[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 2337 Introduced in Senate (IS)]







106th CONGRESS
  2d Session
                                S. 2337

   To amend the Internal Revenue Code of 1986 to allow individuals a 
refundable credit against income tax for the purchase of private health 
insurance, and to establish State health insurance safety-net programs.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 30, 2000

 Mr. Santorum (for himself and Mr. Kyl) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
   To amend the Internal Revenue Code of 1986 to allow individuals a 
refundable credit against income tax for the purchase of private health 
insurance, and to establish State health insurance safety-net programs.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Fair Care for the Uninsured Act''.

        TITLE I--REFUNDABLE CREDIT FOR HEALTH INSURANCE COVERAGE

SEC. 101. REFUNDABLE CREDIT FOR HEALTH INSURANCE COVERAGE.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable credits) 
is amended by redesignating section 35 as section 36 and by inserting 
after section 34 the following:

``SEC. 35. HEALTH INSURANCE COSTS.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this subtitle an amount 
equal to the amount paid during the taxable year for qualified health 
insurance for the taxpayer and the taxpayer's spouse and dependents.
    ``(b) Limitations.--
            ``(1) In general.--The amount allowed as a credit under 
        subsection (a) to the taxpayer for the taxable year shall not 
        exceed the sum of the monthly limitations for coverage months 
        during such taxable year for each individual referred to in 
        subsection (a) for whom the taxpayer paid during the taxable 
        year any amount for coverage under qualified health insurance.
            ``(2) Monthly limitation.--
                    ``(A) In general.--The monthly limitation for an 
                individual for each coverage month of such individual 
                during the taxable year is the amount equal to 1/12 
                of--
                            ``(i) $1,000 if such individual is the 
                        taxpayer,
                            ``(ii) $1,000 if--
                                    ``(I) such individual is the spouse 
                                of the taxpayer,
                                    ``(II) the taxpayer and such spouse 
                                are married as of the first day of such 
                                month, and
                                    ``(III) the taxpayer files a joint 
                                return for the taxable year, and
                            ``(iii) $1,000 if such individual is an 
                        individual for whom a deduction under section 
                        151(c) is allowable to the taxpayer for such 
                        taxable year.
                    ``(B) Limitation to 1 dependent.--Not more than 1 
                individual may be taken into account by the taxpayer 
                under subparagraph (A)(iii).
            ``(3) Coverage month.--For purposes of this subsection--
                    ``(A) In general.--The term `coverage month' means, 
                with respect to an individual, any month if--
                            ``(i) as of the first day of such month 
                        such individual is covered by qualified health 
                        insurance, and
                            ``(ii) the premium for coverage under such 
                        insurance for such month is paid by the 
                        taxpayer.
                    ``(B) Employer-subsidized coverage.--Such term 
                shall not include any month for which such individual 
                eligible to participate in any subsidized health plan 
                (within the meaning of section 162(l)(2)) maintained by 
                any employer of the taxpayer or of the spouse of the 
                taxpayer.
                    ``(C) Cafeteria plan and flexible spending account 
                beneficiaries.--Such term shall not include any month 
                during a taxable year if any amount is not includible 
                in the gross income of the taxpayer for such year under 
                section 106 with respect to--
                            ``(i) a benefit chosen under a cafeteria 
                        plan (as defined in section 125(d)), or
                            ``(ii) a benefit provided under a flexible 
                        spending or similar arrangement.
                    ``(D) Medicare, medicaid, and schip.--Such term 
                shall not include any month with respect to an 
                individual if, as of the first day of such month, such 
                individual--
                            ``(i) is entitled to any benefits under 
                        title XVIII of the Social Security Act, or
                            ``(ii) is a participant in the program 
                        under title XIX or XXI of such Act.
                    ``(E) Certain other coverage.--Such term shall not 
                include any month during a taxable year with respect to 
                an individual if, at any time during such year, any 
                benefit is provided to such individual under--
                            ``(i) chapter 17 of title 38, United States 
                        Code, or
                            ``(ii) any medical care program under the 
                        Indian Health Care Improvement Act.
                    ``(F) Prisoners.--Such term shall not include any 
                month with respect to an individual if, as of the first 
                day of such month, such individual is imprisoned under 
                Federal, State, or local authority.
                    ``(G) Insufficient presence in united states.--Such 
                term shall not include any month during a taxable year 
                with respect to an individual if such individual is 
                present in the United States on fewer than 183 days 
                during such year (determined in accordance with section 
                7701(b)(7)).
            ``(4) Coordination with deduction for health insurance 
        costs of self-employed individuals.--In the case of a taxpayer 
        who is eligible to deduct any amount under section 162(l) for 
        the taxable year, this section shall apply only if the taxpayer 
        elects not to claim any amount as a deduction under such 
        section for such year.
    ``(c) Qualified Health Insurance.--For purposes of this section--
            ``(1) In general.--The term `qualified health insurance' 
        means insurance which constitutes medical care as defined in 
        section 213(d) without regard to--
                    ``(A) paragraph (1)(C) thereof, and
                    ``(B) so much of paragraph (1)(D) thereof as 
                relates to qualified long-term care insurance 
                contracts.
            ``(2) Exclusion of certain other contracts.--Such term 
        shall not include insurance if a substantial portion of its 
        benefits are excepted benefits (as defined in section 9832(c)).
    ``(d) Medical Savings Account Contributions.--
            ``(1) In general.--If a deduction would (but for paragraph 
        (2)) be allowed under section 220 to the taxpayer for a payment 
        for the taxable year to the medical savings account of an 
        individual, subsection (a) shall be applied by treating such 
        payment as a payment for qualified health insurance for such 
        individual.
            ``(2) Denial of double benefit.--No deduction shall be 
        allowed under section 220 for that portion of the payments 
        otherwise allowable as a deduction under section 220 for the 
        taxable year which is equal to the amount of credit allowed for 
        such taxable year by reason of this subsection.
    ``(e) Special Rules.--
            ``(1) Coordination with medical expense deduction.--The 
        amount which would (but for this paragraph) be taken into 
        account by the taxpayer under section 213 for the taxable year 
        shall be reduced by the credit (if any) allowed by this section 
        to the taxpayer for such year.
            ``(2) Denial of credit to dependents.--No credit shall be 
        allowed under this section to any individual with respect to 
        whom a deduction under section 151 is allowable to another 
        taxpayer for a taxable year beginning in the calendar year in 
        which such individual's taxable year begins.
            ``(3) Inflation adjustment.--In the case of any taxable 
        year beginning in a calendar year after 2001, each dollar 
        amount contained in subsection (b)(2)(A) shall be increased by 
        an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                the taxable year begins, determined by substituting 
                `calendar year 2000' for `calendar year 1992' in 
                subparagraph (B) thereof.
        Any increase determined under the preceding sentence shall be 
        rounded to the nearest multiple of $50 ($25 in the case of the 
        dollar amount in subsection (b)(2)(A)(iii)).''.
    (b) Maintenance of Effort Requirement.--Section 162 of the Internal 
Revenue Code of 1986 (relating to trade or business expenses) is 
amended by redesignating subsection (p) as subsection (q) and by 
inserting after subsection (o) the following new subsection:
    ``(p) Group Health Plan Maintenance of Effort.--No deduction shall 
be allowed under this chapter to an employer for any amount paid or 
incurred in connection with a group health plan (as defined in 
subsection (n)(3)) for any taxable year in which occurs the date of 
introduction of the Fair Care for the Uninsured Act unless such plan 
remains in effect for at least 6 months after the date of the enactment 
of such Act.''.
    (c) Information Reporting.--
            (1) In general.--Subpart B of part III of subchapter A of 
        chapter 61 of the Internal Revenue Code of 1986 (relating to 
        information concerning transactions with other persons) is 
        amended by inserting after section 6050S the following:

``SEC. 6050T. RETURNS RELATING TO PAYMENTS FOR QUALIFIED HEALTH 
              INSURANCE.

    ``(a) In General.--Any person who, in connection with a trade or 
business conducted by such person, receives payments during any 
calendar year from any individual for coverage of such individual or 
any other individual under creditable health insurance, shall make the 
return described in subsection (b) (at such time as the Secretary may 
by regulations prescribe) with respect to each individual from whom 
such payments were received.
    ``(b) Form and Manner of Returns.--A return is described in this 
subsection if such return--
            ``(1) is in such form as the Secretary may prescribe, and
            ``(2) contains--
                    ``(A) the name, address, and TIN of the individual 
                from whom payments described in subsection (a) were 
                received,
                    ``(B) the name, address, and TIN of each individual 
                who was provided by such person with coverage under 
                creditable health insurance by reason of such payments 
                and the period of such coverage, and
                    ``(C) such other information as the Secretary may 
                reasonably prescribe.
    ``(c) Creditable Health Insurance.--For purposes of this section, 
the term `creditable health insurance' means qualified health insurance 
(as defined in section 35(c)) other than--
            ``(1) insurance under a subsidized group health plan 
        maintained by an employer, or
            ``(2) to the extent provided in regulations prescribed by 
        the Secretary, any other insurance covering an individual if no 
        credit is allowable under section 35 with respect to such 
        coverage.
    ``(d) Statements To Be Furnished to Individuals With Respect to 
Whom Information Is Required.--Every person required to make a return 
under subsection (a) shall furnish to each individual whose name is 
required under subsection (b)(2)(A) to be set forth in such return a 
written statement showing--
            ``(1) the name and address of the person required to make 
        such return and the phone number of the information contact for 
        such person,
            ``(2) the aggregate amount of payments described in 
        subsection (a) received by the person required to make such 
        return from the individual to whom the statement is required to 
        be furnished, and
            ``(3) the information required under subsection (b)(2)(B) 
        with respect to such payments.
The written statement required under the preceding sentence shall be 
furnished on or before January 31 of the year following the calendar 
year for which the return under subsection (a) is required to be made.
    ``(e) Returns Which Would Be Required To Be Made by 2 or More 
Persons.--Except to the extent provided in regulations prescribed by 
the Secretary, in the case of any amount received by any person on 
behalf of another person, only the person first receiving such amount 
shall be required to make the return under subsection (a).''.
            (2) Assessable penalties.--
                    (A) Subparagraph (B) of section 6724(d)(1) of such 
                Code (relating to definitions) is amended by 
                redesignating clauses (xi) through (xvii) as clauses 
                (xii) through (xviii), respectively, and by inserting 
                after clause (x) the following:
                            ``(xi) section 6050T (relating to returns 
                        relating to payments for qualified health 
                        insurance),''.
                    (B) Paragraph (2) of section 6724(d) of such Code 
                is amended by striking ``or'' at the end of the next to 
                last subparagraph, by striking the period at the end of 
                the last subparagraph and inserting ``, or'', and by 
                adding at the end the following:
                    ``(BB) section 6050T(d) (relating to returns 
                relating to payments for qualified health 
                insurance).''.
            (3) Clerical amendment.--The table of sections for subpart 
        B of part III of subchapter A of chapter 61 of such Code is 
        amended by inserting after the item relating to section 6050S 
        the following:

                              ``Sec. 6050T. Returns relating to 
                                        payments for qualified health 
                                        insurance.''.
    (d) Conforming Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting before the period ``, or 
        from section 35 of such Code''.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of the Internal Revenue Code of 1986 
        is amended by striking the last item and inserting the 
        following:

                              ``Sec. 35. Health insurance costs.
                              ``Sec. 36. Overpayments of tax.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 102. ADVANCE PAYMENT OF CREDIT FOR PURCHASERS OF QUALIFIED HEALTH 
              INSURANCE.

    (a) In General.--Chapter 77 of the Internal Revenue Code of 1986 
(relating to miscellaneous provisions) is amended by adding at the end 
the following:

``SEC. 7527. ADVANCE PAYMENT OF HEALTH INSURANCE CREDIT FOR PURCHASERS 
              OF QUALIFIED HEALTH INSURANCE.

    ``(a) General Rule.--In the case of an eligible individual, the 
Secretary shall make payments to the provider of such individual's 
qualified health insurance equal to such individual's qualified health 
insurance credit advance amount with respect to such provider.
    ``(b) Eligible Individual.--For purposes of this section, the term 
`eligible individual' means any individual--
            ``(1) who purchases qualified health insurance (as defined 
        in section 35(c)), and
            ``(2) for whom a qualified health insurance credit 
        eligibility certificate is in effect.
    ``(c) Qualified Health Insurance Credit Eligibility Certificate.--
For purposes of this section, a qualified health insurance credit 
eligibility certificate is a statement furnished by an individual to 
the Secretary which--
            ``(1) certifies that the individual will be eligible to 
        receive the credit provided by section 35 for the taxable year,
            ``(2) estimates the amount of such credit for such taxable 
        year, and
            ``(3) provides such other information as the Secretary may 
        require for purposes of this section.
    ``(d) Qualified Health Insurance Credit Advance Amount.--For 
purposes of this section, the term `qualified health insurance credit 
advance amount' means, with respect to any provider of qualified health 
insurance, the Secretary's estimate of the amount of credit allowable 
under section 35 to the individual for the taxable year which is 
attributable to the insurance provided to the individual by such 
provider.
    ``(e) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out the purposes of this section.''.
    (b) Clerical Amendment.--The table of sections for chapter 77 of 
the Internal Revenue Code of 1986 is amended by adding at the end the 
following:

                              ``Sec. 7527. Advance payment of health 
                                        insurance credit for purchasers 
                                        of qualified health 
                                        insurance.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on January 1, 2001.

     TITLE II--ASSURING HEALTH INSURANCE COVERAGE FOR UNINSURABLE 
                              INDIVIDUALS

SEC. 201. ESTABLISHMENT OF HEALTH INSURANCE SAFETY NETS.

    (a) In General.--
            (1) Requirement.--For years beginning with 2001, each 
        health insurer, health maintenance organization, and health 
        service organization shall be a participant in a health 
        insurance safety net (in this title referred to as a ``safety 
        net'') established by the State in which it operates.
            (2) Functions.--Any safety net shall assure, in accordance 
        with this title, the availability of qualified health insurance 
        coverage to uninsurable individuals.
            (3) Funding.--Any safety net shall be funded by an 
        assessment against health insurers, health service 
        organizations, and health maintenance organizations on a pro 
        rata basis of uninsurable individuals covered in the State in 
        which the safety net operates. The costs of the assessment may 
        be added by a health insurer, health service organization, or 
        health maintenance organization to the costs of its health 
        insurance or health coverage provided in the State.
            (4) Guaranteed renewable.--Coverage under a safety net 
        shall be guaranteed renewable except for nonpayment of 
        premiums, material misrepresentation, fraud, medicare 
        eligibility under title XVIII of the Social Security Act (42 
        U.S.C. 1395 et seq.), loss of dependent status, or eligibility 
        for other health insurance coverage.
    (b) Deadline.--Safety nets required under subsection (a) shall be 
established not later than January 1, 2001.
    (c) Waiver.--This title shall not apply in the case of insurers and 
organizations operating in a State if the State has established a 
similar comprehensive health insurance program that assures the 
availability of qualified health insurance coverage to all eligible 
individuals residing in the State.
    (d) Recommendation for Compliance Requirement.--Not later than 
January 1, 2002, the Secretary of Health and Human Services shall 
submit to Congress a recommendation on appropriate sanctions for States 
that fail to meet the requirement of subsection (a).

SEC. 202. UNINSURABLE INDIVIDUALS ELIGIBLE FOR COVERAGE.

    (a) Uninsurable and Eligible Individual Defined.--In this title:
            (1) Uninsurable individual.--The term ``uninsurable 
        individual'' means, with respect to a State, an eligible 
        individual who presents proof of uninsurability by a private 
        insurer in accordance with subsection (b) or proof of a 
        condition previously recognized as uninsurable by the State.
            (2) Eligible individual.--
                    (A) In general.--The term ``eligible individual'' 
                means, with respect to a State, a citizen or national 
                of the United States (or an alien lawfully admitted) 
                who is a resident of the State for at least 90 days.
                    (B) Exception.--An individual is not an ``eligible 
                individual'' if the individual--
                            (i) is covered by or eligible for benefits 
                        under a State medicaid plan approved under 
                        title XIX of the Social Security Act (42 U.S.C. 
                        1396 et seq.),
                            (ii) has voluntarily terminated safety net 
                        coverage within the past 6 months,
                            (iii) has received the maximum benefit 
                        payable under the safety net,
                            (iv) is an inmate in a public institution, 
                        or
                            (v) is eligible for other public or private 
                        health care programs (including programs that 
                        pay for directly, or reimburse, otherwise 
                        eligible individuals with premiums charged for 
                        safety net coverage).
    (b) Proof of Uninsurability.--
            (1) In general.--The proof of uninsurability for an 
        individual shall be in the form of--
                    (A) a notice of rejection or refusal to issue 
                substantially similar insurance,
                    (B) a notice of refusal to insure except at a rate 
                in excess of the plan rate which applies to persons in 
                good health, or
                    (C) an offer to insure only subject to a reduction 
                or an exclusion of coverage for a preexisting condition 
                for a period exceeding 6 months.
            (2) Exception.--A State may waive the requirement of proof 
        described in paragraph (1) in the case of an individual who 
        demonstrates a provable medical or health condition.

SEC. 203. QUALIFIED HEALTH INSURANCE COVERAGE UNDER SAFETY NET.

    In this title, the term ``qualified health insurance coverage'' 
means, with respect to a State, health insurance coverage that provides 
benefits typical of major medical insurance available in the individual 
health insurance market in such State.

SEC. 204. FUNDING OF SAFETY NET.

    (a) Limitations on Premiums.--
            (1) In general.--The premium established under a safety net 
        may not exceed 125 percent of the applicable standard risk 
        rate, except as provided in paragraph (2).
            (2) Surcharge for avoidable health risks.--A safety net may 
        impose a surcharge on premiums for individuals with avoidable 
        high risks, such as smoking.
    (b) Additional Funding.--A safety net shall provide for additional 
funding through an assessment on all health insurers, health service 
organizations, and health maintenance organizations in the State 
through a nonprofit association consisting of all such insurers and 
organizations doing business in the State on an equitable and pro rata 
basis consistent with section 201.

SEC. 205. ADMINISTRATION.

    A safety net in a State shall be administered through a contract 
with 1 or more insurers or third party administrators operating in the 
State.
                                 <all>