[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3998 Introduced in House (IH)]







105th CONGRESS
  2d Session
                                H. R. 3998

 To direct the Secretary of Health and Human Services to make payments 
  to each State for the operation of a comprehensive health insurance 
plan ensuring health insurance coverage for individuals and families in 
                   the State, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              June 5, 1998

 Mr. Obey (for himself and Mr. Matsui) introduced the following bill; 
which was referred to the Committee on Commerce, and in addition to the 
 Committees on Ways and Means, and Education and the Workforce, for a 
 period to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL


 
 To direct the Secretary of Health and Human Services to make payments 
  to each State for the operation of a comprehensive health insurance 
plan ensuring health insurance coverage for individuals and families in 
                   the State, and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``American Health 
Security Partnership Act of 1998''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings; purpose.
Sec. 3. Definitions.
                  TITLE I--FEDERAL PAYMENTS TO STATES

Sec. 101. Payments to States with certified plans.
Sec. 102. Amount of State payment.
Sec. 103. Total amount available for payments.
         TITLE II--REQUIREMENTS FOR COMPREHENSIVE HEALTH PLANS

Sec. 201. Implementation of certified health insurance plans by States.
Sec. 202. Required provisions of health insurance plan.
Sec. 203. Requiring operation of certified plan to receive medicaid 
                            payments.
            TITLE III--TAX DEDUCTIBILITY OF HEALTH INSURANCE

Sec. 301. Tax deductibility of health insurance.
               TITLE IV--HEALTH CARE FOR WORKING FAMILIES

Sec. 401. Health benefits for employees and their families.
Sec. 402. Amendment to Public Health Service Act.
                     TITLE V--FINANCING MECHANISMS

Sec. 501. Increase in top income tax rate applicable to corporations.
Sec. 502. Establishment of tobacco settlement trust fund.

SEC. 2. FINDINGS; PURPOSE.

    (a) Findings.--Congress finds as follows:
            (1) 41 million Americans do not have health insurance 
        coverage.
            (2) Cost shifting among payers and providers contributes to 
        the increasing cost of health care in the United States.
            (3) The only means of ending this cost shifting is to 
        ensure that each individual in the United States has health 
        insurance coverage.
    (b) Purpose.--It is the purpose of this Act to provide assistance 
to each State to enable the State to ensure, in the manner the State 
itself considers most appropriate, that each individual has access to 
health insurance coverage at least equivalent to the coverage provided 
to Members of Congress and employees of the Federal Government.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) The term ``Secretary'' means the Secretary of Health 
        and Human Services.
            (2) The term ``State'' means each of the 50 States and the 
        District of Columbia.

                  TITLE I--FEDERAL PAYMENTS TO STATES

SEC. 101. PAYMENTS TO STATES WITH CERTIFIED PLANS.

    For purposes of assisting States in carrying out plans approved 
under title II, the Secretary of Health and Human Services shall make 
payments to States with comprehensive health insurance plans certified 
under title II for a fiscal year in an amount determined under section 
102.

SEC. 102. AMOUNT OF STATE PAYMENT.

    (a) In General.--Subject to the succeeding provisions of this 
section, the amount of payment made to a State for a fiscal year under 
section 101 shall be equal to 50 percent of the State's expenditures in 
carrying out health insurance plans certified under title II.
    (b) State Allocation.--The amount of payments under section 101 to 
a State in a fiscal year may not exceed the State's allocation of the 
total amount available for payments under this title for the fiscal 
year under section 103, as determined in accordance with the following 
formula:
            (1) Fiscal years 1999 through 2001.--For fiscal years 1999 
        through 2001:
                    (A) 30 percent of the total amount available shall 
                be allocated among the States on the basis of the ratio 
                of the uninsured population of each State to the 
                uninsured population of all States.
                    (B) 30 percent of the total amount available shall 
                be allocated among the States on the basis of the ratio 
                of the low-income population of each State to the low-
                income population of all States.
                    (C) 40 percent of the total amount available shall 
                be allocated among the States on the basis of the ratio 
                of the total population of each State to the total 
                population of all States.
            (2) Fiscal year 2002.--For fiscal year 2002:
                    (A) 20 percent of the total amount available shall 
                be allocated among the States on the basis of the ratio 
                of the uninsured population of each State to the 
                uninsured population of all States.
                    (B) 40 percent of the total amount available shall 
                be allocated among the States on the basis of the ratio 
                of the low-income population of each State to the low-
                income population of all States.
                    (C) 40 percent of the total amount available shall 
                be allocated among the States on the basis of the ratio 
                of the total population of each State to the total 
                population of all States.
            (3) Fiscal year 2003 and succeeding fiscal years.--For a 
        fiscal year after fiscal year 2002:
                    (A) 50 percent of the total amount available shall 
                be allocated among the States on the basis of the ratio 
                of the low-income population of each State to the low-
                income population of all States.
                    (B) 50 percent of the total amount available shall 
                be allocated among the States on the basis of the ratio 
                of the total population of each State to the total 
                population of all States.
    (c) Use of Non-federal Funds for State Matching Requirement.--
Amounts provided by the Federal Government, or services assisted or 
subsidized to any significant extent by the Federal Government, may not 
be included in determining the amount of non-Federal contributions 
required under subsection (a). In applying this subsection, the 
Secretary shall provide for the application of rules similar to the 
rules described in section 1903(w) of the Social Security Act (relating 
to treatment of certain provider taxes and donations).
    (d) Offset of Receipts Attributable to Premiums and Other Cost-
sharing.--For purposes of subsection (a), the amount of the 
expenditures under the plan shall be reduced by the amount of any 
premiums and other cost-sharing received by the State.
    (e) Maintenance of Effort.--
            (1) In medicaid eligibility standards.--No payment may be 
        made under this title to a State if the State adopts income and 
        resource standards and methodologies for purposes of 
        determining eligibility for medical assistance under the State 
        plan under title XIX that are more restrictive than those 
        applied as of June 1, 1997.
            (2) In amounts of payment expended for certain state-funded 
        health insurance programs.--
                    (A) In general.--The amount of the allocation under 
                subsection (b) for a State in a fiscal year shall be 
                reduced by the amount by which--
                            (i) the total of the State health insurance 
                        program expenditures in the preceding fiscal 
                        year, is less than
                            (ii) the total of such expenditures in 
                        fiscal year 1998.
                    (B) State health insurance program expenditures.--
                For purposes of subparagraph (A), the term ``State 
                health insurance program expenditures'' means the 
                following:
                            (i) The State share of expenditures under 
                        title XXI of the Social Security Act.
                            (ii) The State share of expenditures under 
                        title XIX of such Act.
                            (iii) State expenditures under health 
                        benefits coverage under an existing 
                        comprehensive State-based program, described in 
                        section 2103(d) of such Act.
    (f) 3-Year Availability of Amounts Allocated.--Amounts allocated to 
a State pursuant to this section for a fiscal year shall remain 
available for expenditure by the State through the end of the second 
succeeding fiscal year; except that amounts reallocated to a State 
under subsection (g) shall be available for expenditure by the State 
through the end of the fiscal year in which they are reallotted.
    (g) Procedure for Redistribution of Unused Allocations.--The 
Secretary shall determine an appropriate procedure for redistribution 
of allocations from States that were provided allocations under this 
section for a fiscal year but that do not expend all of the amount of 
such allocations during the period in which such allocations are 
available for expenditure under subsection (f), to States that have 
fully expended the amount of their allocations under this section. Such 
procedure shall provide priority consideration to States facing 
economic recession or natural disasters.

SEC. 103. TOTAL AMOUNT AVAILABLE FOR PAYMENTS.

    For the purpose of providing for payments to States under this 
title for fiscal years, there are hereby appropriated out of the 
tobacco settlement trust fund established in section 502 the following:
            (1) For fiscal year 1999, $7,000,000,000.
            (2) For fiscal year 2000, $9,000,000,000.
            (3) For fiscal year 2001, $13,000,000,000.
            (4) For fiscal year 2002, $16,000,000,000.
            (5) For fiscal year 2003 and for each succeeding fiscal 
        year, $19,000,000,000.

         TITLE II--REQUIREMENTS FOR COMPREHENSIVE HEALTH PLANS

SEC. 201. IMPLEMENTATION OF CERTIFIED HEALTH INSURANCE PLANS BY STATES.

    (a) In General.--Not later than July 1, 2001, each State shall 
submit to the Secretary a comprehensive health insurance plan designed 
to be administered by the State and containing the provisions required 
under this title, and shall have such plan in place and operating not 
later than January 1, 2002.
    (b) Certification of Plans by Secretary.--The Secretary shall 
certify for a fiscal year those State plans developed and implemented 
under this title which meet the applicable requirements of this title 
for the fiscal year.

SEC. 202. REQUIRED PROVISIONS OF HEALTH INSURANCE PLAN.

    (a) In General.--Each State shall have maximum flexibility in 
developing and implementing its comprehensive health insurance plan 
under this title, except that the plan shall include at least the 
following provisions:
            (1) Coverage.--Health insurance coverage meeting the 
        requirements of this title for all individuals in the State 
        without regard to employment status, income, or pre-existing 
        condition or other health status.
            (2) Portability and guaranteed renewal.--A prohibition 
        against the denial, cancellation, or refusal to renew the 
        coverage of an individual or employer except--
                    (A) on the basis of nonpayment of premiums,
                    (B) on the basis of fraud or misrepresentation, or
                    (C) because the plan is ceasing to provide any 
                coverage in a geographic area.
            (3) Benefits.--
                    (A) Comparable to fehbp.--Subject to the succeeding 
                provisions of this paragraph, benefits at least 
                comparable to the benefits (and deductibles, 
                copayments, and other cost-sharing not exceeding the 
                comparable cost-sharing) for coverage available to 
                Members of Congress and employees of the Federal 
                government under the Federal Employees Health Benefits 
                Program (FEHBP) (as determined by the Secretary).
                    (B) Limitation on cost-sharing for low-income 
                individuals.--In the case of individuals with income 
                below 300 percent of the poverty line for a family of 
                the size involved, the coverage shall not require the 
                payment of any coinsurance, copayments, or other cost-
                sharing (other than premiums).
                    (C) Limitation on premiums for low-income 
                individuals.--In the case of individuals with income 
                below 300 percent of such poverty line, the amount of 
                premiums shall not exceed--
                            (i) 1 percent of income, in the case of 
                        individuals with income below 200 percent of 
                        such poverty line;
                            (ii) 2 percent of income, in the case of 
                        individuals with income at or above 200 
                        percent, but below 250 percent, of such poverty 
                        line; and
                            (iii) 3 percent of income, in the case of 
                        individuals with income at or above 250 
                        percent, but below 300 percent, of such poverty 
                        line.
                    (D) Satisfaction of requirement through coverage 
                under medicare, medicaid, or state children's health 
                insurance program.--Coverage under title XVIII of the 
                Social Security Act or coverage under a State plan 
                under title XIX or XXI of such Act shall be deemed to 
                meet the requirements of subparagraphs (A), (B), and 
                (C).
                    (E) Availability of home- and community-based 
                care.--The offering of home- and community-based care 
                as an alternative to institutional care if medically 
                appropriate.
            (4) Community rating of premiums.--A requirement that the 
        premium charged shall be equivalent for all individuals within 
        any community, except that the premium may vary with respect to 
        an individual on the basis of the individual's age or the 
        number of members of the individual's family covered.
            (5) Quality of care.--The creation of adequate mechanisms 
        designed to assure, monitor, and maintain the provision of high 
        quality health care to individuals in the State.
            (6) Cost containment.--The creation of adequate mechanisms 
        designed to control premiums and the costs of providing high 
        quality health care to individuals in the State.
            (7) Avoiding crowd out.--Procedures to be used to ensure 
        that the coverage provided under this title does not substitute 
        for coverage under group health plans.
            (8) Data collection, records, and reports.--Assurances that 
        the State will collect the data, maintain the records, and 
        furnish the reports to the Secretary, at the times and in the 
        standardized format the Secretary may require in order to 
        enable the Secretary to monitor State program administration 
        and compliance and to evaluate and compare the effectiveness of 
        State plans under this title.
            (9) Audits.--Assurances that the State will afford the 
        Secretary access to any records or information relating to the 
        plan for the purposes of review or audit.
            (10) Program budget.--A budget for the plan, which is 
        updated periodically as necessary and includes details on the 
        planned use of funds and the sources of the non-Federal share 
        of plan expenditures.
            (11) Evaluations.--Submission to the Secretary, by January 
        1, 2004, of an evaluation that includes an assessment of the 
        effectiveness of the plan in increasing the number of residents 
        with health insurance coverage, recommendations for improving 
        the program under this title, and any other matters the State 
        and the Secretary consider appropriate.
    (b) Report of the Secretary.--The Secretary shall submit to 
Congress and make available to the public by December 31, 2004, a 
report based on the evaluations submitted by States under subsection 
(a)(11) containing any conclusions and recommendations the Secretary 
considers appropriate.
    (c) Waiver of Certain Preemption Requirements.--
            (1) In general.--Subject to paragraph (2), the provisions 
        of section 514 of the Employee Retirement Income Security Act 
        of 1974 are waived to the extent the Secretary, in consultation 
        with the Secretary of Labor, determines that such waiver is 
        reasonable and necessary to carry out a comprehensive health 
        insurance plan under this title.
            (2) Limitation.--Nothing in this title shall be construed 
        as encroaching on or otherwise affecting the collective 
        bargaining rights of workers and their representatives.
    (d) Construction.--Nothing in this title shall be construed as 
preventing a State from providing for administration of its 
comprehensive health insurance plan in a manner similar to that 
provided under the State's child health insurance plan under title XXI 
of the Social Security Act.

SEC. 203. REQUIRING OPERATION OF CERTIFIED PLAN TO RECEIVE MEDICAID 
              PAYMENTS.

    Section 1903 of the Social Security Act (42 U.S.C. 1396b) is 
amended by adding at the end the following new subsection:
    ``(x)(1) In order to receive payments under this title for any 
quarter beginning on or after January 1, 2002, a State must have in 
effect a comprehensive health insurance plan certified for the fiscal 
year in which the quarter occurs by the Secretary under section 201(b) 
of the American Health Security Partnership Act of 1998.
    ``(2)(A) The provisions of this subsection shall not apply to a 
State for any quarter--
            ``(i) that follows the quarter during which the State meets 
        the requirements of this subsection; or
            ``(ii) with respect to which the Secretary determines that 
        the State is unable to comply with the relevant requirements of 
        this subsection--
                    ``(I) for good cause (but such a waiver may not be 
                for a period in excess of 4 quarters), or
                    ``(II) due to circumstances beyond the control of 
                such State.
    ``(B) For purposes of determining deadlines imposed under this 
subsection, any time period during which a State was found under 
subparagraph (A)(ii)(II) to be unable to comply with the requirements 
of this subsection shall not be taken into account, and the Secretary 
shall modify all such deadlines with respect to such State 
accordingly.''.

            TITLE III--TAX DEDUCTIBILITY OF HEALTH INSURANCE

SEC. 301. TAX DEDUCTIBILITY OF HEALTH INSURANCE.

    (a) In General.--Part VII of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to additional itemized 
deductions) is amended by redesignating section 222 as section 223 and 
by inserting after section 221 the following new section:

``SEC. 222. HEALTH INSURANCE COSTS.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a deduction an amount equal to 100 percent of the amount 
paid during the taxable year for insurance which constitutes medical 
care for the taxpayer, his spouse, and dependents.
    ``(b) Limitation Based on Earned Income.--No deduction shall be 
allowed under subsection (a) to the extent that the amount of such 
deduction exceeds the sum of--
            ``(1) the taxpayer's wages, salaries, tips, and other 
        employee compensation includible in gross income, plus
            ``(2) the taxpayer's earned income (as defined in section 
        401(c)(2)).
    ``(c) Other Coverage.--
            ``(1) In general.--Subsection (a) shall not apply to any 
        taxpayer for any calendar month for which the taxpayer is 
        eligible to participate in any subsidized health plan 
        maintained by any employer of the taxpayer or of the spouse of 
        the taxpayer. The preceding sentence shall be applied 
        separately with respect to--
                    ``(A) plans which include coverage for qualified 
                long-term care services (as defined in section 
                7702B(c)) or are qualified long-term care insurance 
                contracts (as defined in section 7702B(b)), and
                    ``(B) plans which do not include such coverage and 
                are not such contracts.
            ``(2) Long-term care premiums.--In the case of a qualified 
        long-term care insurance contract (as defined in section 
        7702B(b)), only eligible long-term care premiums (as defined in 
        section 213(d)(10)) shall be taken into account under 
        subsection (a).
            ``(3) Medicare premiums.--Subsection (a) shall not apply to 
        amounts paid as premiums under part B of title XVIII of the 
        Social Security Act.
    ``(d) Special Rules.--
            ``(1) Coordination with medical deduction, etc.--Any amount 
        paid by a taxpayer for insurance to which subsection (a) 
        applies shall not be taken into account in computing the amount 
        allowable to the taxpayer as a deduction under section 213(a).
            ``(2) Deduction not allowed for self-employment tax 
        purposes.--The deduction allowable by reason of this section 
        shall not be taken into account in determining an individual's 
        net earnings from self-employment (within the meaning of 
        section 1402(a)) for purposes of chapter 2.
            ``(3) Deduction not allowed for amounts paid from medical 
        savings accounts.--Subsection (a) shall not apply to amounts 
        paid from a medical savings account (as defined in section 
        220(d)).''
    (b) Conforming Amendments.--
            (1) Subsection (l) of section 162 of such Code is hereby 
        repealed.
            (2) Subsection (a) of section 62 of such Code is amended by 
        inserting after paragraph (17) the following new item:
            ``(18) Health insurance costs.--The deduction allowed by 
        section 222.''
            (3) The table of sections for part VII of subchapter B of 
        chapter 1 of such Code is amended by striking the last item and 
        inserting the following new items:

                              ``Sec. 222. Health insurance costs.
                              ``Sec. 223. Cross reference.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1998.

               TITLE IV--HEALTH CARE FOR WORKING FAMILIES

SEC. 401. HEALTH BENEFITS FOR EMPLOYEES AND THEIR FAMILIES.

    (a) In General.--The Fair Labor Standards Act of 1938 (29 U.S.C. 
201 et seq.) is amended by adding at the end thereof the following new 
title:

      ``TITLE II--HEALTH BENEFITS FOR EMPLOYEES AND THEIR FAMILIES

``SEC. 201. HEALTH BENEFITS.

    ``(a) Offer to Enroll.--
            ``(1) In general.--Each large employer, in accordance with 
        this title, shall offer to each of its employees the 
        opportunity to enroll in a qualifying health benefit plan that 
        provides coverage for the employee and the family of the 
        employee.
            ``(2) Qualifying health benefit plan.--For purposes of this 
        title, the term `qualifying health benefit plan' means a plan 
        that provides benefits for health care items and services that 
        meet the requirements of section 202(a)(3) of the American 
        Health Security Partnership Act of 1998 and of title XXVII of 
        the Public Health Service Act applicable to the plan.
    ``(b) Contribution and Withholding.--
            ``(1) In general.--Each large employer, in accordance with 
        this title, shall--
                    ``(A) contribute to the cost of any qualifying 
                health benefit plan offered to its employees under 
                subsection (a); and
                    ``(B) withhold from the wages of an employee, the 
                employee share of the premium assessed for coverage 
                under the qualifying health benefit plan.
            ``(2) Required contribution.--Except as provided in 
        paragraphs (3) and (4), the portion of the total premium to be 
        paid by a large employer under paragraph (1)(A) shall not be 
        less than the portion of the total premium that the Federal 
        Government contributes under the Blue Cross/Blue Shield 
        Standard Plan provided under the Federal Employees Health 
        Benefit Program under chapter 89 of title 5, United States 
        Code.
            ``(3) Part-time employees.--With respect to an employee who 
        works less than 30 hours per week, the employer contribution 
        required under paragraph (2) shall be equal to the product of--
                    ``(A) the contribution required under paragraph 
                (2); and
                    ``(B) the ratio of number of hours worked by the 
                employee in a typical week to 30 hours.
            ``(4) Limitation.--No employer contribution shall be 
        required under this subsection with respect to an employer who 
        works less than 10 hours per week.
    ``(c) Employee Obligation Under Certain Programs.--
            ``(1) In general.--With respect to an employee covered 
        under a Federal health insurance program (as defined in 
        paragraph (3)), such employee shall accept an offer of health 
        insurance coverage under subsection (a) and agree to the 
        appropriate payroll withholdings under subsection (b)(1)(B) for 
        such coverage or provide for the payment of the employee share 
        of premiums under paragraph (2), except that this subsection 
        shall not apply--
                    ``(A) with respect to an employee who is otherwise 
                covered under an employment-based qualified health 
                benefit plan; or
                    ``(B) with respect to the coverage of a family 
                member of an employee if the employee does not elect 
                coverage for such family member and the family member 
                is otherwise covered under an employment-based 
                qualified health benefit plan.
            ``(2) Payment of premiums.--At the request of an employee 
        to which paragraph (1) applies, the relevant Federal 
        administrator of the Federal health insurance program involved 
        shall provide for the payment of the employee share of the 
        premium assessed for coverage under the qualifying health 
        benefit plan involved. For purposes of title XIX of the Social 
        Security Act (42 U.S.C. 1396 et seq.), the requirement of this 
        paragraph shall be deemed to be a requirement under the 
        appropriate State plan under such title XIX.
            ``(3) Federal health insurance program.--As used in this 
        subsection, the term `Federal health insurance program' means--
                    ``(A) the medicare or medicaid program under title 
                XVIII or XIX of the Social Security Act (42 U.S.C. 1395 
                or 1396 et seq.);
                    ``(B) the Federal employee health benefit program 
                under chapter 89 of title V, United States Code; or
                    ``(C) the Civilian Health and Medical Program of 
                the Uniformed Services (CHAMPUS), as defined in section 
                1073(4) of title 10, United States Code.
    ``(d) Large Employers.--
            ``(1) In general.--The provisions of this title shall only 
        apply to large employers.
            ``(2) Definition.--
                    ``(A) In general.--As used in paragraph (1), the 
                term `large employer' means, with respect to a calendar 
                year and plan year, an employer that employed an 
                average of at least 100 full-time employees on business 
                days during the preceding calendar year and who employs 
                not less than 100 employees on the first day of the 
                plan year.
                    ``(B) Exception.--The provisions of this title 
                shall apply with respect to an employer that is not a 
                large employer under subparagraph (A) if the majority 
                of the services performed by such employer consist of 
                services performed on behalf of a single large 
                employer.
            ``(3) Contract workers.--For purposes of this title, a 
        contract worker of an employer shall be considered to be an 
        employee of the employer.

``SEC. 202. REQUIREMENTS RELATING TO TIMING OF COVERAGE AND 
              WITHHOLDING.

    ``(a) Date of Initial Coverage.--In the case of an employee 
enrolled under a qualifying health benefit plan provided by a large 
employer, the coverage under the plan must begin not later than 30 days 
after the day on which the employee first performs an hour of service 
as an employee of that employer.
    ``(b) Withholding Permitted.--No provision of State law shall 
prevent an employer of an employee enrolled under a qualifying health 
benefit plan established under this title from withholding the amount 
of any premium due by the employee from the payroll of the employee.

``SEC. 203. ENFORCEMENT.

    ``(a) Civil Money Penalty Against Private Employers.--The 
provisions of section 502--
            ``(1) relating to the commencement of civil actions by the 
        Secretary under subsection (a) of such section;
            ``(2) relating to civil money penalties under subsection 
        (c)(2) of such section; and
            ``(3) relating to the procedures for assessing, collecting 
        and the judicial review of such civil money penalties;
shall apply with respect to any large employer that does not comply 
with this title.
    ``(b) Injunctive Relief.--The provisions of section 17 shall apply 
with respect to violations of this title.

``SEC. 204. PREEMPTION.

    ``Nothing in this title shall be construed to prevent a State from 
establishing, implementing, or continuing in effect standards and 
requirements relating to employer provided health insurance coverage 
unless such standards and requirements prevent the application of a 
requirement of this title.

``SEC. 205. DEFINITION AND EFFECTIVE DATE.

    ``(a) Definition.--In this title the terms `family' and `family 
member' mean, with respect to an employee, the spouse and children 
(including adopted children) of the employee.
    ``(b) Effective Date.--
            ``(1) In general.--Except as provided in paragraph (2), 
        this title shall apply with respect to employers on January 1, 
        1999.
            ``(2) Collective bargaining agreements.--This title shall 
        apply with respect to employees covered under a collective 
        bargaining agreement on the first day of the first plan year 
        beginning after the date of enactment of this Act, or January 
        1, 1999, whichever occurs later.''.
    (b) Conforming Amendments.--
            (1) The Fair Labor Standards Act of 1938 is amended by 
        striking out the first section and inserting in lieu thereof 
        the following:

``SECTION 1. SHORT TITLE.

    ``This Act may be cited as the `Fair Labor Standards Act of 1938'.

                     ``TITLE I--WAGES AND HOURS''.

            (2) The Fair Labor Standards Act of 1938 is amended by 
        striking out ``this Act'' each place it occurs and inserting in 
        lieu thereof ``this title''.
            (3) Section 17 of the Fair Labor Standards Act of 1938 (29 
        U.S.C. 217) is amended by inserting ``or violations of title 
        II'' before the period.

SEC. 402. AMENDMENT TO PUBLIC HEALTH SERVICE ACT.

    Title II of the Public Health Service Act (42 U.S.C. 202 et seq.) 
is amended by adding at the end the following:

``SEC. 247. REQUIREMENT FOR HEALTH INSURANCE COVERAGE.

    ``A health insurance issuer (as defined in section 2791(a)) that 
offers health insurance coverage (as defined in section 2791(a)) to an 
employer on behalf of the employees of such employer shall ensure that 
such coverage complies with the requirements of title II of the Fair 
Labor Standards Act of 1938.''.

                     TITLE V--FINANCING MECHANISMS

SEC. 501. INCREASE IN TOP INCOME TAX RATE APPLICABLE TO CORPORATIONS.

    (a) In General.--Subsection (b) of section 11 of the Internal 
Revenue Code of 1986 is amended by striking ``35 percent'' each place 
it appears and inserting ``36 percent''.
    (b) Conforming Amendments.--
            (1) The last sentence of section 11(b)(1) of such Code is 
        amended by striking ``$100,000'' and inserting ``$200,000''.
            (2) Clause (iii) of section 852(b)(3)(D) of such Code is 
        amended by striking ``65 percent'' and inserting ``64 
        percent''.
            (3) Subsection (a) of section 1201 of such Code is amended 
        by striking ``35 percent'' each place it appears and inserting 
        ``36 percent''.
            (4) Paragraphs (1) and (2) of section 1445(e) of such Code 
        are each amended by striking ``35 percent'' and inserting ``36 
        percent''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1998.

SEC. 502. ESTABLISHMENT OF TOBACCO SETTLEMENT TRUST FUND.

    There is established in the Treasury of the United States a tobacco 
settlement trust fund into which payments to be made to the Federal 
Government pursuant to legislation enacted implementing a national 
tobacco settlement are deposited.
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