[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 1028 Reported in Senate (RS)]





                                                       Calendar No. 205

104th CONGRESS

  1st Session

                                S. 1028

                          [Report No. 104-156]

_______________________________________________________________________

                                 A BILL

    To provide increased access to health care benefits, to provide 
  increased portability of health care benefits, to provide increased 
 security of health care benefits, to increase the purchasing power of 
        individuals and small employers, and for other purposes.

_______________________________________________________________________

             October 12 (legislative day, October 10), 1995

                       Reported with an amendment





                                                       Calendar No. 205
104th CONGRESS
  1st Session
                                S. 1028

                          [Report No. 104-156]

    To provide increased access to health care benefits, to provide 
  increased portability of health care benefits, to provide increased 
 security of health care benefits, to increase the purchasing power of 
        individuals and small employers, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                July 13 (legislative day, July 10), 1995

  Mrs. Kassebaum (for herself, Mr. Kennedy, Mr. Frist, Mr. Dodd, Mr. 
Jeffords, Ms. Mikulski, Mr. Gregg, Mr. Wellstone, Mr. Gorton, Mr. Pell, 
Mr. Hatch, Mr. Simon, Mr. Chafee, Mr. Lieberman, Mr. Cohen, Mr. Kerrey, 
 Mr. Rockefeller, Mr. Simpson, Mr. Inouye, Mr. Dorgan, Mr. Glenn, Ms. 
    Snowe, Mr. Bennett, Mr. Hatfield, Mr. Abraham, and Mr. McCain) 
introduced the following bill; which was read twice and referred to the 
                 Committee on Labor and Human Resources

             October 12 (legislative day, October 10), 1995

             Reported by Mrs. Kassebaum, with an amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 A BILL


 
    To provide increased access to health care benefits, to provide 
  increased portability of health care benefits, to provide increased 
 security of health care benefits, to increase the purchasing power of 
        individuals and small employers, and for other purposes.

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

<DELETED>SECTION 1. SHORT TITLE.</DELETED>

<DELETED>    This Act may be cited as the ``Health Insurance Reform Act 
of 1995''.</DELETED>

<DELETED>SEC. 2. DEFINITIONS.</DELETED>

<DELETED>    As used in this Act:</DELETED>
        <DELETED>    (1) Beneficiary.--The term ``beneficiary'' has the 
        same meaning given such term under section 3(8) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 
        1102(8)).</DELETED>
        <DELETED>    (2) Employee.--The term ``employee'' has the same 
        meaning given such term under section 3(6) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 
        1002(6)).</DELETED>
        <DELETED>    (3) Employer.--The term ``employer'' has the same 
        meaning given such term under section 3(6) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1002(6)), 
        except that such term shall only include employers of two or 
        more employees.</DELETED>
        <DELETED>    (4) Family.--</DELETED>
                <DELETED>    (A) In general.--The term ``family'' 
                includes an individual, the individual's spouse, and 
                the child of the individual (if any).</DELETED>
                <DELETED>    (B) Child.--For purposes of subparagraph 
                (A), the term ``child'' means any individual who is a 
                child within the meaning of section 151(c)(3) of the 
                Internal Revenue Code of 1986, and under 19 years of 
                age.</DELETED>
        <DELETED>    (5) Group health plan.--The term ``group health 
        plan'' means any employee welfare benefit plan, governmental 
        plan, or church plan (as defined under paragraphs (1), (32) and 
        (33) of section 3 of the Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1002(1), (32) and (33))) that maintains 
        (or makes contributions to) a health plan.</DELETED>
        <DELETED>    (6) Health plan.--The term ``health plan'' means 
        any plan or arrangement that provides, or pays for health 
        benefits (such as physician and hospital benefits) directly or 
        through insurance, reimbursement, or otherwise. Such term does 
        not include the following, or any combination 
        thereof:</DELETED>
                <DELETED>    (A) Coverage only for accidental death, 
                dismemberment, dental, or vision.</DELETED>
                <DELETED>    (B) Coverage providing wages or payments 
                in lieu of wages for any period during which the 
                employee is absent from work on account of sickness or 
                injury.</DELETED>
                <DELETED>    (C) A medicare supplemental policy (as 
                defined in section 1882(g)(1) of the Social Security 
                Act).</DELETED>
                <DELETED>    (D) Coverage issued as a supplement to 
                liability insurance.</DELETED>
                <DELETED>    (E) Workers' compensation or similar 
                insurance.</DELETED>
                <DELETED>    (F) Automobile medical payment 
                insurance.</DELETED>
                <DELETED>    (G) A long-term care insurance policy, 
                including a nursing home fixed indemnity 
                policy.</DELETED>
                <DELETED>    (H) Any plan or arrangement not described 
                in any preceding subparagraph that provides for benefit 
                payments, on a periodic basis, for a specified disease 
                or illness or period of hospitalization without regard 
                to the costs incurred or services rendered during the 
                period to which the payments relate.</DELETED>
                <DELETED>    (I) Coverage provided through a State risk 
                pool, uncompensated care pool, or similar subsidized 
                program.</DELETED>
        <DELETED>    (7) Individual health plan.--The term ``individual 
        health plan'' means a health plan marketed to 
        individuals.</DELETED>
        <DELETED>    (8) Insured health plan.--The term ``insured 
        health plan'' means, with respect to an employee welfare 
        benefit plan (as defined under section 3(1) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1002(1))), a 
        health plan that is a contract for health benefits with an 
        insurer that is subject to State regulation in accordance with 
        section 514(b)(2)(A) of the Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1144(b)(2)(A))).</DELETED>
        <DELETED>    (9) Insurer.--The term ``insurer'' means--
        </DELETED>
                <DELETED>    (A) a licensed insurance 
                company;</DELETED>
                <DELETED>    (B) a prepaid hospital or medical service 
                plan;</DELETED>
                <DELETED>    (C) a network plan (such as a preferred 
                provider organization) or heath maintenance 
                organization; or</DELETED>
                <DELETED>    (D) any other entity (other than an entity 
                described in paragraph (12)), except for those entities 
                described in section 514(b)(6)(A)(i) of the Employee 
                Retirement Income Security Act of 1974 (29 U.S.C. 
                1144(b)(6)(A)(i)) providing a plan of health insurance 
                or health benefits;</DELETED>
        <DELETED>with respect to which State insurance laws apply and 
        are not preempted under section 514 of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1144).</DELETED>
        <DELETED>    (10) Participant.--The term ``participant'' means 
        any person who is eligible, or is required to be eligible, to 
        receive benefits under a group health plan.</DELETED>
        <DELETED>    (11) Plan sponsor.--The term ``plan sponsor'' has 
        the same meaning given such term under section 3(16)(B) of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1002(16)(B)).</DELETED>
        <DELETED>    (12) Secretary.--The term ``Secretary'', unless 
        specifically provided otherwise, means the Secretary of 
        Labor.</DELETED>
        <DELETED>    (13) Self-insured health plan.--The term ``self-
        insured health plan'' means a group health plan that is not an 
        insured health plan.</DELETED>
        <DELETED>    (14) State.--The term ``State'' means each of the 
        several States, the District of Columbia, Puerto Rico, the 
        United States Virgin Islands, Guam, American Samoa, and the 
        Commonwealth of the Northern Mariana Islands.</DELETED>

        <DELETED>TITLE I--HEALTH CARE ACCESS, PORTABILITY, AND 
                         RENEWABILITY</DELETED>

         <DELETED>Subtitle A--Group Health Plan Rules</DELETED>

<DELETED>SEC. 101. GUARANTEED AVAILABILITY OF HEALTH 
              COVERAGE.</DELETED>

<DELETED>    (a) In General.--</DELETED>
        <DELETED>    (1) Group health plans.--Except as provided in 
        subsection (b) and section 103--</DELETED>
                <DELETED>    (A) an insurer may not decline to provide 
                whole group coverage to employers; and</DELETED>
                <DELETED>    (B) a group health plan (whether an 
                insured health plan or self-insured health plan) may 
                not establish eligibility, continuation, enrollment, or 
                contribution requirements for participants or 
                beneficiaries;</DELETED>
        <DELETED>based on health status, medical condition, claims 
        experience, receipt of health care, medical history, evidence 
        of insurability, or disability of a participant or 
        beneficiary.</DELETED>
        <DELETED>    (3) Health promotion or disease prevention.--
        Nothing in this subsection shall prevent a group health plan 
        from establishing discounts for participation in programs of 
        health promotion or disease prevention.</DELETED>
<DELETED>    (b) Application of Capacity Limits.--</DELETED>
        <DELETED>    (1) In general.--Subject to paragraph (2), an 
        insurer offering coverage in connection with a group health 
        plan may cease enrolling employers under the plan if--
        </DELETED>
                <DELETED>    (A) the insurer ceases to enroll any new 
                employers, participants and beneficiaries; 
                and</DELETED>
                <DELETED>    (B) the insurer can demonstrate to the 
                applicable certifying authority (as defined in section 
                202(d)), if required, that its financial or provider 
                capacity to serve previously covered participants and 
                beneficiaries (and additional participants and 
                beneficiaries who will be expected to enroll because of 
                their affiliation with the group health plan or such 
                previously covered participants or beneficiaries) will 
                be impaired if the insurer is required to enroll 
                additional employers, participants and 
                beneficiaries.</DELETED>
        <DELETED>Such an insurer shall be prohibited from recommencing 
        enrollment after a cessation in enrollment under this paragraph 
        for a 6-month period after such cessation or until the insurer 
        can demonstrate to the applicable certifying authority (as 
        defined in section 202(d)) that the insurer has adequate 
        capacity, whichever is later.</DELETED>
        <DELETED>    (2) First-come-first-served.--An insurer offering 
        coverage in connection with a group health plan is only 
        eligible to exercise the limitations provided for in paragraph 
        (1) if the insurer provides for enrollment of employers 
        (including participants and beneficiaries) under such plan on a 
        first-come-first-served basis (except in the case of additional 
        employers, participants and beneficiaries described in 
        paragraph (1)(B)).</DELETED>
<DELETED>    (c) Construction.--Nothing in this section shall be 
construed to prevent a State from requiring insurers offering group 
health plans to actively market such plans.</DELETED>

<DELETED>SEC. 102. GUARANTEED RENEWABILITY OF HEALTH 
              COVERAGE.</DELETED>

<DELETED>    (a) In General.--</DELETED>
        <DELETED>    (1) Plan sponsor.--Subject to subsections (b) and 
        (c), a group health plan that is an insured health plan shall 
        be renewed or continued in force at the option of the plan 
        sponsor, except that the requirement of this subparagraph shall 
        not apply in the case of--</DELETED>
                <DELETED>    (A) the nonpayment of premiums or 
                contributions by the plan sponsor in accordance with 
                the terms of the plan or where the insurer has not 
                received timely premium payments;</DELETED>
                <DELETED>    (B) fraud or misrepresentation of material 
                fact on the part of the plan sponsor;</DELETED>
                <DELETED>    (C) the termination of the plan in 
                accordance with subsection (b); or</DELETED>
                <DELETED>    (D) the failure of the plan sponsor to 
                meet contribution or participation requirements in 
                accordance with paragraph (3).</DELETED>
        <DELETED>    (2) Participant.--Subject to subsections (b) and 
        (c), coverage under a group health plan (whether an insured 
        health plan or a self-insured health plan) shall be renewed or 
        continued in force, if the plan sponsor elects to continue to 
        provide coverage under such plan, at the option of the 
        participant or beneficiary, except that the requirement of this 
        paragraph shall not apply in the case of--</DELETED>
                <DELETED>    (A) the nonpayment of premiums or 
                contributions by the participant or beneficiary in 
                accordance with the terms of the plan or where the plan 
                has not received timely premium payments;</DELETED>
                <DELETED>    (B) fraud or misrepresentation of material 
                fact on the part of the participant or beneficiary 
                relating to an application for coverage or claim for 
                benefits;</DELETED>
                <DELETED>    (C) the termination of the plan in 
                accordance with subsection (b); or</DELETED>
                <DELETED>    (D) loss of eligibility for continuation 
                coverage as described in part 6 of subtitle B of title 
                I of the Employee Retirement Income Security Act of 
                1974 (29 U.S.C. 1161 et seq.).</DELETED>
        <DELETED>    (3) Contribution and participation rules.--Nothing 
        in this subsection shall be construed to preclude an insurer 
        from establishing employer contribution rules or group 
        participation rules for plan sponsors in connection with an 
        insured group health plan consistent with applicable State 
        law.</DELETED>
<DELETED>    (b) Termination of Health Plans.--</DELETED>
        <DELETED>    (1) Health plan not offered.--In any case in which 
        an insurer is no longer going to continue to offer a group 
        health plan to plan sponsors, participants or beneficiaries, 
        the plan may be discontinued by the insurer if--</DELETED>
                <DELETED>    (A) the insurer provides notice to each 
                plan sponsor (and participants and beneficiaries 
                covered under the group health plan) of such 
                termination at least 90 days prior to the date of the 
                expiration of such plan;</DELETED>
                <DELETED>    (B) the insurer offers to each plan 
                sponsor, the option to purchase any other group health 
                plan currently being offered; and</DELETED>
                <DELETED>    (C) in exercising the option to 
                discontinue the group health plan and in offering one 
                or more replacement plans, the insurer acts uniformly 
                without regard to the health status or insurability of 
                participants or beneficiaries, or new participants or 
                beneficiaries.</DELETED>
        <DELETED>    (2) Insurer not offering plan.--</DELETED>
                <DELETED>    (A) In general.--In any case in which an 
                insurer is no longer offering any group health plan in 
                a State, the plan may be discontinued by the insurer 
                if--</DELETED>
                        <DELETED>    (i) the insurer provides notice to 
                        the applicable certifying authority (as defined 
                        in section 202(d)) and to each plan sponsor 
                        (and participants and beneficiaries covered 
                        under such plan) of such termination at least 
                        180 days prior to the date of the expiration of 
                        the plan; and</DELETED>
                        <DELETED>    (ii) all such plans issued or 
                        delivered for issuance in the State are 
                        discontinued and coverage under such plans is 
                        nonrenewed.</DELETED>
                <DELETED>    (B) Application of provisions.--The 
                provisions of this paragraph and paragraph (3) may be 
                applied separately by an insurer--</DELETED>
                        <DELETED>    (i) to all group health plans of 
                        small employers (as defined under applicable 
                        State law, or employers with not more than 50 
                        employees if such term is not defined in State 
                        law) covering participants or participants and 
                        beneficiaries; or</DELETED>
                        <DELETED>    (ii) to all other group health 
                        plans offered by the insurer in the 
                        State.</DELETED>
        <DELETED>    (3) Prohibition on market reentry.--In the case of 
        a termination under paragraph (2), the insurer may not provide 
        for the issuance of any insured group health plan that was 
        terminated in the State involved during the 5-year period 
        beginning on the date of the termination of the last plan not 
        so renewed.</DELETED>
<DELETED>    (c) Treatment of Network Plans.--</DELETED>
        <DELETED>    (1) Geographic limitations.--A group health plan 
        which is a network plan (as defined in paragraph (2)) or a 
        health maintenance organization plan may deny continued 
        participation under the plan to participants or beneficiaries 
        who neither live, reside, nor work in an area in which the 
        group health plan is offered, but only if such denial is 
        applied uniformly, without regard to health status or the 
        insurability of particular participants or 
        beneficiaries.</DELETED>
        <DELETED>    (2) Network plan.--As used in paragraph (1), the 
        term ``network plan'' means a health plan that arranges for the 
        financing and delivery of health care services to participants 
        or beneficiaries covered under such health plan, in whole or in 
        part, through arrangements with providers to furnish health 
        care services.</DELETED>

<DELETED>SEC. 103. PORTABILITY OF HEALTH COVERAGE AND LIMITATION ON 
              PREEXISTING CONDITION EXCLUSIONS.</DELETED>

<DELETED>    (a) In General.--A group health plan (whether an insured 
health plan or a self-insured health plan) may impose a limitation or 
exclusion of benefits relating to treatment of a preexisting condition 
based on the fact that the condition existed prior to the effective 
date of the plan with respect to a participant or beneficiary only if--
</DELETED>
        <DELETED>    (1) the limitation or exclusion extends for a 
        period of not more than 12 months after the date of enrollment 
        in the health plan;</DELETED>
        <DELETED>    (2) the limitation or exclusion does not apply to 
        an individual who, within 30 days of the date of birth, was 
        covered under the plan; and</DELETED>
        <DELETED>    (3) the limitation or exclusion does not apply to 
        a pregnancy existing on the effective date of 
        coverage.</DELETED>
<DELETED>    (b) Crediting of Qualifying Previous Coverage.--</DELETED>
        <DELETED>    (1) In general.--A group health plan (whether an 
        insured health plan or a self-insured health plan) shall 
        provide that if a participant or beneficiary is in a period of 
        previous qualifying coverage as of the date of enrollment under 
        such plan, any period of exclusion or limitation of coverage 
        with respect to a preexisting condition shall be reduced by 1 
        month for each month in which the participant or beneficiary 
        was in the period of qualifying previous coverage.</DELETED>
        <DELETED>    (2) Discharge of duty.--The duty of an insurer or 
        plan sponsor to verify previous qualifying coverage with 
        respect to a participant or beneficiary is effectively 
        discharged when such insurer or plan sponsor provides 
        documentation to a participant or beneficiary at the time such 
        participant or beneficiary becomes ineligible for coverage 
        under the group health plan verifying--</DELETED>
                <DELETED>    (A) the dates that the participant or 
                beneficiary was covered under such previous qualifying 
                coverage; and</DELETED>
                <DELETED>    (B) the benefits and cost-sharing 
                arrangement available to the participant or beneficiary 
                under such previous qualifying coverage.</DELETED>
        <DELETED>    (3) Definition.--The term ``previous qualifying 
        coverage'' means the period beginning on the date a participant 
        or beneficiary is enrolled under a health plan and ends on the 
        date the participant or beneficiary is not so enrolled for a 
        continuous period of more than 30 days (without regard to any 
        waiting period).</DELETED>
        <DELETED>    (4) Construction.--Nothing in this subsection 
        shall be construed to prohibit a preexisting condition 
        exclusion, subject to the limits in subsection (a)(1), for a 
        service or benefit related to a preexisting condition if such 
        service or benefit was not previously covered under the health 
        plan in which the individual was enrolled immediately prior to 
        enrollment in the plan involved.</DELETED>
<DELETED>    (c) Late Enrollees.--With respect to a participant or 
beneficiary enrolling in a group health plan (whether an insured health 
plan or a self-insured health plan) during a time that is other than 
the first opportunity to enroll during an enrollment period of at least 
30 days, the plan may exclude coverage with respect to services related 
to the treatment of a preexisting condition in accordance with 
subsections (a) and (b), except the period of such exclusion may not 
exceed 18 months beginning on the date of coverage under the 
plan.</DELETED>
<DELETED>    (d) Waiting Periods.--With respect to participants or 
beneficiaries who have become eligible to enroll in a group health plan 
(whether an insured health plan or a self-insured health plan), if such 
plan does not utilize a preexisting condition exclusion, such plan may 
impose a waiting period on such participants or beneficiaries not to 
exceed 60 days (or in the case of a late participant or beneficiary 
described in subsection (c), 90 days) prior to the date on which 
coverage under the plan becomes effective. A group health plan may also 
use alternative methods to address adverse selection as approved by the 
applicable certifying authority (as defined in section 202(d)). During 
such a waiting period, the plan may not be required to provide health 
care services or benefits and no premium shall be charged to the 
participants or beneficiaries.</DELETED>
<DELETED>    (e)  Preexisting Condition.--For purposes of this section, 
the term ``preexisting condition'' means a condition for which medical 
advice, diagnosis, care, or treatment was recommended or received 
within the 6-month period ending on the day before the effective date 
of the coverage (without regard to any waiting period).</DELETED>
<DELETED>    (f) State Flexibility.--Nothing in this Act shall be 
construed to preempt State laws that limit the exclusions or 
limitations for preexisting conditions to periods that are shorter than 
those provided for under this section so long as such laws are not in 
violation of section 514 of the Employee Retirement Income Security Act 
of 1974 (29 U.S.C. 1144).</DELETED>

<DELETED>SEC. 104. SPECIAL ENROLLMENT PERIODS.</DELETED>

<DELETED>    In the case of a participant, beneficiary or family member 
who--</DELETED>
        <DELETED>    (1) through marriage, separation, divorce, death, 
        birth or adoption of a child, experiences a change in family 
        composition affecting health insurance coverage;</DELETED>
        <DELETED>    (2) experiences a change in employment status 
        (including a significant change in the terms and conditions of 
        employment) or in continuation coverage; or</DELETED>
        <DELETED>    (3) experiences a loss of health insurance 
        coverage because of a change in the employment status of a 
        family member;</DELETED>
<DELETED>each group health plan (whether insured or self-insured) shall 
provide for a special enrollment period at the time of such event which 
would permit the participant, beneficiary or family member to change 
the individual or family basis of coverage or to enroll in the plan if 
coverage would have been available to such individual but for failure 
to enroll during a previous enrollment period. Such a special 
enrollment period shall ensure that a child born or adopted shall be 
deemed to be covered under the plan as of the date of such birth or 
adoption if such child is enrolled within 30 days of the date of such 
birth or adoption.</DELETED>

<DELETED>SEC. 105. DISCLOSURE OF INFORMATION.</DELETED>

<DELETED>    (a) In General.--In connection with the offering for sale 
of any group health plan to a small employer (as defined under 
applicable State law, or employers with not more than 50 employees if 
such term is not defined in State law), an insurer shall make a 
reasonable disclosure to the employer, as part of its solicitation and 
sales materials, of--</DELETED>
        <DELETED>    (1) the provisions of the group health plan 
        concerning the insurer's right to change premium rates and the 
        factors that affect changes in premium rates;</DELETED>
        <DELETED>    (2) the provisions of such plan relating to 
        renewability of policies and contracts;</DELETED>
        <DELETED>    (3) the provisions of such plan relating to any 
        preexisting condition provision; and</DELETED>
        <DELETED>    (4) descriptive information about the benefits and 
        premiums available under all group health plans for which the 
        employer is qualified.</DELETED>
<DELETED>Information shall be provided under this subsection in a 
manner determined to be understandable by the average small employer or 
plan sponsor, and shall be sufficiently accurate and comprehensive to 
reasonably inform employers, participants and beneficiaries of their 
rights and obligations under the plan.</DELETED>
<DELETED>    (b) Exception.--With respect to the requirement of 
subsection (a), any information that is proprietary and trade secret 
information under applicable law shall not be subject to the disclosure 
requirements of such subsection.</DELETED>
<DELETED>    (c) Construction.--Nothing in this section shall be 
construed to preempt State reporting and disclosure requirements or 
reporting and disclosure requirements under the Employee Retirement 
Income Security Act of 1974.</DELETED>

      <DELETED>Subtitle B--Individual Health Plan Rules</DELETED>

<DELETED>SEC. 110. INDIVIDUAL HEALTH PLAN PORTABILITY.</DELETED>

<DELETED>    (a) Limitation on Requirements.--</DELETED>
        <DELETED>    (1) In general.--With respect to an individual 
        desiring to enroll in an individual health plan, if such 
        individual is in a period of previous qualifying coverage (as 
        defined in section 103(b)(3)) under a group health plan that 
        commenced 12 or more months prior to the date on which such 
        individual desires to enroll in such a plan, an insurer 
        described in paragraph (3) may not establish eligibility, 
        continuation, or enrollment requirements based on the health 
        status, medical condition, claims experience, receipt of health 
        care, medical history, evidence of insurability, or disability 
        of the individual.</DELETED>
        <DELETED>    (2) Health promotion and disease prevention.--
        Nothing in this subsection shall be construed to prevent an 
        insurer from establishing discounts for participation in 
        programs of health promotion or disease prevention.</DELETED>
        <DELETED>    (3) Insurer.--An insurer described in this 
        paragraph is an insurer that issues or renews any type or form 
        of health plan to individuals.</DELETED>
        <DELETED>    (4) Premiums.--Nothing in this subsection shall be 
        construed to affect the determination of an insurer as to the 
        amount of the premium payable under a health plan issued to 
        individuals under applicable State law.</DELETED>
<DELETED>    (b) Eligibility for Other Group Coverage.--The provisions 
of subsection (a) shall not apply to an individual who is eligible for 
coverage under a group health plan, or who has had coverage terminated 
under a group health plan for failure to make required premium payments 
or contributions, or for fraud or misrepresentation of material fact, 
or who is otherwise eligible for continuation coverage as described in 
section 602 of the Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1162).</DELETED>
<DELETED>    (c) Market Requirements.--The provisions of subsection (a) 
shall not be construed to require that an insurer be an insurer of 
individuals.</DELETED>

<DELETED>SEC. 111. GUARANTEED RENEWABILITY OF INDIVIDUAL HEALTH 
              COVERAGE.</DELETED>

<DELETED>    (a) In General.--Subject to subsections (b) and (c), 
coverage for individuals under an individual health plan shall be 
renewed or continued in force at the option of the individual, except 
that the requirement of this subsection shall not apply in the case 
of--</DELETED>
        <DELETED>    (1) the nonpayment of premiums or contributions by 
        the individual in accordance with the terms of the plan or 
        where the plan has not received timely premium 
        payments;</DELETED>
        <DELETED>    (2) fraud or misrepresentation of material fact on 
        the part of the individual; or</DELETED>
        <DELETED>    (3) the termination of the plan in accordance with 
        subsection (b).</DELETED>
<DELETED>    (b) Termination of Health Plans.--</DELETED>
        <DELETED>    (1) Health plan not offered.--In any case in which 
        an insurer is no longer going to continue to offer an 
        individual health plan to individuals, the plan may be 
        discontinued by the insurer if--</DELETED>
                <DELETED>    (A) the insurer provides notice to each 
                individual covered under the plan of such termination 
                at least 90 days prior to the date of the expiration of 
                the plan;</DELETED>
                <DELETED>    (B) the insurer offers to each individual 
                covered under the plan the option to purchase any other 
                health plan currently being offered to individuals; 
                and</DELETED>
                <DELETED>    (C) in exercising the option to 
                discontinue the plan and in offering one or more 
                replacement plans, the insurer acts uniformly without 
                regard to the health status or insurability of 
                individuals.</DELETED>
        <DELETED>    (2) Insurer not offering plan.--In any case in 
        which an insurer is no longer offering any individual health 
        plan in a State, the plan may be discontinued by the insurer 
        if--</DELETED>
                <DELETED>    (A) the insurer provides notice to the 
                applicable certifying authority (as defined in section 
                202(d)) and to each individual covered under the plan 
                of such termination at least 180 days prior to the date 
                of the expiration of the plan; and</DELETED>
                <DELETED>    (B) all such plans issued or delivered for 
                issuance in the State are discontinued and coverage 
                under such plans is nonrenewed.</DELETED>
        <DELETED>    (3) Prohibition on market reentry.--In the case of 
        a termination under paragraph (2), the insurer may not provide 
        for the issuance of any individual health plan in the State 
        involved during the 5-year period beginning on the date of the 
        termination of the last plan not so renewed.</DELETED>
<DELETED>    (c) Treatment of Network Plans.--</DELETED>
        <DELETED>    (1) Geographic limitations.--An individual health 
        plan which is a network plan (as defined in paragraph (2)) or a 
        health maintenance organization plan may deny continued 
        participation under the plan to individuals who neither live, 
        reside, nor work in an area in which the individual health plan 
        is offered, but only if such denial is applied uniformly, 
        without regard to health status or the insurability of 
        particular individuals.</DELETED>
        <DELETED>    (2) Network plan.--As used in paragraph (1), the 
        term ``network plan'' means a health plan that arranges for the 
        financing and delivery of health care services to individuals 
        covered under such health plan, in whole or in part, through 
        arrangements with providers to furnish health care 
        services.</DELETED>

<DELETED>SEC. 112. STATE FLEXIBILITY IN INDIVIDUAL MARKET 
              REFORMS.</DELETED>

<DELETED>    With respect to any State law in effect on, or enacted 
after, the date of enactment of this Act, such as guarantee issue, open 
enrollment, high-risk pools, or mandatory conversion policies, such 
State law shall apply in lieu of the standards described in sections 
110 and 111 unless the Secretary of Health and Human Services 
determines that such State law is not as effective in providing access 
to affordable health care coverage as the standards described in 
sections 110 and 111.</DELETED>

<DELETED>SEC. 113. INDIVIDUAL HEALTH COVERAGE AVAILABILITY 
              STUDY.</DELETED>

<DELETED>    (a) In General.--Not later than January 1, 1997, the 
Secretary of Health and Human Services, in consultation with the 
Secretary, representatives of State officials, consumers, and other 
representatives of individuals and entities that have expertise in 
health insurance and employee benefit issues, shall conduct a study, 
and prepare and submit to the appropriate committees of Congress a 
report, concerning--</DELETED>
        <DELETED>    (1) the most appropriate way, in light of the 
        experience of the various States, expert opinions, and such 
        additional data as may be available, to ensure the availability 
        of reasonably priced health insurance to individuals purchasing 
        coverage on a non-group basis;</DELETED>
        <DELETED>    (2) the need for Federal standards that limit the 
        variation in health insurance premiums charged to individuals 
        and groups of different characteristics in order to achieve the 
        purposes of this Act; and</DELETED>
        <DELETED>    (3) the effectiveness of the provisions of this 
        Act, and State insurance reform laws, in stabilizing the small 
        group health insurance market by providing for the broad 
        pooling of risk.</DELETED>
<DELETED>    (b) Recommendations.--The report submitted under 
subsection (a) shall contain the recommendations of the Secretary of 
Health and Human Services and the Secretary for additional Federal 
legislation, if any, that is needed to ensure the availability of 
reasonably priced health insurance for individuals and 
employers.</DELETED>

          <DELETED>Subtitle C--COBRA Clarifications</DELETED>

<DELETED>SEC. 121. COBRA CLARIFICATIONS.</DELETED>

<DELETED>    (a) Public Health Service Act.--</DELETED>
        <DELETED>    (1) Period of coverage.--Section 2202(2) of the 
        Public Health Service Act (42 U.S.C. 300bb-2(2)) is amended--
        </DELETED>
                <DELETED>    (A) in subparagraph (A)--</DELETED>
                        <DELETED>    (i) by transferring the sentence 
                        immediately preceding clause (iv) so as to 
                        appear immediately following such clause (iv); 
                        and</DELETED>
                        <DELETED>    (ii) in the last sentence (as so 
                        transferred)--</DELETED>
                                <DELETED>    (I) by inserting ``, or a 
                                beneficiary-family member of the 
                                individual,'' after ``an individual''; 
                                and</DELETED>
                                <DELETED>    (II) by striking ``at the 
                                time of a qualifying event described in 
                                section 2203(2)'' and inserting ``at 
                                any time during the initial 18-month 
                                period of continuing coverage under 
                                this title''; and</DELETED>
                <DELETED>    (B) in subparagraph (E), by striking ``at 
                the time of a qualifying event described in section 
                2203(2)'' and inserting ``at any time during the 
                initial 18-month period of continuing coverage under 
                this title''.</DELETED>
        <DELETED>    (2) Election.--Section 2205(1)(C) of the Public 
        Health Service Act (42 U.S.C. 300bb-5(1)(C)) is amended--
        </DELETED>
                <DELETED>    (A) in clause (i), by striking ``or'' at 
                the end thereof;</DELETED>
                <DELETED>    (B) in clause (ii), by striking the period 
                and inserting ``, or''; and</DELETED>
                <DELETED>    (C) by adding at the end thereof the 
                following new clause:</DELETED>
                        <DELETED>    ``(iii) in the case of an 
                        individual described in the last sentence of 
                        section 2202(2)(A), or a beneficiary-family 
                        member of the individual, the date such 
                        individual is determined to have been 
                        disabled.''.</DELETED>
        <DELETED>    (3) Notices.--Section 2206(3) of the Public Health 
        Service Act (42 U.S.C. 300bb-6(3)) is amended by striking ``at 
        the time of a qualifying event described in section 2203(2)'' 
        and inserting ``at any time during the initial 18-month period 
        of continuing coverage under this title''.</DELETED>
        <DELETED>    (4) Birth or adoption of a child.--Section 
        2208(3)(A) of the Public Health Service Act (42 U.S.C. 300bb-
        8(3)(A)) is amended by adding at the end thereof the following 
        new flush sentence:</DELETED>
        <DELETED>``Such term shall also include a child who is born to 
        or adopted by the covered employee during the period of 
        continued coverage under this title.''.</DELETED>
<DELETED>    (b) Employee Retirement Income Security Act of 1974.--
</DELETED>
        <DELETED>    (1) Period of coverage.--Section 602(2) of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1162(2)) is amended--</DELETED>
                <DELETED>    (A) in the last sentence of subparagraph 
                (A)--</DELETED>
                        <DELETED>    (i) by inserting ``, or a 
                        beneficiary-family member of the individual,'' 
                        after ``an individual''; and</DELETED>
                        <DELETED>    (ii) by striking ``at the time of 
                        a qualifying event described in section 
                        603(2)'' and inserting ``at any time during the 
                        initial 18-month period of continuing coverage 
                        under this part''; and</DELETED>
                <DELETED>    (B) in subparagraph (E), by striking ``at 
                the time of a qualifying event described in section 
                603(2)'' and inserting ``at any time during the initial 
                18-month period of continuing coverage under this 
                part''.</DELETED>
        <DELETED>    (2) Election.--Section 605(1)(C) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1165(1)(C)) 
        is amended--</DELETED>
                <DELETED>    (A) in clause (i), by striking ``or'' at 
                the end thereof;</DELETED>
                <DELETED>    (B) in clause (ii), by striking the period 
                and inserting ``, or''; and</DELETED>
                <DELETED>    (C) by adding at the end thereof the 
                following new clause:</DELETED>
                        <DELETED>    ``(iii) in the case of an 
                        individual described in the last sentence of 
                        section 602(2)(A), or a beneficiary-family 
                        member of the individual, the date such 
                        individual is determined to have been 
                        disabled.''.</DELETED>
        <DELETED>    (3) Notices.--Section 606(3) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1166(3)) is 
        amended by striking ``at the time of a qualifying event 
        described in section 603(2)'' and inserting ``at any time 
        during the initial 18-month period of continuing coverage under 
        this part''.</DELETED>
        <DELETED>    (4) Birth or adoption of a child.--Section 
        607(3)(A) of the Employee Retirement Income Security Act of 
        1974 (29 U.S.C. 1167(3)) is amended by adding at the end 
        thereof the following new flush sentence:</DELETED>
        <DELETED>``Such term shall also include a child who is born to 
        or adopted by the covered employee during the period of 
        continued coverage under this part.''.</DELETED>
<DELETED>    (c) Internal Revenue Code of 1986.--</DELETED>
        <DELETED>    (1) Period of coverage.--Section 4980B(f)(2)(B) of 
        the Internal Revenue Code of 1986 is amended--</DELETED>
                <DELETED>    (A) in the last sentence of clause (i) by 
                striking ``at the time of a qualifying event described 
                in paragraph (3)(B)'' and inserting ``at any time 
                during the initial 18-month period of continuing 
                coverage under this section''; and</DELETED>
                <DELETED>    (B) in clause (v), by striking ``at the 
                time of a qualifying event described in paragraph 
                (3)(B)'' and inserting ``at any time during the initial 
                18-month period of continuing coverage under this 
                section''.</DELETED>
        <DELETED>    (2) Election.--Section 4980B(f)(5)(A)(iii) of the 
        Internal Revenue Code of 1986 is amended--</DELETED>
                <DELETED>    (A) in subclause (I), by striking ``or'' 
                at the end thereof;</DELETED>
                <DELETED>    (B) in subclause (II), by striking the 
                period and inserting ``, or''; and</DELETED>
                <DELETED>    (C) by adding at the end thereof the 
                following new subclause:</DELETED>
                                <DELETED>    ``(III) in the case of an 
                                qualified beneficiary described in the 
                                last sentence of paragraph (2)(B)(i), 
                                the date such individual is determined 
                                to have been disabled.''.</DELETED>
        <DELETED>    (3) Notices.--Section 4980B(f)(6)(C) of the 
        Internal Revenue Code of 1986 is amended by striking ``at the 
        time of a qualifying event described in paragraph (3)(B)'' and 
        inserting ``at any time during the initial 18-month period of 
        continuing coverage under this section''.</DELETED>
        <DELETED>    (4) Birth or adoption of a child.--Section 
        4980B(g)(1)(A) of the Internal Revenue Code of 1986 is amended 
        by adding at the end thereof the following new flush 
        sentence:</DELETED>
                <DELETED>``Such term shall also include a child who is 
                born to or adopted by the covered employee during the 
                period of continued coverage under this 
                section.''.</DELETED>
<DELETED>    (d) Effective Date.--The amendment made by this section 
shall apply to qualifying events occurring on or after the date of the 
enactment of this Act for plan years beginning after December 31, 
1996.</DELETED>
<DELETED>    (e) Notification of Changes.--Not later than 60 days after 
the date of enactment of this Act, each group health plan (covered 
under title XXII of the Public Health Service Act, part 6 of subtitle A 
of title I of the Employee Retirement Income Security Act of 1974, and 
section 4980B(f) of the Internal Revenue Code of 1986) shall notify 
each qualified beneficiary who has elected continuation coverage under 
such title, part or section of the amendments made by this 
section.</DELETED>

          <DELETED>Subtitle D--Private Health Plan Purchasing 
                          Coalitions</DELETED>

<DELETED>SEC. 131. PRIVATE HEALTH PLAN PURCHASING COALITIONS.</DELETED>

<DELETED>    (a) Definition.--As used in this Act, the term ``health 
plan purchasing coalition'' means a group of individuals or employers 
that, on a voluntary basis and in accordance with this section, form an 
entity for the purpose of purchasing insured health plans or 
negotiating with insured health plans and providers. An insurer, agent, 
broker or any other individual or entity engaged in the sale of 
insurance may not form or underwrite a coalition.</DELETED>
<DELETED>    (b) Certification.--</DELETED>
        <DELETED>    (1) In general.--A State shall certify health plan 
        purchasing coalitions that meet the requirements of this 
        section. Each coalition shall be chartered under State law and 
        registered with the Secretary.</DELETED>
        <DELETED>    (2) State refusal to certify.--If a State fails to 
        implement a program for certifying health plan purchasing 
        coalitions in accordance with the standards under this Act, the 
        Secretary shall certify and oversee the operations of such 
        coalitions in such State.</DELETED>
        <DELETED>    (3) Multi-state coalitions.--For purposes of this 
        section, a health plan purchasing coalition operating in more 
        than one State shall be certified by the State in which the 
        coalition is domiciled, pursuant to an agreement between the 
        States in which the coalition conducts business.</DELETED>
<DELETED>    (d) Board of Directors.--</DELETED>
        <DELETED>    (1) In general.--Each health plan purchasing 
        coalition shall be governed by a Board of Directors that shall 
        be responsible for ensuring the performance of the duties of 
        the coalition under this section. The Board shall be composed 
        of a broad cross-section of representatives of employers, 
        employees, and individuals participating in the coalition. An 
        insurer, agent, broker or any other individual or entity 
        engaged in the sale of insurance may not hold or control any 
        right to vote with respect to a coalition.</DELETED>
        <DELETED>    (2) Limitation on compensation.--A health plan 
        purchasing coalition may not provide compensation to members of 
        the Board of Directors. The coalition may provide 
        reimbursements to such members for the reasonable and necessary 
        expenses incurred by the members in the performance of their 
        duties as members of the Board.</DELETED>
        <DELETED>    (3) Conflict of interest.--No member of the Board 
        of Directors (or family members of such members) nor any 
        management personnel of the coalition may be employed by, be a 
        consultant for, be a member of the board of directors of, be 
        affiliated with an agent of, or otherwise be a representative 
        of any health plan or other insurer, health care provider, or 
        agent or broker. Nothing in the preceding sentence shall limit 
        a member of the Board from purchasing coverage from a health 
        plan offered through the coalition.</DELETED>
<DELETED>    (e) Membership and Marketing Area.--</DELETED>
        <DELETED>    (1) Membership.--</DELETED>
                <DELETED>    (A) In general.--A health plan purchasing 
                coalition may establish limits on the size of employers 
                who may become members of the coalition, and may 
                determine whether to permit individuals to become 
                members. Upon the establishment of such membership 
                requirements, the coalition shall, except as provided 
                in subparagraph (B), accept all employers (or 
                individuals) residing within the area served by the 
                coalition who meet such requirements as members on a 
                first come, first-served basis.</DELETED>
                <DELETED>    (B) Capacity limits.--A health plan 
                purchasing coalition may cease accepting employers or 
                individuals as members of the coalition if--</DELETED>
                        <DELETED>    (i) the coalition ceases to permit 
                        any new employers or individuals to become 
                        members; and</DELETED>
                        <DELETED>    (ii) the coalition can demonstrate 
                        to the State (or the Secretary in the case of 
                        coalitions certified by the Secretary) that the 
                        financial or other capacity of the coalition to 
                        serve current members will be impaired if the 
                        coalition is required to accept other 
                        members.</DELETED>
        <DELETED>    (2) Marketing area.--A State may establish rules 
        regarding the geographic area that must be served by a health 
        plan purchasing coalition. With respect to a State that has not 
        established such rules, a health plan purchasing coalition 
        operating in the State shall define the boundaries of the area 
        to be served by the coalition, except that such boundaries may 
        not be established on the basis of health status or 
        insurability.</DELETED>
<DELETED>    (f) Duties and Responsibilities.--</DELETED>
        <DELETED>    (1) In general.--A health plan purchasing 
        coalition shall--</DELETED>
                <DELETED>    (A) enter into agreements with insured 
                health plans;</DELETED>
                <DELETED>    (B) enter into agreements with employers 
                and individuals who become members of the 
                coalition;</DELETED>
                <DELETED>    (C) participate in any program of risk-
                adjustment or reinsurance, or any similar program, that 
                is established by the State;</DELETED>
                <DELETED>    (D) contract and negotiate with health 
                care providers and health plans;</DELETED>
                <DELETED>    (E) prepare and disseminate comparative 
                health plan materials (including information about 
                cost, quality, benefits, and other information 
                concerning health plans offered through the 
                coalition);</DELETED>
                <DELETED>    (F) actively market to all eligible 
                employers and individuals residing within the service 
                area; and</DELETED>
                <DELETED>    (G) act as an ombudsman for health plan 
                enrollees.</DELETED>
        <DELETED>    (2) Permissible activities.--A health plan 
        purchasing coalition may perform such other functions as 
        necessary to further the purposes of this Act, including--
        </DELETED>
                <DELETED>    (A) the collection and distribution of 
                premiums and the performance of other administrative 
                functions;</DELETED>
                <DELETED>    (B) the collection and analysis of surveys 
                of health plan enrollee satisfaction;</DELETED>
                <DELETED>    (C) the charging of membership fee to 
                enrollees (such fees may not be based on health status) 
                and the charging of participation fees to health plans; 
                and</DELETED>
                <DELETED>    (D) cooperating with (or accepting as 
                members) employers who self-insure for the purpose of 
                negotiating with providers.</DELETED>
<DELETED>    (g) Limitations on Coalition Activities.--A health plan 
purchasing coalition shall not--</DELETED>
        <DELETED>    (1) perform any activity relating to the licensing 
        of health plans;</DELETED>
        <DELETED>    (2) assume financial risk in relating to any 
        health plan;</DELETED>
        <DELETED>    (3) perform any other activities that conflict or 
        are inconsistent with the performance of its duties under this 
        Act; or</DELETED>
        <DELETED>    (4) establish eligibility, continuation, 
        enrollment, or contribution requirements for employees or 
        employers and individuals based on the health status, medical 
        condition, claims experience, receipt of health care, medical 
        history, evidence of insurability, or disability of any 
        individual.</DELETED>
<DELETED>    (h) Limited Preemption of Certain State Laws.--</DELETED>
        <DELETED>    (1) In general.--With respect to a health plan 
        purchasing coalition that meets the requirements of this 
        section, the following State laws shall be preempted:</DELETED>
                <DELETED>    (A) State fictitious group laws.</DELETED>
                <DELETED>    (B) State rating requirement laws, except 
                to the extent necessary to comply with the requirements 
                of paragraph (2).</DELETED>
                <DELETED>    (C) Other State laws that directly 
                conflict with the requirements in this 
                section.</DELETED>
        <DELETED>    (2) Rating requirement laws.--With respect to a 
        State rating requirement law, the coalition--</DELETED>
                <DELETED>    (A) may not permit premium rates to vary 
                among employers or individuals that are members of a 
                health plan purchasing coalition in excess of the 
                amount of such variations that would be permitted under 
                such State rating laws among employers that are not 
                members of the coalition; and</DELETED>
                <DELETED>    (B) with respect to premium rates 
                negotiated by the coalition, may permit such rates to 
                be less than rates that would otherwise be permitted 
                under State law if such rating differential is not 
                based on differences in health status or demographic 
                factors.</DELETED>
<DELETED>    (i) Rules of Construction.--Nothing in this section shall 
be construed to--</DELETED>
        <DELETED>    (1) require that a State organize, operate, or 
        otherwise create health care purchasing coalitions;</DELETED>
        <DELETED>    (2) otherwise require the establishment of health 
        care purchasing coalitions;</DELETED>
        <DELETED>    (3) require individuals or employers to purchase 
        health plans through a health plan purchasing 
        coalition;</DELETED>
        <DELETED>    (4) require that a health plan purchasing 
        coalition be the only type of health insurance purchasing 
        arrangement permitted to operate in a State; or</DELETED>
        <DELETED>    (5) confer authority upon a State that the State 
        would not otherwise have to regulate health plans (whether 
        insured or self-insured).</DELETED>
<DELETED>    (j) Application of ERISA.--The requirements of parts 4 and 
5 of subtitle B of title I of the Employee Retirement Income Security 
Act of 1974 (29 U.S.C. 1101) shall apply to a health plan purchasing 
coalition.</DELETED>

 <DELETED>TITLE II--APPLICATION AND ENFORCEMENT OF STANDARDS</DELETED>

<DELETED>SEC. 201. APPLICABILITY.</DELETED>

<DELETED>    (a) Construction.--</DELETED>
        <DELETED>    (1) In general.--A requirement or standard imposed 
        on an insured health plan under this Act shall be deemed to be 
        a requirement or standard imposed on the insurer. A requirement 
        or standard imposed on a self-insured health plan under this 
        Act shall be deemed to be a requirement or standard imposed on 
        the plan sponsor.</DELETED>
        <DELETED>    (2) Preemption of state law.--Nothing in this Act 
        shall be construed to prevent a State from establishing, 
        implementing, or continuing in effect standards and 
        requirements related to the issuance, renewal, or rating of 
        health insurance, or other standards or requirements related to 
        health insurance, unless such standards are in direct conflict 
        with the standards or requirements established under this 
        Act.</DELETED>

<DELETED>SEC. 202. ENFORCEMENT OF STANDARDS.</DELETED>

<DELETED>    (a) Insured Health Plans.--Each State shall require that 
each insured health plan issued, sold, renewed, offered for sale or 
operated in such State meet the insurance reform standards established 
under this Act pursuant to an enforcement plan filed by the State with 
the Secretary. A State shall submit such information as required by the 
Secretary demonstrating effective implementation of the State 
enforcement plan.</DELETED>
<DELETED>    (b) Self-Insured Health Plans.--In the case of self-
insured health plans, the Secretary shall enforce the reform standards 
established under this Act. A plan failing to meet such standards shall 
be subject to civil enforcement as provided for under section 502 of 
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1132) 
and for penalties as provided for under paragraphs (1) and (2) of 
section 502(a) of such Act (relating to failure to provide requested 
information and failure to file required reports).</DELETED>
<DELETED>    (c) Failure to Implement Plan.--In the case of the failure 
of a State to enforce the standards and requirements set forth in this 
Act, the Secretary, in consultation with the Secretary of Health and 
Human Services, shall implement an enforcement plan meeting the 
standards of this Act in such State. In the case of a State that fails 
to enforce the standards and requirements set forth in this Act, each 
health plan operating in such State shall be subject to civil 
enforcement as provided for under section 502 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1132) and for 
penalties as provided for under paragraphs (1) and (2) of subsection 
(a) of such section (relating to failure to provide requested 
information and failure to file required reports).</DELETED>
<DELETED>    (d) Applicable Certifying Authority.--As used in this 
title, the term ``applicable certifying authority'' means, with respect 
to--</DELETED>
        <DELETED>    (1) insured health plans, the State insurance 
        commissioner for the State involved; and</DELETED>
        <DELETED>    (2) a self-insured health plan, the 
        Secretary.</DELETED>

         <DELETED>TITLE III--MISCELLANEOUS PROVISIONS</DELETED>

<DELETED>SEC. 301. HMOS ALLOWED TO OFFER PLANS WITH DEDUCTIBLES TO 
              INDIVIDUALS WITH MEDICAL SAVINGS ACCOUNTS.</DELETED>

<DELETED>    (a) In General.--Section 1301(b) of the Public Health 
Service Act (42 U.S.C. 300e(b)) is amended by adding at the end the 
following new paragraph:</DELETED>
        <DELETED>    ``(6)(A) If a member certifies that a medical 
        savings account has been established for the benefit of such 
        member, a health maintenance organization may, at the request 
        of such member reduce the basic health services payment 
        otherwise determined under paragraph (1) by requiring the 
        payment of a deductible by the member for basic health 
        services.</DELETED>
        <DELETED>    ``(B) For purposes of this paragraph, the term 
        `medical savings account' means an account which, by its terms, 
        allows the deposit of funds and the use of such funds and 
        income derived from the investment of such funds for the 
        payment of the deductible described in subparagraph 
        (A).''.</DELETED>
<DELETED>    (b) Medical Savings Accounts.--It is the sense of the 
Committee on Labor and Human Resources of the Senate that the 
establishment of medical savings accounts, including those defined in 
section 1301(b)(6)(B) of the Public Health Service Act (42 U.S.C. 
300e(b)(6)(B)), should be encouraged as part of any health insurance 
reform legislation passed by the Senate through the use of tax 
incentives relating to contributions to, the income growth of, and the 
qualified use of, such accounts.</DELETED>
<DELETED>    (b) Sense of the Senate.--It is the sense of the Senate 
that the Congress should take measures to further the purposes of this 
Act, including any necessary changes to the Internal Revenue Code of 
1986 to encourage groups and individuals to obtain health coverage, and 
to promote access, equity, portability, affordability, and security of 
health benefits.</DELETED>

<DELETED>SEC. 302. EFFECTIVE DATE.</DELETED>

<DELETED>    The provisions of this Act shall apply to health plans 
offered, sold, issued, renewed, or operated on or after January 1, 
1996.</DELETED>

<DELETED>SEC. 303. SEVERABILITY.</DELETED>

<DELETED>    If any provision of this Act or the application of such 
provision to any person or circumstance is held to be unconstitutional, 
the remainder of this Act and the application of the provisions of such 
to any person or circumstance shall not be affected thereby.</DELETED>

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Health Insurance 
Reform Act of 1995''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.

       TITLE I--HEALTH CARE ACCESS, PORTABILITY, AND RENEWABILITY

                     Subtitle A--Group Market Rules

Sec. 101. Guaranteed availability of health coverage.
Sec. 102. Guaranteed renewability of health coverage.
Sec. 103. Portability of health coverage and limitation on preexisting 
                            condition exclusions.
Sec. 104. Special enrollment periods.
Sec. 105. Disclosure of information.

                  Subtitle B--Individual Market Rules

Sec. 110. Individual health plan portability.
Sec. 111. Guaranteed renewability of individual health coverage.
Sec. 112. State flexibility in individual market reforms.
Sec. 113. Definition.

                    Subtitle C--COBRA Clarifications

Sec. 121. Cobra clarifications.

        Subtitle D--Private Health Plan Purchasing Cooperatives

Sec. 131. Private health plan purchasing cooperatives.

           TITLE II--APPLICATION AND ENFORCEMENT OF STANDARDS

Sec. 201. Applicability.
Sec. 202. Enforcement of standards.

                  TITLE III--MISCELLANEOUS PROVISIONS

Sec. 301. HMOs allowed to offer plans with deductibles to individuals 
                            with medical savings accounts.
Sec. 302. Health coverage availability study.
Sec. 303. Sense of the Committee concerning Medicare.
Sec. 304. Effective date.
Sec. 305. Severability.

SEC. 2. DEFINITIONS.

    As used in this Act:
            (1) Beneficiary.--The term ``beneficiary'' has the meaning 
        given such term under section 3(8) of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1002(8)).
            (2) Employee.--The term ``employee'' has the meaning given 
        such term under section 3(6) of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1002(6)).
            (3) Employer.--The term ``employer'' has the meaning given 
        such term under section 3(5) of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1002(5)), except that such term 
        shall include only employers of two or more employees.
            (4) Employee health benefit plan.--
                    (A) In general.--The term ``employee health benefit 
                plan'' means any employee welfare benefit plan, 
                governmental plan, or church plan (as defined under 
                paragraphs (1), (32), and (33) of section 3 of the 
                Employee Retirement Income Security Act of 1974 (29 
                U.S.C. 1002 (1), (32), and (33))) that provides or pays 
                for health benefits (such as provider and hospital 
                benefits) for participants and beneficiaries whether--
                            (i) directly;
                            (ii) through a group health plan offered by 
                        a health plan issuer as defined in paragraph 
                        (8); or
                            (iii) otherwise.
                    (B) Rule of construction.--An employee health 
                benefit plan shall not be construed to be a group 
                health plan, an individual health plan, or a health 
                plan issuer.
                    (C) Arrangements not included.--Such term does not 
                include the following, or any combination thereof:
                            (i) Coverage only for accident, or 
                        disability income insurance, or any combination 
                        thereof.
                            (ii) Medicare supplemental health insurance 
                        (as defined under section 1882(g)(1) of the 
                        Social Security Act).
                            (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) Hospital or fixed indemnity 
                        insurance.
                            (ix) Short-term limited duration insurance.
                            (x) Credit-only, dental-only, or vision-
                        only insurance.
                            (xi) A health insurance policy providing 
                        benefits only for long-term care, nursing home 
                        care, home health care, community-based care, 
                        or any combination thereof.
            (5) Family.--
                    (A) In general.--The term ``family'' means an 
                individual, the individual's spouse, and the child of 
                the individual (if any).
                    (B) Child.--For purposes of subparagraph (A), the 
                term ``child'' means any individual who is a child 
                within the meaning of section 151(c)(3) of the Internal 
                Revenue Code of 1986.
            (6) Group health plan.--
                    (A) In general.--The term ``group health plan'' 
                means any contract, policy, certificate or other 
                arrangement offered by a health plan issuer to a group 
                purchaser that provides or pays for health benefits 
                (such as provider and hospital benefits) in connection 
                with an employee health benefit plan.
                    (B) Arrangements not included.--Such term does not 
                include the following, or any combination thereof:
                            (i) Coverage only for accident, or 
                        disability income insurance, or any combination 
                        thereof.
                            (ii) Medicare supplemental health insurance 
                        (as defined under section 1882(g)(1) of the 
                        Social Security Act).
                            (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) Hospital or fixed indemnity 
                        insurance.
                            (ix) Short-term limited duration insurance.
                            (x) Credit-only, dental-only, or vision-
                        only insurance.
                            (xi) A health insurance policy providing 
                        benefits only for long-term care, nursing home 
                        care, home health care, community-based care, 
                        or any combination thereof.
            (7) Group purchaser.--The term ``group purchaser'' means 
        any person (as defined under paragraph (9) of section 3 of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1002(9)) or entity that purchases or pays for health benefits 
        (such as provider or hospital benefits) on behalf of two or 
        more participants or beneficiaries in connection with an 
        employee health benefit plan. A health plan purchasing 
        cooperative established under section 131 shall not be 
        considered to be a group purchaser.
            (8) Health plan issuer.--The term ``health plan issuer'' 
        means any entity that is licensed (prior to or after the date 
        of enactment of this Act) by a State to offer a group health 
        plan or an individual health plan.
            (9) Participant.--The term ``participant'' has the meaning 
        given such term under section 3(7) of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1002(7)).
            (10) Plan sponsor.--The term ``plan sponsor'' has the 
        meaning given such term under section 3(16)(B) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1002(16)(B)).
            (11) Secretary.--The term ``Secretary'', unless 
        specifically provided otherwise, means the Secretary of Labor.
            (12) State.--The term ``State'' means each of the several 
        States, the District of Columbia, Puerto Rico, the United 
        States Virgin Islands, Guam, American Samoa, and the 
        Commonwealth of the Northern Mariana Islands.

       TITLE I--HEALTH CARE ACCESS, PORTABILITY, AND RENEWABILITY

                     Subtitle A--Group Market Rules

SEC. 101. GUARANTEED AVAILABILITY OF HEALTH COVERAGE.

    (a) In General.--
            (1) Nondiscrimination.--Except as provided in subsection 
        (b), section 102 and section 103--
                    (A) a health plan issuer offering a group health 
                plan may not decline to offer whole group coverage to a 
                group purchaser desiring to purchase such coverage; and
                    (B) an employee health benefit plan or a health 
                plan issuer offering a group health plan may establish 
                eligibility, continuation of eligibility, enrollment, 
                or premium contribution requirements under the terms of 
                such plan, except that such requirements shall not be 
                based on health status, medical condition, claims 
                experience, receipt of health care, medical history, 
                evidence of insurability, or disability.
            (2) Health promotion and disease prevention.--Nothing in 
        this subsection shall prevent an employee health benefit plan 
        or a health plan issuer from establishing premium discounts or 
        modifying otherwise applicable copayments or deductibles in 
        return for adherence to programs of health promotion and 
        disease prevention.
    (b) Application of Capacity Limits.--
            (1) In general.--Subject to paragraph (2), a health plan 
        issuer offering a group health plan may cease offering coverage 
        to group purchasers under the plan if--
                    (A) the health plan issuer ceases to offer coverage 
                to any additional group purchasers; and
                    (B) the health plan issuer can demonstrate to the 
                applicable certifying authority (as defined in section 
                202(d)), if required, that its financial or provider 
                capacity to serve previously covered participants and 
                beneficiaries (and additional participants and 
                beneficiaries who will be expected to enroll because of 
                their affiliation with a group purchaser or such 
                previously covered participants or beneficiaries) will 
                be impaired if the health plan issuer is required to 
                offer coverage to additional group purchasers.
        Such health plan issuer shall be prohibited from offering 
        coverage after a cessation in offering coverage under this 
        paragraph for a 6-month period or until the health plan issuer 
        can demonstrate to the applicable certifying authority (as 
        defined in section 202(d)) that the health plan issuer has 
        adequate capacity, whichever is later.
            (2) First-come-first-served.--A health plan issuer offering 
        a group health plan is only eligible to exercise the 
        limitations provided for in paragraph (1) if the health plan 
        issuer offers coverage to group purchasers under such plan on a 
        first-come-first-served basis or other basis established by a 
        State to ensure a fair opportunity to enroll in the plan and 
        avoid risk selection.
    (c) Construction.--
            (1) Marketing of group health plans.--Nothing in this 
        section shall be construed to prevent a State from requiring 
        health plan issuers offering group health plans to actively 
        market such plans.
            (2) Involuntary offering of group health plans.--Nothing in 
        this section shall be construed to require a health plan issuer 
        to involuntarily offer group health plans in a particular 
        market. For the purposes of this paragraph, the term ``market'' 
        means either the large employer market or the small employer 
        market (as defined under applicable State law, or if not so 
        defined, an employer with not more than 50 employees).

SEC. 102. GUARANTEED RENEWABILITY OF HEALTH COVERAGE.

    (a) In General.--
            (1) Group purchaser.--Subject to subsections (b) and (c), a 
        group health plan shall be renewed or continued in force by a 
        health plan issuer at the option of the group purchaser, except 
        that the requirement of this subparagraph shall not apply in 
        the case of--
                    (A) the nonpayment of premiums or contributions by 
                the group purchaser in accordance with the terms of the 
                group health plan or where the health plan issuer has 
                not received timely premium payments;
                    (B) fraud or misrepresentation of material fact on 
                the part of the group purchaser;
                    (C) the termination of the group health plan in 
                accordance with subsection (b); or
                    (D) the failure of the group purchaser to meet 
                contribution or participation requirements in 
                accordance with paragraph (3).
            (2) Participant.--Subject to subsections (b) and (c), 
        coverage under an employee health benefit plan or group health 
        plan shall be renewed or continued in force, if the group 
        purchaser elects to continue to provide coverage under such 
        plan, at the option of the participant (or beneficiary where 
        such right exists under the terms of the plan or under 
        applicable law), except that the requirement of this paragraph 
        shall not apply in the case of--
                    (A) the nonpayment of premiums or contributions by 
                the participant or beneficiary in accordance with the 
                terms of the employee health benefit plan or group 
                health plan or where such plan has not received timely 
                premium payments;
                    (B) fraud or misrepresentation of material fact on 
                the part of the participant or beneficiary relating to 
                an application for coverage or claim for benefits;
                    (C) the termination of the employee health benefit 
                plan or group health plan;
                    (D) loss of eligibility for continuation coverage 
                as described in part 6 of subtitle B of title I of the 
                Employee Retirement Income Security Act of 1974 (29 
                U.S.C. 1161 et seq.); or
                    (E) failure of a participant or beneficiary to meet 
                requirements for eligibility for coverage under an 
                employee health benefit plan or group health plan that 
                are not prohibited by this Act.
            (3) Rules of Construction.--Nothing in this subsection, nor 
        in section 101(a), shall be construed to--
                    (A) preclude a health plan issuer from establishing 
                employer contribution rules or group participation 
                rules for group health plans as allowed under 
                applicable State law;
                    (B) preclude a plan defined in section 3(37) of the 
                Employee Retirement Income Security Act of 1974 (29 
                U.S.C. 1102(37)) from establishing employer 
                contribution rules or group participation rules; or
                    (C) permit individuals to decline coverage under an 
                employee health benefit plan if such right is not 
                otherwise available under such plan.
    (b) Termination of Group Health Plans.--
            (1) Particular type of group health plan not offered.--In 
        any case in which a health plan issuer decides to discontinue 
        offering a particular type of group health plan, a group health 
        plan of such type may be discontinued by the health plan issuer 
        only if--
                    (A) the health plan issuer provides notice to each 
                group purchaser covered under a group health plan of 
                this type (and participants and beneficiaries covered 
                under such group health plan) of such discontinuation 
                at least 90 days prior to the date of the 
                discontinuation of such plan;
                    (B) the health plan issuer offers to each group 
                purchaser covered under a group health plan of this 
                type, the option to purchase any other group health 
                plan currently being offered by the health plan issuer; 
                and
                    (C) in exercising the option to discontinue a group 
                health plan of this type and in offering one or more 
                replacement plans, the health plan issuer acts 
                uniformly without regard to the health status or 
                insurability of participants or beneficiaries covered 
                under the group health plan, or new participants or 
                beneficiaries who may become eligible for coverage 
                under the group health plan.
            (2) Discontinuance of all group health plans.--
                    (A) In general.--In any case in which a health plan 
                issuer elects to discontinue offering all group health 
                plans in a State, a group health plan may be 
                discontinued by the health plan issuer only if--
                            (i) the health plan issuer provides notice 
                        to the applicable certifying authority (as 
                        defined in section 202(d)) and to each group 
                        purchaser (and participants and beneficiaries 
                        covered under such group health plan) of such 
                        discontinuation at least 180 days prior to the 
                        date of the expiration of such plan; and
                            (ii) all group health plans issued or 
                        delivered for issuance in the State are 
                        discontinued and coverage under such plans is 
                        not renewed.
                    (B) Application of provisions.--The provisions of 
                this paragraph and paragraph (3) may be applied 
                separately by a health plan issuer--
                            (i) to all group health plans offered to 
                        small employers (as defined under applicable 
                        State law, or if not so defined, an employer 
                        with not more than 50 employees); or
                            (ii) to all other group health plans 
                        offered by the health plan issuer in the State.
            (3) Prohibition on market reentry.--In the case of a 
        discontinuation under paragraph (2), the health plan issuer may 
        not provide for the issuance of any group health plan in the 
        market sector (as described in paragraph (2)(B)) in which 
        issuance of such group health plan was discontinued in the 
        State involved during the 5-year period beginning on the date 
        of the discontinuation of the last group health plan not so 
        renewed.
    (c) Treatment of Network Plans.--
            (1) Geographic limitations.--A network plan (as defined in 
        paragraph (2)) may deny continued participation under such plan 
        to participants or beneficiaries who neither live, reside, nor 
        work in an area in which such network plan is offered, but only 
        if such denial is applied uniformly, without regard to health 
        status or the insurability of particular participants or 
        beneficiaries.
            (2) Network plan.--As used in paragraph (1), the term 
        ``network plan'' means an employee health benefit plan or a 
        group health plan that arranges for the financing and delivery 
        of health care services to participants or beneficiaries 
        covered under such plan, in whole or in part, through 
        arrangements with providers.
    (d) COBRA Coverage.--Nothing in subsection (a)(2)(E) or subsection 
(c) shall be construed to affect any right to COBRA continuation 
coverage as described in part 6 of subtitle B of title I of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1161 et 
seq.).

SEC. 103. PORTABILITY OF HEALTH COVERAGE AND LIMITATION ON PREEXISTING 
              CONDITION EXCLUSIONS.

    (a) In General.--An employee health benefit plan or a health plan 
issuer offering a group health plan may impose a limitation or 
exclusion of benefits relating to treatment of a preexisting condition 
based on the fact that the condition existed prior to the coverage of 
the participant or beneficiary under the plan only if--
            (1) the limitation or exclusion extends for a period of not 
        more than 12 months after the date of enrollment in the plan;
            (2) the limitation or exclusion does not apply to an 
        individual who, within 30 days of the date of birth or 
        placement for adoption (as determined under section 
        609(c)(3)(B) of the Employee Retirement Income Security Act of 
        1974 (29 U.S.C. 1169(c)(3)(B)), was covered under the plan; and
            (3) the limitation or exclusion does not apply to a 
        pregnancy.
    (b) Crediting of Previous Qualifying Coverage.--
            (1) In general.--Subject to paragraph (4), an employee 
        health benefit plan or a health plan issuer offering a group 
        health plan shall provide that if a participant or beneficiary 
        is in a period of previous qualifying coverage as of the date 
        of enrollment under such plan, any period of exclusion or 
        limitation of coverage with respect to a preexisting condition 
        shall be reduced by 1 month for each month in which the 
        participant or beneficiary was in the period of previous 
        qualifying coverage. With respect to an individual described in 
        subsection (a)(2) who maintains continuous coverage, no 
        limitation or exclusion of benefits relating to treatment of a 
        preexisting condition may be applied to a child within the 
        child's first 12 months of life or within 12 months after the 
        placement of a child for adoption.
            (2) Discharge of duty.--An employee health benefit plan 
        shall provide documentation of coverage to participants and 
        beneficiaries whose coverage is terminated under the plan. 
        Pursuant to regulations promulgated by the Secretary, the duty 
        of an employee health benefit plan to verify previous 
        qualifying coverage with respect to a participant or 
        beneficiary is effectively discharged when such employee health 
        benefit plan provides documentation to a participant or 
        beneficiary that includes the following information:
                    (A) the dates that the participant or beneficiary 
                was covered under the plan; and
                    (B) the benefits and cost-sharing arrangement 
                available to the participant or beneficiary under such 
                plan.
        An employee health benefit plan shall retain the documentation 
        provided to a participant or beneficiary under subparagraphs 
        (A) and (B) for at least the 12-month period following the date 
        on which the participant or beneficiary ceases to be covered 
        under the plan. Upon request, an employee health benefit plan 
        shall provide a second copy of such documentation to such 
        participant or beneficiary within the 12-month period following 
        the date of such ineligibility.
            (3) Definitions.--As used in this section:
                    (A) Previous qualifying coverage.--The term 
                ``previous qualifying coverage'' means the period 
                beginning on the date--
                            (i) a participant or beneficiary is 
                        enrolled under an employee health benefit plan 
                        or a group health plan, and ending on the date 
                        the participant or beneficiary is not so 
                        enrolled; or
                            (ii) an individual is enrolled under an 
                        individual health plan (as defined in section 
                        113) or under a public or private health plan 
                        established under Federal or State law, and 
                        ending on the date the individual is not so 
                        enrolled;
                for a continuous period of more than 30 days (without 
                regard to any waiting period).
                    (B) Limitation or exclusion of benefits relating to 
                treatment of a preexisting condition.--The term 
                ``limitation or exclusion of benefits relating to 
                treatment of a preexisting condition'' means a 
                limitation or exclusion of benefits imposed on an 
                individual based on a preexisting condition of such 
                individual.
            (4) Effect of previous coverage.--An employee health 
        benefit plan or a health plan issuer offering a group health 
        plan may impose a limitation or exclusion of benefits relating 
        to the treatment of a preexisting condition, subject to the 
        limits in subsection (a)(1), only to the extent that such 
        service or benefit was not previously covered under the group 
        health plan, employee health benefit plan, or individual health 
        plan in which the participant or beneficiary was enrolled 
        immediately prior to enrollment in the plan involved.
    (c) Late Enrollees.--Except as provided in section 104, with 
respect to a participant or beneficiary enrolling in an employee health 
benefit plan or a group health plan during a time that is other than 
the first opportunity to enroll during an enrollment period of at least 
30 days, coverage with respect to benefits or services relating to the 
treatment of a preexisting condition in accordance with subsections (a) 
and (b) may be excluded, except the period of such exclusion may not 
exceed 18 months beginning on the date of coverage under the plan.
    (d) Affiliation Periods.--With respect to a participant or 
beneficiary who would otherwise be eligible to receive benefits under 
an employee health benefit plan or a group health plan but for the 
operation of a preexisting condition limitation or exclusion, if such 
plan does not utilize a limitation or exclusion of benefits relating to 
the treatment of a preexisting condition, such plan may impose an 
affiliation period on such participant or beneficiary not to exceed 60 
days (or in the case of a late participant or beneficiary described in 
subsection (c), 90 days) from the date on which the participant or 
beneficiary would otherwise be eligible to receive benefits under the 
plan. An employee health benefit plan or a health plan issuer offering 
a group health plan may also use alternative methods to address adverse 
selection as approved by the applicable certifying authority (as 
defined in section 202(d)). During such an affiliation period, the plan 
may not be required to provide health care services or benefits and no 
premium shall be charged to the participant or beneficiary.
    (e)  Preexisting Condition.--For purposes of this section, the term 
``preexisting condition'' means a condition, regardless of the cause of 
the condition, for which medical advice, diagnosis, care, or treatment 
was recommended or received within the 6-month period ending on the day 
before the effective date of the coverage (without regard to any 
waiting period).
    (f) State Flexibility.--Nothing in this section shall be construed 
to preempt State laws that --
            (1) require health plan issuers to impose a limitation or 
        exclusion of benefits relating to the treatment of a 
        preexisting condition for periods that are shorter than those 
        provided for under this section; or
            (2) allow individuals, participants, and beneficiaries to 
        be considered to be in a period of previous qualifying coverage 
        if such individual, participant, or beneficiary experiences a 
        lapse in coverage that is greater than the 30-day period 
        provided for under subsection (b)(3);
unless such laws are preempted by section 514 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1144).

SEC. 104. SPECIAL ENROLLMENT PERIODS.

    In the case of a participant, beneficiary or family member who--
            (1) through marriage, separation, divorce, death, birth or 
        placement of a child for adoption, experiences a change in 
        family composition affecting eligibility under a group health 
        plan, individual health plan, or employee health benefit plan;
            (2) experiences a change in employment status, as described 
        in section 603(2) of the Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1163(2)), that causes the loss of 
        eligibility for coverage, other than COBRA continuation 
        coverage under a group health plan, individual health plan, or 
employee health benefit plan; or
            (3) experiences a loss of eligibility under a group health 
        plan, individual health plan, or employee health benefit plan 
        because of a change in the employment status of a family 
        member;
each employee health benefit plan and each group health plan shall 
provide for a special enrollment period extending for a reasonable time 
after such event that would permit the participant to change the 
individual or family basis of coverage or to enroll in the plan if 
coverage would have been available to such individual, participant, or 
beneficiary but for failure to enroll during a previous enrollment 
period. Such a special enrollment period shall ensure that a child born 
or placed for adoption shall be deemed to be covered under the plan as 
of the date of such birth or placement for adoption if such child is 
enrolled within 30 days of the date of such birth or placement for 
adoption.

SEC. 105. DISCLOSURE OF INFORMATION.

    (a) Disclosure of Information by Health Plan Issuers.--
            (1) In general.--In connection with the offering of any 
        group health plan to a small employer (as defined under 
        applicable State law, or if not so defined, an employer with 
        not more than 50 employees), a health plan issuer shall make a 
        reasonable disclosure to such employer, as part of its 
        solicitation and sales materials, of--
                    (A) the provisions of such group health plan 
                concerning the health plan issuer's right to change 
                premium rates and the factors that may affect changes 
                in premium rates;
                    (B) the provisions of such group health plan 
                relating to renewability of coverage;
                    (C) the provisions of such group health plan 
                relating to any preexisting condition provision; and
                    (D) descriptive information about the benefits and 
                premiums available under all group health plans for 
                which the employer is qualified.
        Information shall be provided to small employers under this 
        paragraph in a manner determined to be understandable by the 
        average small employer, and shall be sufficiently accurate and 
        comprehensive to reasonably inform small employers, 
        participants and beneficiaries of their rights and obligations 
        under the group health plan.
            (2) Exception.--With respect to the requirement of 
        paragraph (1), any information that is proprietary and trade 
        secret information under applicable law shall not be subject to 
        the disclosure requirements of such paragraph.
            (3) Construction.--Nothing in this subsection shall be 
        construed to preempt State reporting and disclosure 
        requirements to the extent that such requirements are not 
        preempted under section 514 of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1144).
    (b) Disclosure of Information to Participants and Beneficiaries.--
            (1) In general.--Section 104(b)(1) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1024(b)(1)) 
        is amended in the matter following subparagraph (B)--
                    (A) by striking ``102(a)(1),'' and inserting 
                ``102(a)(1) that is not a material reduction in covered 
                services or benefits provided,''; and
                    (B) by adding at the end thereof the following new 
                sentences: ``If there is a modification or change 
                described in section 102(a)(1) that is a material 
                reduction in covered services or benefits provided, a 
                summary description of such modification or change 
                shall be furnished to participants not later than 60 
                days after the date of the adoption of the modification 
                or change. In the alternative, the plan sponsors may 
                provide such description at regular intervals of not 
                more than 90 days. The Secretary shall issue 
                regulations within 180 days after the date of enactment 
                of the Health Insurance Reform Act of 1995, providing 
                alternative mechanisms to delivery by mail through 
                which employee health benefit plans may notify 
                participants of material reductions in covered services 
                or benefits.''.
            (2) Plan description and summary.--Section 102(b) of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1022(b)) is amended--
                    (A) by inserting ``including the office or title of 
                the individual who is responsible for approving or 
                denying claims for coverage of benefits'' after ``type 
                of administration of the plan'';
                    (B) by inserting ``including the name of the 
                organization responsible for financing claims'' after 
                ``source of financing of the plan''; and
                    (C) by inserting ``including the office, contact, 
                or title of the individual at the Department of Labor 
                through which participants may seek assistance or 
                information regarding their rights under this Act and 
                the Health Insurance Reform Act of 1995 with respect to 
                health benefits that are not offered through a group 
health plan.'' after ``benefits under the plan''.

                  Subtitle B--Individual Market Rules

SEC. 110. INDIVIDUAL HEALTH PLAN PORTABILITY.

    (a) Limitation on Requirements.--
            (1) In general.--With respect to an individual desiring to 
        enroll in an individual health plan, if such individual is in a 
        period of previous qualifying coverage (as defined in section 
        103(b)(3)(A)(i)) under one or more group health plans or 
        employee health benefit plans that commenced 18 or more months 
        prior to the date on which such individual desires to enroll in 
        the individual plan, a health plan issuer described in 
        paragraph (3) may not decline to offer coverage to such 
        individual, or deny enrollment to such individual based on the 
        health status, medical condition, claims experience, receipt of 
        health care, medical history, evidence of insurability, or 
        disability of the individual, except as described in 
        subsections (b) and (c).
            (2) Health promotion and disease prevention.--Nothing in 
        this subsection shall be construed to prevent a health plan 
        issuer offering an individual health plan from establishing 
        premium discounts or modifying otherwise applicable copayments 
        or deductibles in return for adherence to programs of health 
        promotion or disease prevention.
            (3) Health plan issuer.--A health plan issuer described in 
        this paragraph is a health plan issuer that issues or renews 
        individual health plans.
            (4) Premiums.--Nothing in this subsection shall be 
        construed to affect the determination of a health plan issuer 
        as to the amount of the premium payable under an individual 
        health plan under applicable State law.
    (b) Eligibility for Other Group Coverage.--The provisions of 
subsection (a) shall not apply to an individual who is eligible for 
coverage under a group health plan or an employee health benefit plan, 
or who has had coverage terminated under a group health plan or 
employee health benefit plan for failure to make required premium 
payments or contributions, or for fraud or misrepresentation of 
material fact, or who is otherwise eligible for continuation coverage 
as described in part 6 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1161 et seq.) or 
under an equivalent State program.
    (c) Application of Capacity Limits.--
            (1) In general.--Subject to paragraph (2), a health plan 
        issuer offering coverage to individuals under an individual 
        health plan may cease enrolling individuals under the plan if--
                    (A) the health plan issuer ceases to enroll any new 
                individuals; and
                    (B) the health plan issuer can demonstrate to the 
                applicable certifying authority (as defined in section 
                202(d)), if required, that its financial or provider 
                capacity to serve previously covered individuals will 
                be impaired if the health plan issuer is required to 
                enroll additional individuals.
        Such a health plan issuer shall be prohibited from offering 
        coverage after a cessation in offering coverage under this 
        paragraph for a 6-month period or until the health plan issuer 
        can demonstrate to the applicable certifying authority (as 
        defined in section 202(d)) that the health plan issuer has 
        adequate capacity, whichever is later.
            (2) First-come-first-served.--A health plan issuer offering 
        coverage to individuals under an individual health plan is only 
        eligible to exercise the limitations provided for in paragraph 
        (1) if the health plan issuer provides for enrollment of 
        individuals under such plan on a first-come-first-served basis 
or other basis established by a State to ensure a fair opportunity to 
enroll in the plan and avoid risk selection.
    (d) Market Requirements.--
            (1) In general.--The provisions of subsection (a) shall not 
        be construed to require that a health plan issuer offering 
        group health plans to group purchasers offer individual health 
        plans to individuals.
            (2) Conversion policies.--A health plan issuer offering 
        group health plans to group purchasers under this Act shall not 
        be deemed to be a health plan issuer offering an individual 
        health plan solely because such health plan issuer offers a 
        conversion policy.
            (3) Marketing of plans.--Nothing in this section shall be 
        construed to prevent a State from requiring health plan issuers 
        offering coverage to individuals under an individual health 
        plan to actively market such plan.

SEC. 111. GUARANTEED RENEWABILITY OF INDIVIDUAL HEALTH COVERAGE.

    (a) In General.--Subject to subsections (b) and (c), coverage for 
individuals under an individual health plan shall be renewed or 
continued in force by a health plan issuer at the option of the 
individual, except that the requirement of this subsection shall not 
apply in the case of--
            (1) the nonpayment of premiums or contributions by the 
        individual in accordance with the terms of the individual 
        health plan or where the health plan issuer has not received 
        timely premium payments;
            (2) fraud or misrepresentation of material fact on the part 
        of the individual; or
            (3) the termination of the individual health plan in 
        accordance with subsection (b).
    (b) Termination of Individual Health Plans.--
            (1) Particular type of individual health plan not 
        offered.--In any case in which a health plan issuer decides to 
        discontinue offering a particular type of individual health 
        plan to individuals, an individual health plan may be 
        discontinued by the health plan issuer only if--
                    (A) the health plan issuer provides notice to each 
                individual covered under the plan of such 
                discontinuation at least 90 days prior to the date of 
                the expiration of the plan;
                    (B) the health plan issuer offers to each 
                individual covered under the plan the option to 
                purchase any other individual health plan currently 
                being offered by the health plan issuer to individuals; 
                and
                    (C) in exercising the option to discontinue the 
                individual health plan and in offering one or more 
                replacement plans, the health plan issuer acts 
                uniformly without regard to the health status or 
                insurability of particular individuals.
            (2) Discontinuance of all individual health plans.--In any 
        case in which a health plan issuer elects to discontinue all 
        individual health plans in a State, an individual health plan 
        may be discontinued by the health plan issuer only if--
                    (A) the health plan issuer provides notice to the 
                applicable certifying authority (as defined in section 
                202(d)) and to each individual covered under the plan 
                of such discontinuation at least 180 days prior to the 
                date of the discontinuation of the plan; and
                    (B) all individual health plans issued or delivered 
                for issuance in the State are discontinued and coverage 
                under such plans is not renewed.
            (3) Prohibition on market reentry.--In the case of a 
        discontinuation under paragraph (2), the health plan issuer may 
        not provide for the issuance of any individual health plan in 
        the State involved during the 5-year period beginning on the 
        date of the discontinuation of the last plan not so renewed.
    (c) Treatment of Network Plans.--
            (1) Geographic limitations.--A health plan issuer which 
        offers a network plan (as defined in paragraph (2)) may deny 
        continued participation under the plan to individuals who 
        neither live, reside, nor work in an area in which the 
        individual health plan is offered, but only if such denial is 
        applied uniformly, without regard to health status or the 
        insurability of particular individuals.
            (2) Network plan.--As used in paragraph (1), the term 
        ``network plan'' means an individual health plan that arranges 
        for the financing and delivery of health care services to 
        individuals covered under such health plan, in whole or in 
        part, through arrangements with providers.

SEC. 112. STATE FLEXIBILITY IN INDIVIDUAL MARKET REFORMS.

    (a) In General.--With respect to any State law with respect to 
which the Governor of the State notifies the Secretary of Health and 
Human Services that such State law will achieve the goals of sections 
110 and 111, and that is in effect on, or enacted after, the date of 
enactment of this Act (such as laws providing for guaranteed issue, 
open enrollment by one or more health plan issuers, high-risk pools, or 
mandatory conversion policies), such State law shall apply in lieu of 
the standards described in sections 110 and 111 unless the Secretary of 
Health and Human Services determines, after considering the criteria 
described in subsection (b)(1), in consultation with the Governor and 
Insurance Commissioner or chief insurance regulatory official of the 
State, that such State law does not achieve the goals of providing 
access to affordable health care coverage for those individuals 
described in sections 110 and 111.
    (b) Determination.--
            (1) In general.--In making a determination under subsection 
        (a), the Secretary of Health and Human Services shall only--
                    (A) evaluate whether the State law or program 
                provides guaranteed access to affordable coverage to 
                individuals described in sections 110 and 111;
                    (B) evaluate whether the State law or program 
                provides coverage for preexisting conditions (as 
                defined in section 103(e)) that were covered under the 
                individuals' previous group health plan or employee 
                health benefit plan for individuals described in 
                sections 110 and 111;
                    (C) evaluate whether the State law or program 
                provides individuals described in sections 110 and 111 
                with a choice of health plans or a health plan 
                providing comprehensive coverage; and
                    (D) evaluate whether the application of the 
                standards described in sections 110 and 111 will have 
                an adverse impact on the number of individuals in such 
                State having access to affordable coverage.
            (2) Notice of intent.--If, within 6 months after the date 
        of enactment of this Act, the Governor of a State notifies the 
        Secretary of Health and Human Services that the State intends 
        to enact a law, or modify an existing law, described in 
        subsection (a), the Secretary of Health and Human Services may 
        not make a determination under such subsection until the 
        expiration of the 12-month period beginning on the date on 
        which such notification is made, or until January 1, 1997, 
        whichever is later. With respect to a State that provides 
        notice under this paragraph and that has a legislature that 
        does not meet within the 12-month period beginning on the date 
        of enactment of this Act, the Secretary shall not make a 
        determination under subsection (a) prior to January 1, 1998.
            (3) Notice to state.--If the Secretary of Health and Human 
        Services determines that a State law or program does not 
        achieve the goals described in subsection (a), the Secretary of 
        Health and Human Services shall provide the State with adequate 
        notice and reasonable opportunity to modify such law or program 
        to achieve such goals prior to making a final determination 
        under subsection (a).
    (c) Adoption of NAIC Model.--If, not later than 9 months after the 
date of enactment of this Act--
            (1) the National Association of Insurance Commissioners 
        (hereafter referred to as the ``NAIC''), through a process 
        which the Secretary of Health and Human Services determines has 
        included consultation with representatives of the insurance 
        industry and consumer groups, adopts a model standard or 
        standards for reform of the individual health insurance market; 
        and
            (2) the Secretary of Health and Human Services determines, 
        within 30 days of the adoption of such NAIC standard or 
        standards, that such standards comply with the goals of 
        sections 110 and 111;
a State that elects to adopt such model standards or substantially 
adopt such model standards shall be deemed to have met the requirements 
of sections 110 and 111 and shall not be subject to a determination 
under subsection (a).

SEC. 113. DEFINITION.

    (a) In General.--As used in this title, the term ``individual 
health plan'' means any contract, policy, certificate or other 
arrangement offered to individuals by a health plan issuer that 
provides or pays for health benefits (such as provider and hospital 
benefits) and that is not a group health plan under section 2(6).
    (b) Arrangements Not Included.--Such term does not include the 
following, or any combination thereof:
            (1) Coverage only for accident, or disability income 
        insurance, or any combination thereof.
            (2) Medicare supplemental health insurance (as defined 
        under section 1882(g)(1) of the Social Security Act).
            (3) Coverage issued as a supplement to liability insurance.
            (4) Liability insurance, including general liability 
        insurance and automobile liability insurance.
            (5) Workers' compensation or similar insurance.
            (6) Automobile medical payment insurance.
            (7) Coverage for a specified disease or illness.
            (8) Hospital or fixed indemnity insurance.
            (9) Short-term limited duration insurance.
            (10) Credit-only, dental-only, or vision-only insurance.
            (11) A health insurance policy providing benefits only for 
        long-term care, nursing home care, home health care, community-
        based care, or any combination thereof.

                    Subtitle C--COBRA Clarifications

SEC. 121. COBRA CLARIFICATIONS.

    (a) Public Health Service Act.--
            (1) Period of coverage.--Section 2202(2) of the Public 
        Health Service Act (42 U.S.C. 300bb-2(2)) is amended--
                    (A) in subparagraph (A)--
                            (i) by transferring the sentence 
                        immediately preceding clause (iv) so as to 
                        appear immediately following such clause (iv); 
                        and
                            (ii) in the last sentence (as so 
                        transferred)--
                                    (I) by inserting ``, or a 
                                beneficiary-family member of the 
                                individual,'' after ``an individual''; 
                                and
                                    (II) by striking ``at the time of a 
                                qualifying event described in section 
                                2203(2)'' and inserting ``at any time 
                                during the initial 18-month period of 
                                continuing coverage under this title'';
                    (B) in subparagraph (D)(i), by inserting before ``, 
                or'' the following: ``, except that the exclusion or 
                limitation contained in this clause shall not be 
                considered to apply to a plan under which a preexisting 
                condition or exclusion does not apply to an individual 
                otherwise eligible for continuation coverage under this 
                section because of the provision of the Health 
                Insurance Reform Act of 1995''; and
                    (C) in subparagraph (E), by striking ``at the time 
                of a qualifying event described in section 2203(2)'' 
                and inserting ``at any time during the initial 18-month 
                period of continuing coverage under this title''.
            (2) Election.--Section 2205(1)(C) of the Public Health 
        Service Act (42 U.S.C. 300bb-5(1)(C)) is amended--
                    (A) in clause (i), by striking ``or'' at the end 
                thereof;
                    (B) in clause (ii), by striking the period and 
                inserting ``, or''; and
                    (C) by adding at the end thereof the following new 
                clause:
                            ``(iii) in the case of an individual 
                        described in the last sentence of section 
                        2202(2)(A), or a beneficiary-family member of 
                        the individual, the date such individual is 
                        determined to have been disabled.''.
            (3) Notices.--Section 2206(3) of the Public Health Service 
        Act (42 U.S.C. 300bb-6(3)) is amended by striking ``at the time 
        of a qualifying event described in section 2203(2)'' and 
        inserting ``at any time during the initial 18-month period of 
        continuing coverage under this title''.
            (4) Birth or adoption of a child.--Section 2208(3)(A) of 
        the Public Health Service Act (42 U.S.C. 300bb-8(3)(A)) is 
        amended by adding at the end thereof the following new flush 
        sentence:
        ``Such term shall also include a child who is born to or placed 
        for adoption with the covered employee during the period of 
        continued coverage under this title.''.
    (b) Employee Retirement Income Security Act of 1974.--
            (1) Period of coverage.--Section 602(2) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1162(2)) is 
        amended--
                    (A) in the last sentence of subparagraph (A)--
                            (i) by inserting ``, or a beneficiary-
                        family member of the individual,'' after ``an 
                        individual''; and
                            (ii) by striking ``at the time of a 
                        qualifying event described in section 603(2)'' 
                        and inserting ``at any time during the initial 
                        18-month period of continuing coverage under 
                        this part'';
                    (B) in subparagraph (D)(i), by inserting before ``, 
                or'' the following: ``, except that the exclusion or 
                limitation contained in this clause shall not be 
                considered to apply to a plan under which a preexisting 
                condition or exclusion does not apply to an individual 
                otherwise eligible for continuation coverage under this 
                section because of the provision of the Health 
                Insurance Reform Act of 1995''; and
                    (C) in subparagraph (E), by striking ``at the time 
                of a qualifying event described in section 603(2)'' and 
                inserting ``at any time during the initial 18-month 
                period of continuing coverage under this part''.
            (2) Election.--Section 605(1)(C) of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1165(1)(C)) is amended--
                    (A) in clause (i), by striking ``or'' at the end 
                thereof;
                    (B) in clause (ii), by striking the period and 
                inserting ``, or''; and
                    (C) by adding at the end thereof the following new 
                clause:
                            ``(iii) in the case of an individual 
                        described in the last sentence of section 
                        602(2)(A), or a beneficiary-family member of 
                        the individual, the date such individual is 
                        determined to have been disabled.''.
            (3) Notices.--Section 606(3) of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1166(3)) is amended by 
        striking ``at the time of a qualifying event described in 
        section 603(2)'' and inserting ``at any time during the initial 
        18-month period of continuing coverage under this part''.
            (4) Birth or adoption of a child.--Section 607(3)(A) of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1167(3)) is amended by adding at the end thereof the following 
        new flush sentence:
        ``Such term shall also include a child who is born to or placed 
        for adoption with the covered employee during the period of 
        continued coverage under this part.''.
    (c) Internal Revenue Code of 1986.--
            (1) Period of coverage.--Section 4980B(f)(2)(B) of the 
        Internal Revenue Code of 1986 is amended--
                    (A) in the last sentence of clause (i) by striking 
                ``at the time of a qualifying event described in 
                paragraph (3)(B)'' and inserting ``at any time during 
                the initial 18-month period of continuing coverage 
                under this section'';
                    (B) in clause (iv)(I), by inserting before ``, or'' 
                the following: ``, except that the exclusion or 
                limitation contained in this subclause shall not be 
                considered to apply to a plan under which a preexisting 
                condition or exclusion does not apply to an individual 
                otherwise eligible for continuation coverage under this 
                subsection because of the provision of the Health 
                Insurance Reform Act of 1995''; and
                    (C) in clause (v), by striking ``at the time of a 
                qualifying event described in paragraph (3)(B)'' and 
                inserting ``at any time during the initial 18-month 
                period of continuing coverage under this section''.
            (2) Election.--Section 4980B(f)(5)(A)(iii) of the Internal 
        Revenue Code of 1986 is amended--
                    (A) in subclause (I), by striking ``or'' at the end 
                thereof;
                    (B) in subclause (II), by striking the period and 
                inserting ``, or''; and
                    (C) by adding at the end thereof the following new 
                subclause:
                                    ``(III) in the case of an qualified 
                                beneficiary described in the last 
                                sentence of paragraph (2)(B)(i), the 
                                date such individual is determined to 
                                have been disabled.''.
            (3) Notices.--Section 4980B(f)(6)(C) of the Internal 
        Revenue Code of 1986 is amended by striking ``at the time of a 
        qualifying event described in paragraph (3)(B)'' and inserting 
        ``at any time during the initial 18-month period of continuing 
        coverage under this section''.
            (4) Birth or adoption of a child.--Section 4980B(g)(1)(A) 
        of the Internal Revenue Code of 1986 is amended by adding at 
        the end thereof the following new flush sentence:
                        ``Such term shall also include a child who is 
                        born to or placed for adoption with the covered 
                        employee during the period of continued 
                        coverage under this section.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to qualifying events occurring on or after the date of the 
enactment of this Act for plan years beginning after December 31, 1996.
    (e) Notification of Changes.--Not later than 60 days prior to the 
date on which this section becomes effective, each group health plan 
(covered under title XXII of the Public Health Service Act, part 6 of 
subtitle B of title I of the Employee Retirement Income Security Act of 
1974, and section 4980B(f) of the Internal Revenue Code of 1986) shall 
notify each qualified beneficiary who has elected continuation coverage 
under such title, part or section of the amendments made by this 
section.

        Subtitle D--Private Health Plan Purchasing Cooperatives

SEC. 131. PRIVATE HEALTH PLAN PURCHASING COOPERATIVES.

    (a) Definition.--As used in this Act, the term ``health plan 
purchasing cooperative'' means a group of individuals or employers 
that, on a voluntary basis and in accordance with this section, form a 
cooperative for the purpose of purchasing individual health plans or 
group health plans offered by health plan issuers. A health plan 
issuer, agent, broker or any other individual or entity engaged in the 
sale of insurance may not underwrite a cooperative.
    (b) Certification.--
            (1) In general.--If a group described in subsection (a) 
        desires to form a health plan purchasing cooperative in 
        accordance with this section and such group appropriately 
        notifies the State and the Secretary of such desire, the State, 
        upon a determination that such group meets the requirements of 
        this section, shall certify the group as a health plan 
        purchasing cooperative. The State shall make a determination of 
        whether such group meets the requirements of this section in a 
        timely fashion. Each such cooperative shall also be registered 
        with the Secretary.
            (2) State refusal to certify.--If a State fails to 
        implement a program for certifying health plan purchasing 
        cooperatives in accordance with the standards under this Act, 
        the Secretary shall certify and oversee the operations of such 
        cooperatives in such State.
            (3) Interstate cooperatives.--For purposes of this section, 
        a health plan purchasing cooperative operating in more than one 
        State shall be certified by the State in which the cooperative 
        is domiciled. States may enter into cooperative agreements for 
        the purpose of certifying and overseeing the operation of such 
        cooperatives. For purposes of this subsection, a cooperative 
        shall be considered to be domiciled in the State in which most 
        of the members of the cooperative reside.
    (c) Board of Directors.--
            (1) In general.--Each health plan purchasing cooperative 
        shall be governed by a Board of Directors that shall be 
        responsible for ensuring the performance of the duties of the 
        cooperative under this section. The Board shall be composed of 
        a broad cross-section of representatives of employers, 
        employees, and individuals participating in the cooperative. A 
        health plan issuer, agent, broker or any other individual or 
        entity engaged in the sale of individual health plans or group 
        health plans may not hold or control any right to vote with 
        respect to a cooperative.
            (2) Limitation on compensation.--A health plan purchasing 
        cooperative may not provide compensation to members of the 
        Board of Directors. The cooperative may provide reimbursements 
        to such members for the reasonable and necessary expenses 
        incurred by the members in the performance of their duties as 
        members of the Board.
            (3) Conflict of interest.--No member of the Board of 
        Directors (or family members of such members) nor any 
        management personnel of the cooperative may be employed by, be 
        a consultant for, be a member of the board of directors of, be 
        affiliated with an agent of, or otherwise be a representative 
        of any health plan issuer, health care provider, or agent or 
        broker. Nothing in the preceding sentence shall limit a member 
        of the Board from purchasing coverage offered through the 
        cooperative.
    (d) Membership and Marketing Area.--
            (1) Membership.--A health plan purchasing cooperative may 
        establish limits on the maximum size of employers who may 
        become members of the cooperative, and may determine whether to 
        permit individuals to become members. Upon the establishment of 
        such membership requirements, the cooperative shall, except as 
        provided in subparagraph (B), accept all employers (or 
        individuals) residing within the area served by the cooperative 
        who meet such requirements as members on a first-come, first-
        served basis, or on another basis established by the State to 
        ensure equitable access to the cooperative.
            (2) Marketing area.--A State may establish rules regarding 
        the geographic area that must be served by a health plan 
        purchasing cooperative. With respect to a State that has not 
        established such rules, a health plan purchasing cooperative 
        operating in the State shall define the boundaries of the area 
        to be served by the cooperative, except that such boundaries 
        may not be established on the basis of health status or 
        insurability of the populations that reside in the area.
    (e) Duties and Responsibilities.--
            (1) In general.--A health plan purchasing cooperative 
        shall--
                    (A) enter into agreements with multiple, 
                unaffiliated health plan issuers, except that the 
                requirement of this subparagraph shall not apply in 
                regions (such as remote or frontier areas) in which 
                compliance with such requirement is not possible;
                    (B) enter into agreements with employers and 
                individuals who become members of the cooperative;
                    (C) participate in any program of risk-adjustment 
                or reinsurance, or any similar program, that is 
                established by the State;
                    (D) prepare and disseminate comparative health plan 
                materials (including information about cost, quality, 
                benefits, and other information concerning group health 
                plans and individual health plans offered through the 
                cooperative);
                    (E) actively market to all eligible employers and 
                individuals residing within the service area; and
                    (F) act as an ombudsman for group health plan or 
                individual health plan enrollees.
            (2) Permissible activities.--A health plan purchasing 
        cooperative may perform such other functions as necessary to 
        further the purposes of this Act, including--
                    (A) collecting and distributing premiums and 
                performing other administrative functions;
                    (B) collecting and analyzing surveys of enrollee 
                satisfaction;
                    (C) charging membership fee to enrollees (such fees 
                may not be based on health status) and charging 
                participation fees to health plan issuers;
                    (D) cooperating with (or accepting as members) 
                employers who provide health benefits directly to 
                participants and beneficiaries only for the purpose of 
                negotiating with providers; and
                    (E) negotiating with health care providers and 
                health plan issuers.
    (f) Limitations on Cooperative Activities.--A health plan 
purchasing cooperative shall not--
            (1) perform any activity relating to the licensing of 
        health plan issuers;
            (2) assume financial risk directly or indirectly on behalf 
        of members of a health plan purchasing cooperative relating to 
        any group health plan or individual health plan;
            (3) establish eligibility, continuation of eligibility, 
        enrollment, or premium contribution requirements for 
        participants, beneficiaries, or individuals based on health 
        status, medical condition, claims experience, receipt of health 
        care, medical history, evidence of insurability, or disability;
            (4) operate on a for-profit or other basis where the legal 
        structure of the cooperative permits profits to be made and not 
        returned to the members of the cooperative, except that a for-
        profit health plan purchasing cooperative may be formed by a 
        nonprofit organization--
                    (A) in which membership in such organization is not 
                based on health status, medical condition, claims 
                experience, receipt of health care, medical history, 
                evidence of insurability, or disability; and
                    (B) that accepts as members all employers or 
                individuals on a first-come, first-served basis, 
                subject to any established limit on the maximum size of 
                and employer that may become a member; or
            (5) perform any other activities that conflict or are 
        inconsistent with the performance of its duties under this Act.
    (g) Limited Preemption of Certain State Laws.--
            (1) In general.--With respect to a health plan purchasing 
        cooperative that meets the requirements of this section, State 
        fictitious group laws shall be preempted.
            (2) Health plan issuers.--
                    (A) Rating.--With respect to a health plan issuer 
                offering a group health plan or individual health plan 
                through a health plan purchasing cooperative that meets 
                the requirements of this section, State premium rating 
                requirement laws, except to the extent provided under 
                subparagraph (B), shall be preempted unless such laws 
                permit premium rates negotiated by the cooperative to 
                be less than rates that would otherwise be permitted 
                under State law, if such rating differential is not 
                based on differences in health status or demographic 
                factors.
                    (B) Exception.--State laws referred to in 
                subparagraph (A) shall not be preempted if such laws--
                            (i) prohibit the variance of premium rates 
                        among employers, plan sponsors, or individuals 
                        that are members of a health plan purchasing 
                        cooperative in excess of the amount of such 
                        variations that would be permitted under such 
                        State rating laws among employers, plan 
                        sponsors, and individuals that are not members 
                        of the cooperative; and
                            (ii) prohibit a percentage increase in 
                        premium rates for a new rating period that is 
                        in excess of that which would be permitted 
                        under State rating laws.
                    (C) Benefits.--Except as provided in subparagraph 
                (D), a health plan issuer offering a group health plan 
                or individual health plan through a health plan 
                purchasing cooperative shall comply with all State 
                mandated benefit laws that require the offering of any 
                services, category or care, or services of any class or 
                type of provider.
                    (D) Exception.--In those States that have enacted 
                laws authorizing the issuance of alternative benefit 
                plans to small employers, health plan issuers may offer 
                such alternative benefit plans through a health plan 
                purchasing cooperative that meets the requirements of 
                this section.
    (h) Rules of Construction.--Nothing in this section shall be 
construed to--
            (1) require that a State organize, operate, or otherwise 
        create health plan purchasing cooperatives;
            (2) otherwise require the establishment of health plan 
        purchasing cooperatives;
            (3) require individuals, plan sponsors, or employers to 
        purchase group health plans or individual health plans through 
        a health plan purchasing cooperative;
            (4) require that a health plan purchasing cooperative be 
        the only type of purchasing arrangement permitted to operate in 
        a State;
            (5) confer authority upon a State that the State would not 
        otherwise have to regulate health plan issuers or employee 
        health benefits plans; or
            (6) confer authority upon a State (or the Federal 
        Government) that the State (or Federal Government) would not 
        otherwise have to regulate group purchasing arrangements, 
        coalitions, or other similar entities that do not desire to 
        become a health plan purchasing cooperative in accordance with 
        this section.
    (i) Application of ERISA.--For purposes of enforcement only, the 
requirements of parts 4 and 5 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1101) shall apply to 
a health plan purchasing cooperative as if such plan were an employee 
welfare benefit plan.

           TITLE II--APPLICATION AND ENFORCEMENT OF STANDARDS

SEC. 201. APPLICABILITY.

    (a) Construction.--
            (1) Enforcement.--
                    (A) In general.--A requirement or standard imposed 
                under this Act on a group health plan or individual 
                health plan offered by a health plan issuer shall be 
                deemed to be a requirement or standard imposed on the 
                health plan issuer. Such requirements or standards 
                shall be enforced by the State insurance commissioner 
                for the State involved or the official or officials 
                designated by the State to enforce the requirements of 
                this Act. In the case of a group health plan offered by 
                a health plan issuer in connection with an employee 
                health benefit plan, the requirements or standards 
                imposed under this Act shall be enforced with respect 
                to the health plan issuer by the State insurance 
                commissioner for the State involved or the official or 
                officials designated by the State to enforce the 
                requirements of this Act.
                    (B) Limitation.--Except as provided in subsection 
                (c), the Secretary shall not enforce the requirements 
                or standards of this Act as they relate to health plan 
                issuers, group health plans, or individual health 
                plans. In no case shall a State enforce the 
                requirements or standards of this Act as they relate to 
                employee health benefit plans.
            (2) Preemption of state law.--Nothing in this Act shall be 
        construed to prevent a State from establishing, implementing, 
        or continuing in effect standards and requirements--
                    (A) not prescribed in this Act; or
                    (B) related to the issuance, renewal, or 
                portability of health insurance or the establishment or 
                operation of group purchasing arrangements, that are 
                consistent with, and are not in direct conflict with, 
                this Act and provide greater protection or benefit to 
                participants, beneficiaries or individuals.
    (b) Rule of Construction.--Nothing in this Act shall be construed 
to affect or modify the provisions of section 514 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1144).
    (c) Continuation.--Nothing in this Act shall be construed as 
requiring a group health plan or an employee health benefit plan to 
provide benefits to a particular participant or beneficiary in excess 
of those provided under the terms of such plan.

SEC. 202. ENFORCEMENT OF STANDARDS.

    (a) Health Plan Issuers.--Each State shall require that each group 
health plan and individual health plan issued, sold, renewed, offered 
for sale or operated in such State by a health plan issuer meet the 
standards established under this Act pursuant to an enforcement plan 
filed by the State with the Secretary. A State shall submit such 
information as required by the Secretary demonstrating effective 
implementation of the State enforcement plan.
    (b) Employee Health Benefit Plans.--With respect to employee health 
benefit plans, the Secretary shall enforce the reform standards 
established under this Act in the same manner as provided for under 
sections 502, 504, 506, and 510 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1132, 1134, 1136, and 1140). The civil 
penalties contained in paragraphs (1) and (2) of section 502(c) of such 
Act (29 U.S.C. 1132(c)(1) and (2)) shall apply to any information 
required by the Secretary to be disclosed and reported under this 
section.
    (c) Failure To Implement Plan.--In the case of the failure of a 
State to substantially enforce the standards and requirements set forth 
in this Act with respect to group health plans and individual health 
plans as provided for under the State enforcement plan filed under 
subsection (a), the Secretary, in consultation with the Secretary of 
Health and Human Services, shall implement an enforcement plan meeting 
the standards of this Act in such State. In the case of a State that 
fails to substantially enforce the standards and requirements set forth 
in this Act, each health plan issuer operating in such State shall be 
subject to civil enforcement as provided for under sections 502, 504, 
506, and 510 of the Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1132, 1134, 1136, and 1140). The civil penalties contained in 
paragraphs (1) and (2) of section 502(c) of such Act (29 U.S.C. 
1132(c)(1) and (2)) shall apply to any information required by the 
Secretary to be disclosed and reported under this section.
    (d) Applicable Certifying Authority.--As used in this title, the 
term ``applicable certifying authority'' means, with respect to--
            (1) health plan issuers, the State insurance commissioner 
        or official or officials designated by the State to enforce the 
        requirements of this Act for the State involved; and
            (2) an employee health benefit plan, the Secretary.
    (e) Regulations.--The Secretary may promulgate such regulations as 
may be necessary or appropriate to carry out this Act.
    (f) Technical Amendment.--Section 508 of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1138) is amended by inserting 
``and under the Health Insurance Reform Act of 1995'' before the 
period.

                  TITLE III--MISCELLANEOUS PROVISIONS

SEC. 301. HMOS ALLOWED TO OFFER PLANS WITH DEDUCTIBLES TO INDIVIDUALS 
              WITH MEDICAL SAVINGS ACCOUNTS.

    (a) In General.--Section 1301(b) of the Public Health Service Act 
(42 U.S.C. 300e(b)) is amended by adding at the end the following new 
paragraph:
            ``(6)(A) If a member certifies that a medical savings 
        account has been established for the benefit of such member, a 
        health maintenance organization may, at the request of such 
        member reduce the basic health services payment otherwise 
        determined under paragraph (1) by requiring the payment of a 
        deductible by the member for basic health services.
            ``(B) For purposes of this paragraph, the term `medical 
        savings account' means an account which, by its terms, allows 
        the deposit of funds and the use of such funds and income 
        derived from the investment of such funds for the payment of 
        the deductible described in subparagraph (A).''.
    (b) Medical Savings Accounts.--It is the sense of the Committee on 
Labor and Human Resources of the Senate that the establishment of 
medical savings accounts, including those defined in section 
1301(b)(6)(B) of the Public Health Service Act (42 U.S.C. 
300e(b)(6)(B)), should be encouraged as part of any health insurance 
reform legislation passed by the Senate through the use of tax 
incentives relating to contributions to, the income growth of, and the 
qualified use of, such accounts.
    (c) Sense of the Senate.--It is the sense of the Senate that the 
Congress should take measures to further the purposes of this Act, 
including any necessary changes to the Internal Revenue Code of 1986 to 
encourage groups and individuals to obtain health coverage, and to 
promote access, equity, portability, affordability, and security of 
health benefits.

SEC. 302. HEALTH COVERAGE AVAILABILITY STUDY.

    (a) In General.--The Secretary of Health and Human Services, in 
consultation with the Secretary, representatives of State officials, 
consumers, and other representatives of individuals and entities that 
have expertise in health insurance and employee benefits, shall conduct 
a two-part study, and prepare and submit reports, in accordance with 
this section.
    (b) Evaluation of Availability.--Not later than January 1, 1997, 
the Secretary of Health and Human Services shall prepare and submit to 
the appropriate committees of Congress a report, concerning--
            (1) an evaluation, based on the experience of States, 
        expert opinions, and such additional data as may be available, 
        of the various mechanisms used to ensure the availability of 
        reasonably priced health coverage to employers purchasing group 
        coverage and to individuals purchasing coverage on a non-group 
        basis; and
            (2) whether standards that limit the variation in premiums 
        will further the purposes of this Act.
    (c) Evaluation of Effectiveness.--Not later than January 1, 1998, 
the Secretary of Health and Human Services shall prepare and submit to 
the appropriate committees of Congress a report, concerning the 
effectiveness of the provisions of this Act and the various State laws, 
in ensuring the availability of reasonably priced health coverage to 
employers purchasing group coverage and individuals purchasing coverage 
on a non-group basis.

SEC. 303. SENSE OF THE COMMITTEE CONCERNING MEDICARE.

    (a) Findings.--The Committee on Labor and Human Resources of the 
Senate finds that the Public Trustees of Medicare concluded in their 
1995 Annual Report that--
            (1) the Medicare program is clearly unsustainable in its 
        present form;
            (2) ``the Hospital Insurance Trust Fund, which pays 
        inpatient hospital expenses, will be able to pay benefits for 
        only about 7 years and is severely out of financial balance in 
        the long range''; and
            (3) the Public Trustees ``strongly recommend that the 
        crisis presented by the financial condition of the Medicare 
        trust fund be urgently addressed on a comprehensive basis, 
        including a review of the programs's financing methods, benefit 
        provisions, and delivery mechanisms''.
    (b) Sense of the Committee.--It is the Sense of the Committee on 
Labor and Human Resources of the Senate that the Senate should take 
measures necessary to reform the Medicare program, to provide increased 
choice for seniors, and to respond to the findings of the Public 
Trustees by protecting the short-term solvency and long-term 
sustainability of the Medicare program.

SEC. 304. EFFECTIVE DATE.

    Except as otherwise provided for in this Act, the provisions of 
this Act shall apply as follows:
            (1) With respect to group health plans and individual 
        health plans, such provisions shall apply to plans offered, 
        sold, issued, renewed, in effect, or operated on or after 
        January 1, 1996; and
            (2) With respect to employee health benefit plans, on the 
        first day of the first plan year beginning on or after January 
        1, 1996.

SEC. 305. SEVERABILITY.

    If any provision of this Act or the application of such provision 
to any person or circumstance is held to be unconstitutional, the 
remainder of this Act and the application of the provisions of such to 
any person or circumstance shall not be affected thereby.
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