[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 439 Introduced in House (IH)]







104th CONGRESS
  1st Session
                                H. R. 439

 To promote portability of health insurance by limiting discrimination 
  in health coverage based on health status or past claims experience.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 9, 1995

Mr. Hayes (for himself and Mr. McCrery) introduced the following bill; 
 which was referred to the Committee on Commerce and, in addition, to 
 the Committee on Economic and Educational Opportunities, for a period 
    to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL


 
 To promote portability of health insurance by limiting discrimination 
  in health coverage based on health status or past claims experience.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Health Insurance Equity Act of 
1995''.

SEC. 2. HEALTH INSURANCE STANDARDS.

    The Social Security Act is amended by adding at the end the 
following new title:

               ``TITLE XXI--STANDARDS FOR HEALTH COVERAGE

``SEC. 2101. PROHIBITION OF DISCRIMINATION BASED ON HEALTH STATUS FOR 
              COVERAGE, BENEFITS, AND PREMIUMS.

    ``(a) In General.--Except as provided under subsection (b), an 
insurer or group health plan providing health coverage may not deny, 
limit, or condition the health coverage or benefits with respect to 
health services, or vary the premiums charged for such coverage, based 
on the health status, claims experience, receipt of health care, 
medical history, or lack of evidence of insurability, of an individual.
    ``(b) Exception for Certain Preexisting Conditions.--
            ``(1) In general.--Subject to the succeeding provisions of 
        this subsection, an insurer or group health plan providing 
        health coverage may exclude coverage of services related to 
        treatment of a preexisting condition, but the period of such 
        exclusion may not exceed 6 months. The exclusion of coverage 
        shall not apply to services furnished to newborns who are 
        covered at the time of birth or to treatment of conditions 
        relating to pregnancy.
            ``(2)  Crediting of previous coverage.--
                    ``(A) In general.--An insurer or group health plan 
                providing health coverage shall provide that if a 
                covered individual is in a period of continuous 
                coverage (as defined in subparagraph (B)(i)) with 
                respect to particular services as of the date of 
                application for coverage (determined without regard to 
                any waiting period for coverage), any period of 
                exclusion of coverage with respect to a preexisting 
                condition for such services or type of services shall 
                be reduced by 1 month for each month in the period of 
                continuous coverage.
                    ``(B) Definitions.--As used in this subsection:
                            ``(i) Period of continuous coverage.--The 
                        term `period of continuous coverage' means, 
                        with respect to particular services, the period 
                        beginning on the date an individual has health 
                        coverage (including coverage under title XVIII 
                        or XIX) which provides substantially the same 
                        or similar benefits with respect to such 
                        services and ends on the date the individual 
                        does not have such coverage for a continuous 
                        period of more than 3 months.
                            ``(ii) Preexisting condition.--The term 
                        `preexisting condition' means a condition which 
                        has been diagnosed or treated during the 6-
                        month period ending on the day before the first 
                        date of such coverage.
            ``(3) Exception.--
                    ``(A) In general.--Subsection (a) shall not affect 
                a variation of premiums based only on the age, sex, or 
                geographic area of residence of an individual.
                    ``(B) Waiting period.--An insurer or group health 
                plan providing health coverage may offer to an 
                individual to waive an exclusion of coverage with 
                respect to a preexisting condition for which an 
                exclusion could otherwise be applied under this 
                subsection in exchange for an increase in the premium 
                during the period in which the exclusion could 
                otherwise be applied. If the individual rejects this 
                offer, the limitations on premiums and exclusions that 
                would apply in the absence of such offer shall continue 
                to apply.
    ``(c) Application of Rules by Certain Health Maintenance 
Organizations.--A health maintenance organization that provides health 
insurance coverage shall not be considered as failing to meet the 
requirements of section 1301 of the Public Health Service Act 
notwithstanding that it provides for an exclusion of the coverage based 
on a preexisting condition consistent with the provisions of this 
section so long as such exclusion is applied consistent with the 
provisions of this section. Nothing in this section shall be construed 
as requiring such an organization to impose such an exclusion.

``SEC. 2102. ENROLLMENT AND RENEWAL PRACTICES FOR HEALTH INSURANCE 
              COVERAGE.

    ``(a) Construction Involving Application of Capacity Limits for 
Health Insurance Coverage.--
            ``(1) In general.--Subject to paragraph (2) and subsection 
        (b), nothing in this title shall be construed as preventing an 
        insurer providing health insurance coverage to individuals or 
        small employers in an area from ceasing to enroll individuals 
        or small employers under such coverage if--
                    ``(A) the insurer ceases to enroll any new 
                individuals or small employers; and
                    ``(B) the insurer can demonstrate to the State 
                insurance commissioner that the insurer's financial or 
                provider capacity to serve previously covered 
                individuals or small employers (and additional 
                individuals who will be expected to enroll because of 
                affiliation with such previously covered individuals or 
                small employers) will be impaired if it is required to 
                enroll additional individuals or small employers.
            ``(2) First-come-first-served.--An insurer is only eligible 
        to exercise the limitations provided for in paragraph (1) if 
        such insurer provides for enrollment of individuals or small 
        employers on a first-come-first-served basis (except in the 
        case of additional individuals or small employers described in 
        paragraph (1)(B)).
    ``(b) Requirements Relating to Renewal of Health Insurance 
Coverage.--
            ``(1) In general.--Except as provided in paragraphs (2) and 
        (3), an insurer that provides health insurance coverage to an 
        individual or small employer shall not deny, cancel, or refuse 
        to renew such coverage of the individual or small employer.
            ``(2) Grounds for refusal to renew.--An insurer may deny, 
        cancel, refuse to renew, or terminate health insurance coverage 
        within a type of coverage option described in paragraph (4) in 
        an area described in paragraph (6) only--
                    ``(A) for nonpayment of premiums;
                    ``(B) for fraud on the part of the individual or 
                small employer;
                    ``(C) with respect to an individual, for 
                misrepresentation of material facts on the part of the 
                individual relating to an application for coverage or 
                claim for benefits;
                    ``(D) in the case of coverage provided through a 
                geographically limited managed care arrangement, the 
                individual or employer leaves the geographic service 
                area in which the coverage is provided; or
                    ``(E) subject to paragraph (3), because the insurer 
                elects not to renew any health insurance coverage for 
                individuals or small employers in the area within such 
                type of coverage option and provides notice of such 
                election to the State insurance commissioner and to 
                each such employer and individual covered in the area 
                at least 180 days before the effective date of such 
                nonrenewal.
            ``(3) Prohibition on market reentry.--In the case of an 
        election described in paragraph (2)(E) by an insurer for an 
        area for a type of coverage option, the insurer may not provide 
        for any health insurance coverage to an individual or small 
        employer in the area within the type of coverage option during 
        the 5-year period beginning on the effective date of the 
        nonrenewal for the area and for the type of coverage option.
            ``(4) Options.--For purposes of this subsection, each of 
        the following is a `type of coverage option':
                    ``(A) Fee-for-service option.--Health insurance 
                coverage is considered to provide a `fee-for-service 
                option' if, regardless of whether covered individuals 
                may receive benefits through a provider network, 
                benefits with respect to the covered items and services 
                in the coverage are made available for such items and 
                services provided through any lawful provider of such 
                covered items and services and payment is made to such 
                a provider whether or not there is a contractual 
                arrangement between the provider and the carrier or 
                plan.
                    ``(B) Managed care option.--Health insurance 
                coverage is considered to provide a `managed care 
                option' if benefits with respect to the covered items 
                and services in the coverage are made available 
                exclusively through a provider network, except in the 
                case of emergency services and as otherwise required 
                under law.
                    ``(C) Point-of-service option.--Health insurance 
                coverage is considered to provide a `point-of-service 
                option' if the benefits with respect to covered items 
                and services in the coverage are made available 
                principally through a managed care arrangement, with 
                the choice of the enrollee to obtain such benefits for 
                items and services provided through any lawful provider 
                of such covered items and services. The coverage may 
                provide for different cost sharing schedules based on 
                whether the items and services are provided through 
                such an arrangement or outside such an arrangement.
            ``(5) Managed care arrangements.--In this subsection:
                    ``(A) Managed care arrangement.--The term `managed 
                care arrangement' means, with respect to health 
                insurance coverage, an arrangement under such coverage 
                under which providers agree to provide items and 
                services covered under the arrangement to individuals 
                who have such coverage.
                    ``(B) Provider network.--The term `provider 
                network' means, with respect to health insurance 
                coverage, providers who have entered into an agreement 
                described in subparagraph (A).
            ``(6) Limitations on area.--An area described in this 
        paragraph is an area in which there is no division of any of 
        the following:
                    ``(A) A 3-digit zip code.
                    ``(B) Any county, parish, or borough.
                    ``(C) All portions of a metropolitan statistical 
                area.

``SEC. 2103. ENFORCEMENT.

    ``(a) Health Insurance Coverage.--
            ``(1) Enforcement through state insurance commissioner.--
                    ``(A) Establishment of enforcement programs.--Each 
                State, through its State insurance commissioner, is 
                responsible for establishing a program to enforce 
                requirements of this title with respect to insurers 
                (and health coverage offered by insurers) in the State. 
                The State shall provide the Secretary of Health and 
                Human Services annually (for years beginning with 1996) 
                with such description of the program established to 
                enforce adequately such requirements as the Secretary 
                specifies.
                    ``(B) More stringent state standards permitted.--A 
                State may implement standards that are more stringent 
                than the standards established under this title.
                    ``(C) Authorization of appropriations for state 
                enforcement programs.--There are authorized to be 
                appropriated to the Secretary of Health and Human 
                Services (for each fiscal year beginning with fiscal 
                year 1996) such sums as may be necessary to provide for 
                grants to States to provide for enforcement programs 
                described in subparagraph (A). Such grants shall be 
                made available in such amounts and subject to such 
                reasonable terms and conditions as the Secretary shall 
                provide.
            ``(2) Federal fallback enforcement.--
                    ``(A) Review and contingency.--The Secretary 
                annually shall review State enforcement programs under 
                paragraph (1)(A) to determine if they provide for 
                adequate enforcement of the requirements of this title. 
                If the Secretary initially determines that such a 
                program does not provide for such enforcement, the 
                Secretary shall notify the State and provide the State 
                an opportunity to adopt such a plan of correction that 
                would provide for adequate enforcement. If the 
                Secretary makes a final determination that the State 
                program fails to provide for an adequate enforcement 
                program after such an opportunity, the succeeding 
                provisions of this paragraph shall apply with respect 
                to insurers and health insurance coverage in the State 
                until the Secretary has been provided a description of 
                an adequate enforcement program.
                    ``(B) Civil money penalties.--
                            ``(i) In general.--If this paragraph 
                        applies in a State in a year, subject to clause 
                        (ii), an insurer in that State that fails to 
                        comply with a requirement applicable to the 
                        insurer or health insurance coverage under this 
                        title is subject to a civil money penalty of 
                        $150 for each day during which such failure 
                        persists for each individual to which such 
                        failure relates.
                            ``(ii) Limitation.--The amount of the 
                        penalty imposed by this subparagraph for an 
                        insurer with respect to health insurance 
                        coverage shall not exceed 25 percent of the 
                        amounts received under the plan for coverage 
                        during the period such failure persists.
                    ``(C) Exceptions.--
                            ``(i) Corrections within 30 days.--No civil 
                        money penalty shall be imposed under this 
                        paragraph by reason of any failure if--
                                    ``(I) such failure was due to 
                                reasonable cause and not to willful 
                                neglect, and
                                    ``(II) such failure is corrected 
                                within the 30-day period beginning on 
                                the earliest date the insurer knew, or 
                                exercising reasonable diligence would 
                                have known, that such failure existed.
                            ``(ii) Waiver by secretary.--In the case of 
                        a failure which is due to reasonable cause and 
                        not to willful neglect, the Secretary may waive 
                        part or all of the penalty imposed by this 
                        paragraph to the extent that payment of such 
                        penalty would be excessive relative to the 
                        failure involved.
                    ``(D) Procedures.--The Secretary by regulation 
                shall provide for procedures for the imposition of 
                civil money penalties under this paragraph. Such 
                procedures shall assure written notice and opportunity 
                for a determination to be made on the record after a 
                hearing at which the insurer is entitled to be 
                represented by counsel, to present witnesses, and to 
                cross-examine witnesses against the insurer. The 
                provisions of subsections (e), (f), (j), and (k) of 
                section 1128A shall apply to determinations and civil 
                money penalties under this paragraph in the same manner 
                as they apply to determinations and civil money 
                penalties under such section.
    ``(b) Enforcement by Department of Labor for Group Health Plans.--
            ``(1) In general.--For purposes of part 5 of subtitle B of 
        title I of the Employee Retirement Income Security Act of 1974, 
        the provisions of sections 2101 and 2102 shall be deemed to be 
        provisions of title I of such Act irrespective of exclusions 
        under section 4(b) of such Act.
            ``(2) Regulatory authority.--With respect to the regulatory 
        authority of the Secretary of Labor under this title pursuant 
        to paragraph (1), section 505 of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1135) shall apply.

``SEC. 2104. DEFINITIONS.

    ``For purposes of this title:
            ``(1) Group health plan.--The term `group health plan' 
        means an employee welfare benefit plan providing medical care 
        (as defined in section 213(d) of the Internal Revenue Code of 
        1986) to participants or beneficiaries directly or through 
        insurance, reimbursement, or otherwise, but does not include 
        any type of coverage excluded from the definition of an health 
        insurance coverage under paragraph (3)(B).
            ``(2) Health coverage.--The term `health coverage' means 
        health insurance coverage provided by an insurer or medical 
        care provided under a group health plan.
            ``(3) Health insurance coverage.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `health insurance coverage' 
                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 (or any combination 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) Liability insurance, including 
                        general liability insurance and automobile 
                        liability insurance.
                            ``(v) Workers' compensation or similar 
                        insurance.
                            ``(vi) Automobile medical-payment 
                        insurance.
                            ``(vii) Coverage for a specified disease or 
                        illness.
                            ``(viii) A hospital or fixed indemnity 
                        policy.
            ``(4) Insurer.--The term `insurer' means a licensed 
        insurance company, an entity offering prepaid hospital or 
        medical services, and a health maintenance organization, and 
        includes a similar organization regulated under State law for 
        solvency.
            ``(5) Small employer.--The term `small employer' means, 
        with respect to a calendar year, an employer (as defined in 
        section 3(5) of the Employee Retirement Income Security Act of 
        1974) that normally employs on a typical business day more than 
        1 but less than 50 employees who normally perform on a monthly 
        basis at least 30 hours of service per week for that employer. 
        For the purposes of this paragraph, the term `employee' 
        includes a self-employed individual. For purposes of 
        determining if an employer is a small employer, rules similar 
        to the rules of subsections (b) and (c) of section 414 of the 
        Internal Revenue Code of 1986 shall apply.
            ``(6) State insurance commissioner.--The term `State 
        insurance commissioner' includes a State superintendent of 
        insurance or other State authority responsible for regulation 
        of health insurance.''.

SEC. 3. EFFECTIVE DATE.

    The requirements of title XXI of the Social Security Act, as added 
by section 2, shall apply with respect to--
            (1) group health plans for plan years beginning after 
        December 31, 1995, and
            (2) insurers as of January 1, 1996, for health insurance 
        coverage issued or renewed on or after such date.
                                 <all>
HR 439 IH----2