a) In General.--
            (1) Establishment.--Not later than 12 months after the date 
        of the enactment of this Act, the Secretary shall establish a 
        Standardized Forms Commission (hereafter referred to in this 
        section as the ``Commission'') which shall make recommendations 
        on the standardization of paper and electronic claims 
        processing so as to reduce the paperwork burden associated 
        with, and enhance the efficiency and productivity of, such 
        claims processing.
            (2) Membership.--
                    (A) In General.--The Commission shall be composed 
                of at least 12 but not more than 20 representatives of 
                private health care providers and private insurers.
                    (B) Chair.--The Secretary shall appoint a Chair of 
                the Commission.
            (3) Report on findings and recommendations.--Not later than 
        24 months after the date of the enactment of this Act, the 
        Chair of the Commission shall report to the Secretary on the 
        findings and recommendations of the Commission.
            (4) Prohibition of compensation.--Members of the Commission 
        shall serve without pay except for reimbursement for travel 
        expenses, including per diem in lieu of subsistence, in 
        accordance with sections 5702 and 5703 of title 5, United 
        States Code.
            (5) Staff of federal agencies.--Upon request of the Chair, 
        the head of any Federal department or agency shall detail any 
        of the personnel of that department or agency to the Commission 
        to assist it in carrying out its duties under this section.
            (6) Obtaining official data.--The Commission may secure 
        directly from any department or agency of the United States 
        information necessary to enable it to carry out this section.
            (7) Administrative support services.--Upon request of the 
        Chair, the Administrator of General Services shall provide to 
        the Commission the administrative support services necessary 
        for the Commission to carry out its responsibilities under this 
        section.
    (b) Legislative Proposal.--
            (1) In general.--
                    (A) Development of implementing bill.--Not later 
                than 3 months after the Commission has submitted its 
                findings and recommendations to the Secretary, the 
                Secretary shall take such recommendations and submit 
                them to Congress in the form of an implementing bill 
                which contains the provisions necessary or appropriate 
                to implement the recommendations by either repealing or 
                amending existing laws or providing new statutory 
                authority.
                    (B) Consideration of implementing bill.--The 
                implementing bill described in subparagraph (A) shall 
                be considered by Congress under the procedures for 
                consideration described in paragraph (2).
            (2) Congressional consideration.--
                    (A) Rules of house of representatives and senate.--
                This paragraph is enacted by Congress--
                            (i) as an exercise of the rulemaking power 
                        of the House of Representatives and the Senate, 
                        respectively, and as such is deemed a part of 
                        the rules of each House, respectively, but 
                        applicable only with respect to the procedure 
                        to be followed in that House in the case of an 
                        implementing bill described in paragraph 
                        (1)(A), and supersedes other rules only to the 
                        extent that such rules are inconsistent 
                        therewith; and
                            (ii) with full recognition of the 
                        constitutional right of either House to change 
                        the rules (so far as relating to the procedure 
                        of that House) at any time, in the same manner 
                        and to the same extent as in the case of any 
                        other rule of that House.
                    (B) Introduction and referral.--On the day on which 
                the implementing bill described in paragraph (1)(A) is 
                transmitted to the House of Representatives and the 
                Senate, such bill shall be introduced (by request) in 
                the House of Representatives by the Majority Leader of 
                the House, for himself and the Minority Leader of the 
                House, or by Members of the House designated by the 
                Majority Leader and Minority Leader of the House and 
                shall be introduced (by request) in the Senate by the 
                Majority Leader of the Senate, for himself and the 
                Minority Leader of the Senate, or by Members of the 
                Senate designated by the Majority Leader and Minority 
                Leader of the Senate. If either House is not in session 
                on the day on which the implementing bill is 
                transmitted, the bill shall be introduced in the House, 
                as provided in the preceding sentence, on the first day 
                thereafter on which the House is in session. The 
                implementing bill introduced in the House of 
                Representatives and the Senate shall be referred to the 
                appropriate committees of each House.
                    (C) Amendments prohibited.--No amendment to an 
                implementing bill shall be in order in either the House 
                of Representatives or the Senate and no motion to 
                suspend the application of this paragraph shall be in 
                order in either House, nor shall it be in order in 
                either House for the Presiding Officer to entertain a 
                request to suspend the application of this paragraph by 
                unanimous consent.
                    (D) Period for committee and floor consideration.--
                            (i) In general.--Except as provided in 
                        clause (ii), if the committee or committees of 
                        either House to which an implementing bill has 
                        been referred have not reported it at the close 
                        of the 45th day after its introduction, such 
                        committee or committees shall be automatically 
                        discharged from further consideration of the 
                        implementing bill and it shall be placed on the 
                        appropriate calendar. A vote on final passage 
                        of the implementing bill shall be taken in each 
                        House on or before the close of the 45th day 
                        after the implementing bill is reported by the 
                        committees or committee of that House to which 
                        it was referred, or after such committee or 
                        committees have been discharged from further 
                        consideration of the implementing bill. If 
                        prior to the passage by 1 House of an 
                        implementing bill of that House, that House 
                        receives the same implementing bill from the 
                        other House then--
                                    (I) the procedure in that House 
                                shall be the same as if no implementing 
                                bill had been received from the other 
                                House; but
                                    (II) the vote on final passage 
                                shall be on the implementing bill of 
                                the other House.
                            (ii) Computation of days.--For purposes of 
                        clause (i), in computing a number of days in 
                        either House, there shall be excluded--
                                    (I) the days on which either House 
                                is not in session because of an 
                                adjournment of more than 3 days to a 
                                day certain, or an adjournment of the 
                                Congress sine die, and
                                    (II) any Saturday and Sunday not 
                                excluded under subclause (I) when 
                                either House is not in session.
                    (E) Floor consideration in the house of 
                representatives.--
                            (i) Motion to proceed.--A motion in the 
                        House of Representatives to proceed to the 
                        consideration of an implementing bill shall be 
                        highly privileged and not debatable. An 
                        amendment to the motion shall not be in order, 
                        nor shall it be in order to move to reconsider 
                        the vote by which the motion is agreed to or 
                        disagreed to.
                            (ii) Debate.--Debate in the House of 
                        Representatives on an implementing bill shall 
                        be limited to not more than 20 hours, which 
                        shall be divided equally between those favoring 
                        and those opposing the bill. A motion further 
                        to limit debate shall not be debatable. It 
                        shall not be in order to move to recommit an 
                        implementing bill or to move to reconsider the 
                        vote by which an implementing bill is agreed to 
                        or disagreed to.
                            (iii) Motion to postpone.--Motions to 
                        postpone, made in the House of Representatives 
                        with respect to the consideration of an 
                        implementing bill, and motions to proceed to 
                        the consideration of other business, shall be 
                        decided without debate.
                            (iv) Appeals.--All appeals from the 
                        decisions of the Chair relating to the 
                        application of the Rules of the House of 
                        Representatives to the procedure relating to an 
                        implementing bill shall be decided without 
                        debate.
                            (v) General rules apply.--Except to the 
                        extent specifically provided in the preceding 
                        provisions of this subparagraph, consideration 
                        of an implementing bill shall be governed by 
                        the Rules of the House of Representatives 
                        applicable to other bills and resolutions in 
                        similar circumstances.
                    (F) Floor consideration in the senate.--
                          (i) Motion to proceed.--A motion in the 
                        Senate to proceed to the consideration of an 
                        implementing bill shall be privileged and not 
                        debatable. An amendment to the motion shall not 
                        be in order, nor shall it be in order to move 
                        to reconsider the vote by which the motion is 
                        agreed to or disagreed to.
                            (ii) General debate.--Debate in the Senate 
                        on an implementing bill, and all debatable 
                        motions and appeals in connection therewith, 
                        shall be limited to not more than 20 hours. The 
                        time shall be equally divided between, and 
                        controlled by, the Majority Leader and the 
                        Minority Leader or their designees.
                            (iii) Debate of motions and appeals.--
                        Debate in the Senate on any debatable motion or 
                        appeal in connection with an implementing bill 
                        shall be limited to not more than 1 hour, to be 
                        equally divided between, and controlled by, the 
                        mover and the manager of the implementing bill, 
                        except that in the event the manager of the 
                        implementing bill is in favor of any such 
                        motion or appeal, the time in opposition 
                        thereto, shall be controlled by the Minority 
                        Leader or his designee. Such leaders, or either 
                        of them, may, from time under their control on 
                        the passage of an implementing bill, allot 
                        additional time to any Senator during the 
                        consideration of any debatable motion or 
                        appeal.
                            (iv) Other motions.--A motion in the Senate 
                        to further limit debate is not debatable. A 
                        motion to recommit an implementing bill is not 
                        in order.
    (c) Failure To Comply With Recommendations Enacted.--A health care 
provider or health care insurer that fails to comply with any 
recommendations of the Commission that are enacted in accordance with 
subsection (b) and that are applicable to such provider or insurer 
shall be ineligible for payments of claims submitted under any 
provision of the Social Security Act or the Public Health Service Act.

             TITLE XI--MEANINGFUL MEDICAL LIABILITY REFORM

SEC. 1101. APPLICABILITY AND PREEMPTION.

    (a) Applicability.--This title shall apply with respect to any 
medical malpractice liability claim and to any medical malpractice 
liability action brought in any State or Federal court, except that 
this title shall not apply to a claim or action for damages arising 
from a vaccine-related injury or death to the extent that title XXI of 
the Public Health Service Act applies to the claim or action.
    (b) Preemption.--
            (1) In general.--The provisions of this title shall preempt 
        any State or local law to the extent such law is inconsistent 
        with the limitations contained in such provisions. The 
        provisions of this title shall not preempt any State law that 
        provides for defenses or places limitations on a person's 
        liability in addition to those contained in this title, places 
        greater limitations on the amount of attorneys' fees and 
        expenses that can be collected, or otherwise imposes greater 
        restrictions than those provided in this title.
            (2) Negotiated liability.--The provisions of this title 
        shall preempt any Federal, State or local law to the extent 
        that such law prohibits a health care provider and a purchaser 
        of health care from voluntarily entering into a contractual 
        agreement in which the provider offers reduced fees for medical 
        services in exchange for a prearranged limit on the amount of 
        any award in a medical malpractice liability action resulting 
        from the provision of such services or a limit on the cause of 
        action that may be maintained with respect to such services.
    (c) Effect on Sovereign Immunity and Choice of Law or Venue.--
Nothing in subsection (b) shall be construed to--
            (1) waive or affect any defense of sovereign immunity 
        asserted by any State under any provision of law;
            (2) waive or affect any defense of sovereign immunity 
        asserted by the United States;
            (3) affect the applicability of any provision of the 
        Foreign Sovereign Immunities Act of 1976;
            (4) preempt State choice-of-law rules with respect to 
        claims brought by a foreign nation or a citizen of a foreign 
        nation; or
            (5) affect the right of any court to transfer venue or to 
        apply the law of a foreign nation or to dismiss a claim of a 
        foreign nation or of a citizen of a foreign nation on the 
        ground of inconvenient forum.
    (d) Federal Court Jurisdiction Not Established on Federal Question 
Grounds.--Nothing in this title shall be construed to establish any 
jurisdiction in the district courts of the United States over medical 
malpractice liability actions on the basis of section 1331 or 1337 of 
title 28, United States Code.

SEC. 1102. STATUTE OF LIMITATIONS.

    (a) In General.--Except as provided in subsection (b), no medical 
malpractice liability action shall be initiated after the expiration of 
the 2-year period that begins on the later of the date that the alleged 
injury that is the subject of the claim was discovered, or the date on 
which such injury should reasonably have been discovered. In no event 
shall any such action be initiated after the expiration of the 4-year 
period that begins on the date on which the alleged injury occurred.
    (b) Exception for Certain Minors.--In the case of an alleged injury 
suffered by a minor who has not attained 6 years of age, no medical 
malpractice liability action shall be initiated after the expiration of 
the 2-year period that begins on the date on which the alleged injury 
was discovered, or the date on which such injury should reasonably have 
been discovered. In no event shall any such action be initiated after 
the expiration of the 4-year period that begins on the date on which 
the alleged injury occurred, or the date on which the minor attains 8 
years of age, whichever is later.

SEC. 1103. SCOPE OF LIABILITY.

    (a) In General.--With respect to economic and noneconomic damages, 
the liability of each defendant in a medical malpractice liability 
action shall be several only and may not be joint. Such a defendant 
shall be liable only for the amount of economic or noneconomic damages 
allocated to the defendant in direct proportion to such defendant's 
percentage of fault or responsibility for the injury suffered by the 
claimant.
    (b) Determination of Percentage of Liability.--The trier of fact in 
a medical malpractice liability action shall determine the extent of 
each defendant's fault or responsibility for the economic or 
noneconomic damages suffered by the claimant, and shall assign a 
percentage of responsibility for such injury to each such defendant.

SEC. 1104. DISCOVERY; FAILURE TO MAKE OR COOPERATE IN DISCOVERY.

    (a) In General.--All requests for discovery pursuant to a medical 
malpractice liability action shall identify the relevant portion of the 
complaint, answer or other pleading to which responses to the discovery 
requests are expected to relate.
    (b) Fees and Expenses.--With respect to any motion for an order 
compelling discovery that is made pursuant to a medical malpractice 
liability action, the court shall award the prevailing party reasonable 
fees and other expenses incurred by that party in bringing or defending 
against the motion, including reasonable attorney fees, unless the 
court finds that the position of the unsuccessful party was 
substantially justified or that special circumstances make such an 
award unjust.

SEC. 1105. LIMITATION ON NONECONOMIC DAMAGES.

    The total amount of noneconomic damages that may be awarded to a 
claimant and the members of the claimant's family for losses resulting 
from the injury which is the subject of a medical malpractice liability 
action may not exceed $250,000, regardless of the number of parties 
against whom the action is brought or the number of actions brought 
with respect to such injury.

SEC. 1106. TREATMENT OF PAYMENTS FOR FUTURE ECONOMIC LOSSES.

    (a) Prohibiting Single Lump-Sum Payment.--In any medical 
malpractice liability action in which the damages awarded for any 
economic losses to be incurred after the date on which the judgment is 
entered exceeds $100,000, a defendant may not be required to pay such 
damages in a single, lump-sum payment, but shall be permitted to make 
such payments periodically based on projections of the amount of 
damages expected to be incurred by the claimant at appropriate 
intervals, as determined by the court.
    (b) Use of Annuities or Trusts.--The court may require that a 
defendant in a medical malpractice liability action purchase an annuity 
or fund a reversionary trust to make periodic payments under subsection 
as provided for in subsection (a) if the court determines that a 
reasonable basis exists for concluding that the defendant may be unable 
or otherwise fail to make the required periodic payments.
    (c) Requirement of Periodic Payment as Final Order.--A judgment of 
a court awarding periodic payments under this section may not be 
reopened at any time to contest, amend, or modify the schedule or 
amount of the payments in the absence of fraud or any other basis under 
which a party may obtain relief from a final judgment.

SEC. 1107. TREATMENT OF COSTS AND ATTORNEY'S FEES.

    (a) Costs and Fees, Generally.--
            (1) Court discretion.--A court in a medical malpractice 
        liability action may, as a condition of the initiation of such 
        an action, require an undertaking for the payment of the costs 
        associated with such action, including reasonable attorneys' 
        fees.
            (2) Payment of costs.--If a judgment in a medical 
        malpractice liability action is rendered against a party to 
        such action, upon a motion by the prevailing party to such 
        action, the court shall require the party against whom the 
        judgment was rendered to pay to such prevailing party the costs 
        and fees incurred by such prevailing party under the action, 
        including reasonable attorneys' fees and other expenses. The 
        court may waive the application of this paragraph if the court 
        finds that the position maintained by the party against whom 
        such judgment was rendered under such action was substantially 
        justified or that special circumstances make such an award 
        unjust.
            (3) Application for recovery of costs.--A party to a 
        medical malpractice liability action who is seeking an award of 
        costs and fees as provided for in paragraph (2) shall, not 
        later than 30 days after the date on which the final, 
        nonappealable judgment in entered with respect to such action, 
        submit to the appropriate court an application for the recovery 
        of costs and fees. Such application shall contain--
                    (A) a certification that the submitting party is a 
                prevailing party and is eligible to receive costs and 
                fees under paragraph (2);
                    (B) a description of the amount of costs and fees 
                sought, including an itemized statement from any 
                attorney or expert witness representing or appearing on 
                behalf of such party stating the actual time expended 
                and the rate at which fees and other expenses were 
                computed; and
                    (C) a description of the reasons why the position 
                of the party against whom the judgment was rendered was 
                not substantially justified.
        In determining whether or not the position of the nonprevailing 
        party was substantially justified the court shall consider only 
        the record presented in the action maintained for the costs and 
        fees.
            (4) Amount of award.--In making a decision on an 
        application submitted under paragraph (3), the court may--
                    (A) assess the amount to be awarded under this 
                subsection against the party against whom the judgment 
                was rendered or against the attorney (or attorneys) of 
                such party; and
                    (B) reduce the amount to be awarded pursuant to 
                this subsection, or deny an award, to the extent that 
                the prevailing party, during the course of the 
                proceedings, engaged in conduct which unnecessarily and 
                unreasonably lengthened the time for, or increased the 
                costs of, the final resolution of the matter in 
                controversy.
    (b) Attorney's Fees.--
            (1) Contingency fees.--An attorney who represents, on a 
        contingency fee basis, a claimant in a medical malpractice 
        liability claim may not charge, demand, receive, or collect for 
        services rendered in connection with such claim in excess of 
        the following amount recovered by judgment or settlement under 
        such claim:
                    (A) 25 percent of the first $150,000 (or portion 
                thereof) recovered; plus
                    (B) 15 percent of any amount in excess of $150,000 
                recovered.
            (2) Records.--
                    (A) In general.--With respect to a medical 
                malpractice liability action, in order to receive an 
                award of attorneys' fees as provided for in this title, 
                the attorney of record of a party to such action shall 
                have maintained accurate, complete records of hours 
                worked on the action regardless of the fee arrangement 
                entered into by the attorney with such party, including 
                records of other attorneys, legal staff, expert 
                witnesses and others who worked on the action on behalf 
                of such attorney.
                    (B) Calculation.--The court shall determine the 
                amount of reasonable attorneys' fees and expenses that 
                shall be awarded in a medical malpractice liability 
                action under this title on the basis of an hourly rate 
                or as a percentage of the total damages awarded under 
                such action for economic and noneconomic losses. Such 
                amount shall be indexed to account for inflation. The 
                amount of attorneys' fees and expenses as determined by 
                the court may not exceed an amount that would be 
                considered reasonable based on the following:
                            (i) The time, labor, and skill necessary to 
                        properly perform the legal services required by 
                        the action.
                            (ii) The novelty and difficultly of the 
                        questions involved in the action.
                            (iii) The likelihood, if apparent to the 
                        client, that the acceptance of employment with 
                        respect to the client's action will preclude 
                        other employment by the attorney.
                            (iv) The fee customarily charged in the 
                        locality for similar legal services.
                            (v) The amount involved in the action and 
                        the results obtained.
                            (vi) The time limitations imposed by the 
                        client or by the circumstances of the action.
                            (vii) The nature and length of the 
                        professional relationship between the attorney 
                        and the client.
                            (viii) The experience, reputation, and 
                        ability of the attorney performing the services 
                        in connection with the action.

SEC. 1108. CONTRIBUTION AND INDEMNIFICATION.

    (a) Recovery.--With respect to a medical malpractice liability 
action, each nonsettling party may recover contribution and 
indemnification from any other such nonsettling party who, if joined in 
the original action, would have been liable for such damages.
    (b) Release, Dismissal, Settlement.--A party who is released or 
dismissed (with or without prejudice) from, or who, in good faith prior 
to a verdict or judgment, settles a medical malpractice liability 
action shall, upon the execution of the release, dismissal or 
settlement agreement, be discharged from all claims for contribution or 
indemnification brought by nonsettling or other settling parties to 
such action. Any party to such action who asserts a lack of good faith 
shall have the burden of proof concerning such good faith issue.

SEC. 1109. COLLATERAL SOURCES.

    (a) In General.--The total amount of damages received by a claimant 
in a medical malpractice liability action shall be reduced, in 
accordance with subsection (b), by any other payment that has been 
made, or that will be made, to such claimant to compensate such 
claimant for an injury that was part of such action, including 
payments--
            (1) under Federal or State disability or sickness programs;
            (2) under Federal, State, or private health insurance 
        programs;
            (3) under private disability insurance programs;
            (4) under employer wage continuation programs; and
            (5) from any other source that are intended to compensate 
        such claimant for such injury.
    (b) Amount of Reduction.--The amount by which an award of damages 
to a claimant for an injury shall be reduced under subsection (a) shall 
be--
            (1) the total amount of any payments (other than such 
        award) that have been made, or that will be made, to such 
        claimant to compensate such claimant for such injury; and
            (2) the amount paid by such claimant (or by the spouse, 
        parent, or legal guardian of such claimant) to secure the 
        payments described in paragraph (1).

SEC. 1110. DAMAGES RELATING TO MEDICAL PRODUCT LIABILITY CLAIMS.

    (a) In General.--Noneconomic damages may not be awarded with 
respect to any medical product liability claim alleged against a 
medical product producer if--
            (1) the drug or device that is the subject of such claim--
                    (A) was subject to approval under section 505, or 
                premarket approval under section 515, of the Federal 
                Food, Drug, and Cosmetic Act by the Food and Drug 
                Administration with respect to--
                            (i) the safety of the formulation or 
                        performance of the aspect of the drug or 
                        device; or
                            (ii) the adequacy of the packaging or 
                        labeling of the drug or device, and
                    (B) was approved by the Food and Drug 
                Administration; or
            (2) the drug or device is generally recognized as safe and 
        effective pursuant to conditions established by the Food and 
        Drug Administration and applicable regulations, including 
        packaging and labeling regulations.
    (b) Exception in Case of Withheld Information, Misrepresentation, 
or Illegal Payment.--The provisions of subsection (a) shall not apply 
if it is determined on the basis of clear and convincing evidence that 
the medical product producer--
            (1) withheld from or misrepresented to the Food and Drug 
        Administration information concerning such drug or device that 
        is required to be submitted under the Federal Food, Drug, and 
        Cosmetic Act or section 352 of the Public Health Service Act 
        and that is material and relevant to the action involved; or
            (2) made an illegal payment to an official of the Food and 
        Drug Administration for the purpose of securing approval of the 
        drug or device.
    (c) Definition.--As used in this section, the term ``clear and 
convincing evidence'' is that measure or degree of proof that will 
produce in the mind of the trier of fact a firm belief or conviction as 
to the truth of the allegations sought to be established, except that 
such measure or degree of proof is more than that required under 
preponderance of the evidence, but less than that required for proof 
beyond a reasonable doubt.

SEC. 1111. CLASS ACTIONS.

    (a) Recovery by Named Claimants in Class Actions.--In any medical 
malpractice liability action that is certified as a class action 
pursuant to Rule 23 of the Federal Rules of Civil Procedure, the share 
of damages under any final judgment or any settlement that is awarded 
to any party serving as a representative claimant shall be calculated 
in the same manner as the shares of the final judgment or settlement 
awarded to all other members of the claimant class. The preceding 
sentence may not be construed to limit the award to a representative 
claimant of reasonable compensation, costs, and expenses relating to 
the representation of the class.
    (b) Prohibition of Conflicts of Interest.--In any medical 
malpractice liability action that is certified as a class action 
pursuant to Rule 23 of the Federal Rules of Civil Procedure, if a party 
is represented by any attorney who has a beneficial interest in the 
subject of the litigation, the court shall make a determination of 
whether such interest constitutes a conflict of interest sufficient to 
disqualify the attorney from representing the party.
    (c) Receipt of Referral Fees.--In any medical liability action that 
is certified as a class action pursuant to Rule 23 of the Federal Rules 
of Civil Procedure, an attorney may not represent the class if the 
attorney has paid or is obligated to pay a fee to a third party who 
assisted the attorney in obtaining the representation of any party to 
the action. An attorney who knowingly violates this subsection shall be 
barred from representing the party in such action or any action to 
which this title applies.

SEC. 1112. DEFINITIONS.

            (1) Claimant.--The term ``claimant'' means any person who 
        alleges a medical malpractice liability claim, and any person 
        on whose behalf such a claim is alleged, including the decedent 
        in the case of an action brought through or on behalf of an 
        estate.
            (2) Commercial loss.--The term ``commercial loss'' means 
        loss, including damage to the product itself, which is not harm 
        described in subparagraph (A) or (B) of paragraph (5), and 
        which is of a kind for which there is a remedy under applicable 
        contract or commercial law.
            (3) Economic damages.--The term ``economic damages'' means 
        damages paid to compensate an individual for hospital and other 
        medical expenses, lost wages, lost employment, and other 
        pecuniary losses.
            (4) Health care professional.--The term ``health care 
        professional'' means any individual who provides health care 
        services in a State and who is required by the laws or 
        regulations of the State to be licensed or certified by the 
        State to provide such services in the State.
            (5) Harm.--The term ``harm'' means--
                    (A) the personal physical illness, injury, or death 
                of a claimant;
                    (B) the mental anguish or emotional harm of a 
                claimant that is caused by or causing the claimant 
                personal physical illness or injury; or
                    (C) the physical damage caused by a medical product 
                to property other than the medical product itself.
        Such term does not include commercial loss or loss or damage to 
        a medical product.
            (6) Health care provider.--The term ``health care 
        provider'' means any organization or institution that is 
        engaged in the delivery of health care services in a State and 
        that is required by the laws or regulations of the State to be 
        licensed or certified by the State to engage in the delivery of 
        such services in the State.
            (7) Injury.--The term ``injury'' means any illness, 
        disease, or other harm that is the subject of a medical 
        malpractice liability action or a medical malpractice liability 
        claim.
            (8) Medical malpractice liability action.--The term 
        ``medical malpractice liability action'' means a civil action 
        brought in a State or Federal court against a health care 
        provider or health care professional in which the plaintiff 
        alleges a medical malpractice liability claim, but does not 
        include any action in which the plaintiff's sole allegation is 
        an allegation of an intentional tort.
            (9) Medical malpractice liability claim.--The term 
        ``medical malpractice liability claim'' means a claim in which 
        the claimant alleges that injury was caused by the provision of 
        (or the failure to provide) health care services or the use of 
        a medical product.
            (10) Medical product.--
                    (A) In general.--The term ``medical product'' 
                means, with respect to the allegation of a claimant, a 
                drug (as defined in section 201(g)(1) of the Federal 
                Food, Drug, and Cosmetic Act (21 U.S.C. 321(g)(1)) or a 
                medical device (as defined in section 201(h) of the 
                Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321(h)) 
                if--
                            (i) such drug or device was subject to 
                        premarket approval under section 505, 507, or 
                        515 of the Federal Food, Drug, and Cosmetic Act 
                        (21 U.S.C. 355, 357, or 360e) or section 351 of 
                        the Public Health Service Act (42 U.S.C. 262) 
                        with respect to the safety of the formulation 
                        or performance of the aspect of such drug or 
                        device which is the subject of the claimant's 
                        allegation or the adequacy of the packaging or 
                        labeling of such drug or device, and such drug 
                        or device is approved by the Food and Drug 
                        Administration; or
                            (ii) the drug or device is generally 
                        recognized as safe and effective under 
                        regulations issued by the Secretary of Health 
                        and Human Services under section 201(p) of the 
                        Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
                        321(p)).
                    (B) Exception in case of misrepresentation or 
                fraud.--Notwithstanding subparagraph (A), the term 
                ``medical product'' shall not include any product 
                described in such subparagraph if the claimant shows 
                that the product is approved by the Food and Drug 
                Administration for marketing as a result of withheld 
                information, misrepresentation, or an illegal payment 
                by manufacturer of the product.
            (11) Noneconomic damages.--The term ``noneconomic damages'' 
        means damages paid to compensate an individual for losses for 
        physical and emotional pain, suffering, inconvenience, physical 
        impairment, mental anguish, emotional distress, disfigurement, 
        loss of enjoyment of life, loss of society and companionship, 
        loss of consortium, injury to reputation, humiliation, and 
        other noneconomic injury.
            (12) Person.--The term ``person'' means any individual, 
        corporation, company, association, firm, partnership, society, 
        joint stock company, or any other entity, including any 
        governmental entity.

SEC. 1113. SEVERABILITY.

    If any provision of this title or the application of any provision 
to any person or circumstance is held invalid, the remainder of this 
title and the application of such provisions to any other person or 
circumstance shall not be affected by such invalidation.

SEC. 1114. EFFECTIVE DATE.

    This title shall apply to all medical malpractice liability actions 
commenced on or after the date of enactment of this Act.

                      TITLE XII--ANTITRUST REFORMS

SEC. 1201. ESTABLISHMENT OF LIMITED EXEMPTION PROGRAM FOR HEALTH CARE 
              JOINT VENTURES.

    (a) Establishment.--
            (1) In general.--Not later than 6 months after the date of 
        the enactment of this Act, the Attorney General, after 
        consultation with the Secretary of Health and Human Services 
        and the Interagency Advisory Committee on Competition, 
        Antitrust Policy, and Health Care, shall promulgate specific 
        guidelines under which a health care joint venture may submit 
        an application requesting that the Attorney General provide the 
        entities participating in the joint venture with an exemption 
        under which (notwithstanding any other provision of law)--
                    (A) monetary recovery on a claim under the 
                antitrust laws shall be limited to actual damages if 
                the claim results from conduct within the scope of the 
                joint venture that occurs while the exemption is in 
                effect; and
                    (B) the conduct of the entity in making or 
                performing a contract to carry out the joint venture 
                shall not be deemed illegal per se under the antitrust 
                laws but shall be judged on the basis of its 
                reasonableness, taking into account all relevant 
                factors affecting competition, including (but not 
                limited to) effects on competition in properly defined, 
                relevant research, development, product, process, and 
                service markets (taking into consideration worldwide 
                capacity to the extent that it may be appropriate in 
                the circumstances).
            (2) Deadline for response.--The Attorney General, after 
        consultation with the Secretary and the Advisory Committee, 
        shall approve or disapprove the application of a health care 
        joint venture for an exemption under this subsection not later 
        than 30 days after the Attorney General receives the joint 
        venture's application.
            (3) Providing reasons for disapproval.--If the Attorney 
        General disapproves the application of a health care joint 
        venture for an exemption under this subsection, the Attorney 
        General shall provide the joint venture with a statement 
        explaining the reasons for the Attorney General's disapproval.
    (b) Requirements for Approval.--For purposes of subsection (a), the 
Attorney General shall approve the application of a health care joint 
venture for an exemption under subsection (a) if an entity 
participating in the joint venture submits to the Attorney General an 
application not later than 30 days after the entity has entered into a 
written agreement to participate in the joint venture (or not later 
than 30 days after the date of the enactment of this Act in the case of 
a joint venture in effect as of such date) that contains the following 
information and assurances:
            (1) The identities of the parties to the joint venture.
            (2) The nature, objectives, and planned activities of the 
        joint venture.
            (3) Assurances that the entities participating in the joint 
        venture shall notify the Attorney General of any changes in the 
        information described in paragraphs (1) and (2) during the 
        period for which the exemption is in effect.
    (c) Revocation of Exemption.--
            (1) In general.--The Attorney General, after consultation 
        with the Secretary, may revoke an exemption provided to a 
        health care joint venture under this section if, at any time 
        during which the exemption is in effect, the Attorney General 
        finds that the joint venture no longer meets the applicable 
        requirements for approval under subsection (b), except that the 
        Attorney General may not revoke such an exemption if the 
        failure of the health care joint venture to meet such 
        requirements is merely technical in nature.
            (2) Timing.--The revocation of an exemption under paragraph 
        (1) shall apply only to conduct of the health care joint 
        venture occurring after the exemption is no longer in effect.
    (d) Withdrawal of Application.--Any party that submits an 
application under this section may withdraw such application at any 
time before the Attorney General's response to the application.
    (e) Requirements Relating to Notice and Publication of Exemptions 
and Related Information.--
            (1) Publication of approved applications for exemptions in 
        federal register.--
                    (A) In general.--With respect to each exemption for 
                a health care joint venture provided under subsection 
                (a), the Attorney General (acting jointly with the 
                Secretary) shall--
                            (i) prepare a notice with respect to the 
                        joint venture that identifies the parties to 
                        the venture and that describes the planned 
                        activities of the venture;
                            (ii) submit the notice to the entities 
                        participating in the joint venture; and
                            (iii) after submitting the notice to such 
                        entities (but not later than 30 days after 
                        approving the application for the exemption for 
                        the joint venture), publish the notice in the 
                        Federal Register.
                    (B) Effect of publication.--An exemption provided 
                by the Attorney General under subsection (a) shall take 
                effect as of the date of the publication in the Federal 
                Register of the notice with respect to the exemption 
                pursuant to subparagraph (A).
            (2) Waiver of disclosure requirements for information 
        relating to applications for exemptions.--
                    (A) In general.--All information and documentary 
                material submitted as part of an application of a 
                health care joint venture for an exemption under 
                subsection (a), together with any other information 
                obtained by the Attorney General, the Secretary, or the 
                Advisory Committee in the course of any investigation, 
                administrative proceeding, or case with respect to a 
                potential violation of the antitrust laws by the joint 
                venture with respect to which the exemption applies, 
                shall be exempt from disclosure under section 552 of 
                title 5, United States Code, and shall not be made 
                publicly available by any agency of the United States 
                to which such section applies, except as relevant to a 
                law enforcement investigation or in a judicial or 
                administrative proceeding in which such information and 
                material is subject to any protective order.
                    (B) Exception for information included in federal 
                register notice.--Subparagraph (A) shall not apply with 
                respect to information contained in a notice published 
                in the Federal Register pursuant to paragraph (1).
            (3) Use of information to support or answer claims under 
        antitrust laws.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the fact of disclosure of conduct under an 
                application for an exemption under subsection (a) and 
                the fact of publication of a notice in the Federal 
                Register under paragraph (1) shall be admissible into 
                evidence in any judicial or administrative proceeding 
                for the sole purpose of establishing that a person is 
                entitled to the protections provided by an exemption 
                granted under subsection (a).
                    (B) Effect of rejected application.--If the 
                Attorney General denies, in whole or in part, an 
                application for an exemption under subsection (a), or 
                revokes an exemption under such section, neither the 
                negative determination nor the statement of reasons 
                therefor shall be admissible into evidence in any 
                administrative or judicial proceeding for the purpose 
                of supporting or answering any claim under the 
                antitrust laws.

SEC. 1202. ISSUANCE OF HEALTH CARE CERTIFICATES OF PUBLIC ADVANTAGE.

    (a) Issuance and Effect of Certificate.--The Attorney General, 
after consultation with the Secretary and the Advisory Committee, shall 
issue in accordance with this section a certificate of public advantage 
to each eligible health care joint venture that complies with the 
requirements in effect under this section on or after the expiration of 
the 1-year period that begins on the date of the enactment of this Act 
(without regard to whether or not the Attorney General has promulgated 
regulations to carry out this section by such date). Such venture, and 
the parties to such venture, shall not be liable under any of the 
antitrust laws for conduct described in such certificate and engaged in 
by such venture if such conduct occurs while such certificate is in 
effect.
    (b) Requirements Applicable to Issuance of Certificates.--
            (1) Standards to be met.--The Attorney General shall issue 
        a certificate to an eligible health care joint venture if the 
        Attorney General finds that--
                    (A) the benefits that are likely to result from 
                carrying out the venture outweigh the reduction in 
                competition (if any) that is likely to result from the 
                venture, and
                    (B) such reduction in competition is reasonably 
                necessary to obtain such benefits.
            (2) Factors to be considered.--
                    (A) Weighing of benefits against reduction in 
                competition.--For purposes of making the finding 
                described in paragraph (1)(A), the Attorney General 
                shall consider whether the venture is likely --
                            (i) to maintain or to increase the quality 
                        of health care,
                            (ii) to increase access to health care,
                            (iii) to achieve cost efficiencies that 
                        will be passed on to health care consumers, 
                        such as economies of scale, reduced transaction 
                        costs, and reduced administrative costs,
                            (iv) to preserve the operation of health 
                        care facilities located in underserved 
                        geographical areas,
                            (v) to improve utilization of health care 
                        resources, and
                            (vi) to reduce inefficient health care 
                        resource duplication.
                    (B) Necessity of reduction in competition.--For 
                purposes of making the finding described in paragraph 
                (1)(B), the Attorney General shall consider--
                            (i) the ability of the providers of health 
                        care services that are (or likely to be) 
                        affected by the health care joint venture and 
                        the entities responsible for making payments to 
                        such providers to negotiate societally optimal 
                        payment and service arrangements,
                            (ii) the effects of the health care joint 
                        venture on premiums and other charges imposed 
                        by the entities described in clause (i), and
                            (iii) the availability of equally 
                        efficient, less restrictive alternatives to 
                        achieve the benefits that are intended to be 
                        achieved by carrying out the venture.
    (c) Establishment of Criteria and Procedures.--Subject to 
subsections (d) and (e), not later than 1 year after the date of the 
enactment of this Act, the Attorney General and the Secretary shall 
establish jointly by rule the criteria and procedures applicable to the 
issuance of certificates under subsection (a). The rules shall specify 
the form and content of the application to be submitted to the Attorney 
General to request a certificate, the information required to be 
submitted in support of such application, the procedures applicable to 
denying and to revoking a certificate, and the procedures applicable to 
the administrative appeal (if such appeal is authorized by rule) of the 
denial and the revocation of a certificate. Such information may 
include the terms of the health care joint venture (in the case of a 
venture in existence as of the time of the application) and 
implementation plan for the joint venture.
    (d) Eligible Health Care Joint Venture.--To be an eligible health 
care joint venture for purposes of this section, a health care joint 
venture shall submit to the Attorney General an application that 
complies with the rules in effect under subsection (c) and that 
includes--
            (1) an agreement by the parties to the venture that the 
        venture will not foreclose competition by entering into 
        contracts that prevent health care providers from providing 
        health care in competition with the venture,
            (2) an agreement that the venture will submit to the 
        Attorney General annually a report that describes the 
        operations of the venture and information regarding the impact 
        of the venture on health care and on competition in health 
        care, and
            (3) an agreement that the parties to the venture will 
        notify the Attorney General and the Secretary of the 
        termination of the venture not later than 30 days after such 
        termination occurs.
    (e) Review of Applications for Certificates.--Not later than 30 
days after an eligible health care joint venture submits to the 
Attorney General an application that complies with the rules in effect 
under subsection (c) and with subsection (d), the Attorney General 
shall issue or deny the issuance of such certificate. If, before the 
expiration of such 30-day period, the Attorney General fails to issue 
or deny the issuance of such certificate, the Attorney General shall be 
deemed to have issued such certificate.
    (f) Revocation of Certificate.--Whenever the Attorney General finds 
that a health care joint venture with respect to which a certificate is 
in effect does not meet the standards specified in subsection (b), the 
Attorney General shall revoke such certificate.
    (g) Written Reasons; Judicial Review.--
            (1) Denial and revocation of certificates.--If the Attorney 
        General denies an application for a certificate or revokes a 
        certificate, the Attorney General shall include in the notice 
        of denial or revocation a statement of the reasons relied upon 
        for the denial or revocation of such certificate.
            (2) Judicial review.--
                    (A) After administrative proceeding.--(i) If the 
                Attorney General denies an application submitted or 
                revokes a certificate issued under this section after 
                an opportunity for hearing on the record, then any 
                party to the health care joint venture involved may 
                commence a civil action, not later than 60 days after 
                receiving notice of the denial or revocation, in an 
                appropriate district court of the United States for 
                review of the record of such denial or revocation.
                    (ii) As part of the Attorney General's answer, the 
                Attorney General shall file in such court a certified 
                copy of the record on which such denial or revocation 
                is based. The findings of fact of the Attorney General 
                may be set aside only if found to be unsupported by 
                substantial evidence in such record taken as a whole.
                    (B) Denial or revocation without administrative 
                proceeding.--If the Attorney General denies an 
                application submitted or revokes a certificate issued 
                under this section without an opportunity for hearing 
                on the record, then any party to the health care joint 
                venture involved may commence a civil action, not later 
                than 60 days after receiving notice of the denial or 
                revocation, in an appropriate district court of the 
                United States for de novo review of such denial or 
                revocation.
    (h) Exemption.--A person shall not be liable under any of the 
antitrust laws for conduct necessary--
            (1) to prepare, agree to prepare, or attempt to agree to 
        prepare an application to request a certificate under this 
        section, or
            (2) to attempt to enter into any health care joint venture 
        with respect to which such a certificate is in effect.

SEC. 1203. INTERAGENCY ADVISORY COMMITTEE ON COMPETITION, ANTITRUST 
              POLICY, AND HEALTH CARE.

    (a) Establishment.--There is hereby established the Interagency 
Advisory Committee on Competition, Antitrust Policy, and Health Care. 
The Advisory Committee shall be composed of--
            (1) the Secretary of Health and Human Services (or the 
        designee of the Secretary);
            (2) the Attorney General (or the designee of the Attorney 
        General);
            (3) the Director of the Office of Management and Budget (or 
        the designee of the Director); and
            (4) a representative of the Federal Trade Commission.
    (b) Duties.--The duties of the Advisory Committee are--
            (1) to discuss and evaluate competition and antitrust 
        policy, and their implications with respect to the performance 
        of health care markets;
            (2) to analyze the effectiveness of health care joint 
        ventures receiving exemptions under the program established 
        under section 1201(a) or certificates under section 1202 in 
        reducing the costs of and expanding access to the health care 
        services that are the subject of such ventures; and
            (3) to make such recommendations to Congress not later than 
        2 years after the date of the enactment of this Act (and at 
        such subsequent periods as the Advisory Committee considers 
        appropriate) regarding modifications to the program established 
        under section 1201(a) or to section 1202 as the Advisory 
        Committee considers appropriate, including modifications 
        relating to the costs to health care providers of obtaining an 
        exemption for a joint venture under such program.

SEC. 1204. DEFINITIONS.

    For purposes of this title:
            (1) The term ``Advisory Committee'' means the Interagency 
        Advisory Committee on Competition, Antitrust Policy, and Health 
        Care established under section 1203.
            (2) The term ``antitrust laws''--
                    (A) has the meaning given it in subsection (a) of 
                the first section 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 such 
                section applies to unfair methods of competition; and
                    (B) includes any State law similar to the laws 
                referred to in subparagraph (A).
            (3) The term ``certificate'' means a certificate of public 
        advantage authorized to be issued under section 1202(a).
            (4) The term ``health care joint venture'' means an 
        agreement (whether existing or proposed) between 2 or more 
        providers of health care services that is entered into solely 
        for the purpose of sharing in the provision of health care 
        services and that involves substantial integration or financial 
        risk-sharing between the parties, but does not include the 
        exchanging of information, the entering into of any agreement, 
        or the engagement in any other conduct that is not reasonably 
        required to carry out such agreement.
            (5) The term ``health care services'' includes services 
        related to the delivery or administration of health care 
        services.
            (6) The term ``liable'' means liable for any civil or 
        criminal violation of the antitrust laws.
            (7) The term ``provider of health care services'' means any 
        individual or entity that is engaged in the delivery of health 
        care services in a State and that is required by State law or 
        regulation to be licensed or certified by the State to engage 
        in the delivery of such services in the State.

 TITLE XIII--EXPENDITURE TARGETS FOR THE MEDICAID AND MEDICARE PROGRAMS

SEC. 1301. DETERMINATION OF EXPENDITURES UNDER THE MEDICAID AND 
              MEDICARE PROGRAMS.

    (a) Determination of Excess Expenditures.--
            (1) In general.--Not later than 30 days after the end of 
        each fiscal year beginning with fiscal year 1995, the Director 
        of the Office of Management and Budget (hereafter referred to 
        in this title as the ``Director''), in consultation with the 
        Secretary, shall determine the amount of medicaid excess 
        expenditures and medicare excess expenditures for such fiscal 
        year.
            (2) Definitions.--For purposes of this title--
                    (A) Medicaid excess expenditures.--The term 
                ``medicaid excess expenditures'' for a fiscal year 
                means the amount by which the Federal expenditures 
                under the medicaid program for such fiscal year exceed 
                the target expenditure for such program as determined 
                under subsection (b)(1) for such fiscal year.
                    (B) Medicare excess expenditures.--The term 
                ``medicare excess expenditures'' for a fiscal year 
                means the amount by which the expenditures under the 
                medicare program for such fiscal year exceed the target 
                expenditure for such program as determined under 
                subsection (b)(2) for such fiscal year.
                    (C) Medicaid program.--The term ``medicaid 
                program'' means the program under title XIX of the 
                Social Security Act.
                    (D) Medicare program.--The term ``medicare 
                program'' means the program under title XVIII of the 
                Social Security Act.
    (b) Target Expenditures.--
            (1) Medicaid program.--
                    (A) In general.--The target expenditure determined 
                under this paragraph for the medicaid program for a 
                fiscal year shall be an amount equal to the applicable 
                percentage of the total Federal expenditures under the 
                medicaid program for the previous fiscal year.
                    (B) Medicaid applicable percentage.--For purposes 
                of subparagraph (A), the medicaid applicable percentage 
                is--
                            (i) 106.8 percent for the determination 
                        with respect to fiscal year 1995;
                            (ii) 106.9 percent for the determination 
                        with respect to fiscal year 1996; and
                            (iii) 107 percent for the determination 
                        with respect to fiscal year 1997 and succeeding 
                        fiscal years.
            (2) Medicare program.--
                    (A) In general.--The target expenditure determined 
                under this paragraph for the medicare program for a 
                fiscal year shall be an amount equal to the applicable 
                percentage of the total expenditures under the medicare 
                program for the previous fiscal year.
                    (B) Medicare applicable percentage.--For purposes 
                of subparagraph (A), the medicare applicable percentage 
                is--
                            (i) 109.4 percent for the determination 
                        with respect to fiscal year 1995;
                            (ii) 108.9 percent for the determination 
                        with respect to fiscal year 1996;
                            (iii) 108.5 percent for the determination 
                        with respect to fiscal year 1997; and
                            (iv) 108 percent for the determination with 
                        respect to fiscal year 1998 and succeeding 
                        fiscal years.

SEC. 1302. DELAY OF HEALTH INSURANCE BENEFITS DUE TO EXCESS 
              EXPENDITURES.

    (a) In General.--If the Director determines that there are medicaid 
or medicare excess expenditures for a fiscal year under section 1301, 
any category of health insurance benefit described in subsection (b) 
that is effective in the taxable or calendar year (whichever is 
applicable) beginning after such fiscal year may be delayed until the 
following year. This subsection shall be applied only to so many of the 
categories of health insurance benefits described in subsection (b) in 
the order in which such categories are listed such that the savings 
resulting from such delay at least equal the costs of the medicaid and 
medicare excess expenditures.
    (b) Health Insurance Benefits.--The categories of health insurance 
benefits described in this subsection are as follows:
            (1) The tax credit under section 34A of the Internal 
        Revenue Code of 1986 applicable to individuals described in 
        subparagraphs (C) and (D) of section 34A(g)(1).
            (2) The tax credit under section 34A of the Internal 
        Revenue Code of 1986 applicable to individuals described in 
        subparagraph (B) of section 34A(g)(1).
            (3) The tax credit under section 34A of the Internal 
        Revenue Code of 1986 applicable to individuals described in 
        subparagraph (A) of section 34A(g)(1).
            (4) The tax exclusion under section 106A of the Internal 
        Revenue Code of 1986.
            (5) Assistance to individuals with preexisting conditions 
        in purchasing health insurance under section 501.

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