[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6699 Introduced in House (IH)]







110th CONGRESS
  2d Session
                                H. R. 6699

  To amend title XVIII of the Social Security Act to reform Medicare 
payments to physicians and certain other providers and improve Medicare 
    benefits, to encourage the offering of health coverage by small 
   businesses, to provide tax incentives for the purchase of health 
    insurance by individuals, to increase access to health care for 
   veterans, to address the nursing shortage, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 31, 2008

  Mr. Latham introduced the following bill; which was referred to the 
Committee on Energy and Commerce, and in addition to the Committees on 
   Education and Labor, Ways and Means, Veterans' Affairs, and Armed 
Services, 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 amend title XVIII of the Social Security Act to reform Medicare 
payments to physicians and certain other providers and improve Medicare 
    benefits, to encourage the offering of health coverage by small 
   businesses, to provide tax incentives for the purchase of health 
    insurance by individuals, to increase access to health care for 
   veterans, to address the nursing shortage, 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 ``Health Security 
for All Americans Act of 2008''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
                           TITLE I--MEDICARE

Sec. 101. Medicare physician payment update reform.
Sec. 102. Medicare GPCI floors.
Sec. 103. Annual physical examinations under Medicare.
Sec. 104. Medicare outreach campaign on availability of welcome to 
                            Medicare physicals.
Sec. 105. Improvements to the Medicare-dependent hospital (MDH) 
                            program.
Sec. 106. Improvements to the Medicare inpatient hospital payment 
                            adjustment for low-volume hospitals.
Sec. 107. Ensuring proportional representation of interests of rural 
                            areas on MedPAC.
                 TITLE II--SMALL BUSINESS HEALTH PLANS

                 Subtitle A--Enhanced Marketplace Pools

Sec. 201. Rules governing enhanced marketplace pools.
          ``Part 8--Rules Governing Enhanced Marketplace Pools

        ``Sec. 801. Small business health plans.
        ``Sec. 802. Alternative Market Pooling Organizations.
        ``Sec. 803. Certification of small business health plans.
        ``Sec. 804. Requirements relating to sponsors and boards of 
                            trustees.
        ``Sec. 805. Participation and coverage requirements.
        ``Sec. 806. Other requirements relating to plan documents, 
                            contribution rates, and benefit options.
        ``Sec. 807. Requirements for application and related 
                            requirements.
        ``Sec. 808. Notice requirements for voluntary termination.
        ``Sec. 809. Implementation and application authority by 
                            Secretary.
        ``Sec. 810. Definitions and rules of construction.
Sec. 202. Cooperation between Federal and State authorities.
Sec. 203. Effective date and transitional and other rules.
                       Subtitle B--Market Relief

Sec. 211. Market relief.
      ``TITLE XXX--HEALTH CARE INSURANCE MARKETPLACE MODERNIZATION

        ``Sec. 3001. General insurance definitions.
        ``Sec. 3002. Implementation and application authority by 
                            Secretary.
                      ``Subtitle A--Market Relief

                     ``Part I--Rating Requirements

        ``Sec. 3011. Definitions.
        ``Sec. 3012. Rating rules.
        ``Sec. 3013. Application and preemption.
        ``Sec. 3014. Civil actions and jurisdiction.
        ``Sec. 3015. Ongoing review.
                      ``Part II--Affordable Plans

        ``Sec. 3021. Definitions.
        ``Sec. 3022. Offering affordable plans.
        ``Sec. 3023. Application and preemption.
        ``Sec. 3024. Civil actions and jurisdiction.
        ``Sec. 3025. Rules of construction.
        Subtitle C--Harmonization of Health Insurance Standards

Sec. 221. Health Insurance Standards Harmonization.
                 ``Subtitle B--Standards Harmonization

        ``Sec. 3031. Definitions.
        ``Sec. 3032. Harmonized standards.
        ``Sec. 3033. Application and preemption.
        ``Sec. 3034. Civil actions and jurisdiction.
        ``Sec. 3035. Authorization of appropriations; rule of 
                            construction.
                TITLE III--TAX-RELATED HEALTH INCENTIVES

Sec. 301. SECA tax deduction for health insurance costs.
Sec. 302. Deduction for qualified health insurance costs of 
                            individuals.
             TITLE IV--INCREASING ACCESS TO VA HEALTH CARE

Sec. 401. Requirement for payments to facilities other than the 
                            Department of Veterans Affairs for covered 
                            health services.
Sec. 402. Authority of Department of Veterans Affairs pharmacies to 
                            dispense medications to veterans on 
                            prescriptions written by private 
                            practitioners.
                       TITLE V--NURSING SHORTAGE

Sec. 501. Child care assistance for individuals pursuing advanced 
                            nursing degrees.
Sec. 502. Nurse faculty program.
                    ``Part E--Nurse Faculty Project

        ``Sec. 771. Purposes.
        ``Sec. 772. Assistance authorized.
        ``Sec. 773. Applications.
        ``Sec. 774. Authorization of appropriations.
        ``Sec. 775. Definition.
Sec. 503. Additional capacity for R.N. students or graduate-level 
                            nursing students.
   ``Part F--Additional Capacity for R.N. Students or Graduate-Level 
                            Nursing Students

        ``Sec. 781. Additional capacity for R.N. students or graduate-
                            level nursing students.
Sec. 504. Programs to increase the number of nurses within the Armed 
                            Forces.
            TITLE VI--RESERVE COMPONENTS OF THE ARMED FORCES

Sec. 601. Effective date of active duty for purposes of entitlement to 
                            active duty health care of members of the 
                            reserve components of the armed forces 
                            receiving alert order anticipating a call 
                            or order to active duty in support of a 
                            contingency operation.

                           TITLE I--MEDICARE

SEC. 101. MEDICARE PHYSICIAN PAYMENT UPDATE REFORM.

    (a) Substitution of MEI Increase for SGR Adjustments.--Section 
1848(d) of the Social Security Act (42 U.S.C. 1395w-4(d)), as amended 
by section 131(a) of the Medicare Improvements for Patients and 
Providers Act of 2008 (Public Law 110-275), is amended--
            (1) in paragraph (1)(A), by inserting ``and before 2010'' 
        after ``beginning with 2001'';
            (2) in paragraph (1)(A), by inserting before the period at 
        the end the following: ``, and for years beginning with 2010, 
        multiplied by the update established under paragraph (10) 
        applicable to the year involved''; and
            (3) in paragraph (4)--
                    (A) in the heading by striking ``years beginning 
                with 2001'' and inserting ``2001, 2002, and 2003''; and
                    (B) in subparagraph (A), by inserting ``and ending 
                with 2003'' after ``beginning with 2001''; and
            (4) by adding at the end the following new paragraph:
            ``(10) Update beginning with 2010.--The update to the 
        single conversion factor established in paragraph (1)(C) for 
        2010 and each succeeding year shall be the percentage increase 
        in the MEI (as defined in section 1842(i)(3)) for the year 
        involved minus 1 percentage point.''.
    (b) Ending Application of Sustainable Growth Rate (SGR).--Section 
1848(f)(1)(B) of such Act (42 U.S.C. 1395w-4(f)(1)(B)) is amended by 
inserting ``(and before 2009)'' after ``each succeeding year''.
    (c) Effective Date.--The amendments made by this section shall 
apply to payment for services furnished on or after January 1, 2010.

SEC. 102. MEDICARE GPCI FLOORS.

    Section 1848(e)(1) of the Social Security Act (42 U.S.C. 1395w-
4(e)(1)) is amended--
            (1) in subparagraph (A), by striking ``and (G)'' and 
        inserting ``(G), (H), and (I)''; and
            (2) by adding at the end the following new subparagraphs:
                    ``(H) Floor at 1.0 for practice expense index.--
                After calculating the practice expense index in 
                subparagraph (A)(ii), for purposes of payment for 
                services furnished on or after January 1, 2009, the 
                Secretary shall increase the practice expense 
                geographic index to 1.00 for any locality for which 
                such practice expense geographic index is less than 
                1.00.
                    ``(I) Floor at 1.0 for work expenses index.--After 
                calculating the practice expense index in subparagraph 
                (A)(ii), for purposes of payment for services furnished 
                on or after January 1, 2009, the Secretary shall 
                increase the practice expense geographic index to 1.00 
                for any locality for which such practice expense 
                geographic index is less than 1.00.''.

SEC. 103. ANNUAL PHYSICAL EXAMINATIONS UNDER MEDICARE.

    (a) In General.--Section 1861 of the Social Security Act (42 U.S.C. 
1395x) is amended--
            (1) in each of subparagraphs (W) and (AA)(i) of subsection 
        (s)(2), by striking ``initial'' and inserting ``annual'';
            (2) in the heading of subsection (ww), by striking 
        ``Initial'' and inserting ``Annual''; and
            (3) by amending paragraph (1) of subsection (ww) to read as 
        follows:
            ``(1) The term `annual preventive physical examination' 
        means professional services of a physician, or of a nurse 
        practitioner or physician assistant which the practitioner or 
        assistant is authorized to provide under State law, consisting 
        of a physical examination (including, as medically appropriate, 
        measurement of height, weight, body mass index, and blood 
        pressure) with the goal of health promotion and disease 
        detection and includes education, counseling, and referral with 
        respect to screening and other preventive services described in 
        paragraph (2) and end-of-life planning (as defined in paragraph 
        (3)) upon the agreement with the individual, as well as related 
        clinical laboratory tests and such other preventive services in 
        connection with the same visit as the Secretary may provide 
        (taking into account services typically included in an annual 
        physical examination covered under private health benefit 
        plans).''.
    (b) Modification of Exclusions.--Section 1862(a) of such Act (42 
U.S.C. 1395y(a)) is amended--
            (1) in paragraph (1), by amending subparagraph (K) to read 
        as follows:
                    ``(K) in the case of an annual preventive physical 
                examination, which is performed for an individual more 
                frequently than once in any 12-month period,''; and
            (2) in paragraph (7), by inserting ``(other than annual 
        preventive physical examinations)'' after ``routine physical 
        checkups''.
    (c) Conforming Amendment.--Section 1833(b)(9) of such Act (42 
U.S.C. 1395l(b)(9)), as inserted by section 101(b)(2)(B) of the 
Medicare Improvements for Patients and Providers Act of 2008 (Public 
Law 110-275), is amended by striking ``initial'' and inserting 
``annual''.
    (d) Effective Date.--The amendments made by this section shall 
apply to services furnished on or after January 1 of the first year 
beginning more than 60 days after the date of the enactment of this 
Act.

SEC. 104. MEDICARE OUTREACH CAMPAIGN ON AVAILABILITY OF WELCOME TO 
              MEDICARE PHYSICALS.

    (a) In General.--The Secretary of Health and Human Services shall 
conduct a national campaign to provide information to the public on the 
availability of an initial preventive physical examination (as defined 
in section 1861(ww) of the Social Security Act (42 U.S.C. 1395x(ww))) 
for beneficiaries of the Medicare program under title XVIII of the 
Social Security Act (42 U.S.C. 1395 et seq.).
    (b) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section $1,000,000 for each of fiscal 
years 2009 through 2013.

SEC. 105. IMPROVEMENTS TO THE MEDICARE-DEPENDENT HOSPITAL (MDH) 
              PROGRAM.

    (a) Use of Non-Wage Adjusted PPS Rate.--Section 1886(d)(5)(G) of 
the Social Security Act (42 U.S.C. 1395ww(d)(5)(G)) is amended by 
adding at the end the following new clause:
    ``(v) In the case of discharges occurring on or after October 1, 
2008, and before October 1, 2011, in determining the amount under 
paragraph (1)(A)(iii) for purposes of clauses (i) and (ii)(II) of this 
subparagraph, such amount shall, if it results in greater payments to 
the hospital, be determined without regard to any adjustment for 
different area wage levels under paragraph (3)(E).''.
    (b) Enhanced Payment for Amount by Which the Target Exceeds the PPS 
Rate.--Section 1886(d)(5)(G)(ii)(II) of such Act (42 U.S.C. 
1395ww(d)(5)(G)(ii)(II)) is amended by inserting ``and before October 
1, 2008, or 85 percent in the case of discharges occurring on or after 
October 1, 2008, and before October 1, 2011'' after ``October 1, 
2006''.

SEC. 106. IMPROVEMENTS TO THE MEDICARE INPATIENT HOSPITAL PAYMENT 
              ADJUSTMENT FOR LOW-VOLUME HOSPITALS.

    Section 1886(d)(12) of the Social Security Act (42 U.S.C. 
1395ww(d)(12)) is amended--
            (1) in subparagraph (A), by inserting ``or (D)'' after 
        ``subparagraph (B)'';
            (2) in subparagraph (B), by adding at the end of the 
        heading ``for fiscal years 2005 through 2008'';
            (3) in subparagraph (B), in the matter preceding clause 
        (i), by striking ``The Secretary'' and inserting ``For 
        discharges occurring in fiscal years 2005 through 2008, the 
        Secretary'';
            (4) in subparagraph (C)(i)--
                    (A) by inserting ``(or, with respect to fiscal year 
                2009 and each subsequent fiscal year, 15 road miles)'' 
                after ``25 road miles''; and
                    (B) by inserting ``(or, with respect to fiscal year 
                2009 and each subsequent fiscal year, 2,000 discharges 
                of individuals entitled to, or enrolled for, benefits 
                under part A)'' after ``800 discharges''; and
            (5) by adding at the end the following new subparagraph:
                    ``(D) Applicable percentage increase beginning in 
                fiscal year 2009.--For discharges occurring in fiscal 
                year 2009 and each subsequent fiscal year, the 
                Secretary shall determine an applicable percentage 
                increase for purposes of subparagraph (A) using a 
                linear sliding scale ranging from 25 percent for low-
                volume hospitals with fewer than an appropriate number 
                (as determined by the Secretary) of discharges of 
                individuals entitled to, or enrolled for, benefits 
                under part A in the fiscal year to 0 percent for low-
                volume hospitals with greater than 2,000 discharges of 
                such individuals in the fiscal year.''.

SEC. 107. ENSURING PROPORTIONAL REPRESENTATION OF INTERESTS OF RURAL 
              AREAS ON MEDPAC.

    (a) In General.--Section 1805(c)(2) of the Social Security Act (42 
U.S.C. 1395b-6(c)(2)) is amended--
            (1) in subparagraph (A), by inserting ``consistent with 
        subparagraph (E)'' after ``rural representatives''; and
            (2) by adding at the end the following new subparagraph:
                    ``(E) Proportional representation of interests of 
                rural areas.--In order to provide a balance between 
                urban and rural representatives under subparagraph (A), 
                the proportion of members of the Commission who 
                represent the interests of health care providers and 
                Medicare beneficiaries located in rural areas shall be 
                no less than the proportion of the total number of 
                Medicare beneficiaries who reside in rural areas.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to appointments to the Medicare Payment Advisory Commission made 
after the date of enactment of this Act.

                 TITLE II--SMALL BUSINESS HEALTH PLANS

                 Subtitle A--Enhanced Marketplace Pools

SEC. 201. RULES GOVERNING ENHANCED MARKETPLACE POOLS.

    (a) In General.--Subtitle B of title I of the Employee Retirement 
Income Security Act of 1974 is amended by adding after part 7 the 
following new part:

          ``PART 8--RULES GOVERNING ENHANCED MARKETPLACE POOLS

``SEC. 801. SMALL BUSINESS HEALTH PLANS.

    ``(a) In General.--For purposes of this part, the term `small 
business health plan' means a fully insured group health plan whose 
sponsor is (or is deemed under this part to be) described in subsection 
(b).
    ``(b) Sponsorship.--The sponsor of a group health plan is described 
in this subsection if such sponsor--
            ``(1) is organized and maintained in good faith, with a 
        constitution and bylaws specifically stating its purpose and 
        providing for periodic meetings on at least an annual basis, as 
        a bona fide trade association, a bona fide industry association 
        (including a rural electric cooperative association or a rural 
        telephone cooperative association), a bona fide professional 
        association, or a bona fide chamber of commerce (or similar 
        bona fide business association, including a corporation or 
        similar organization that operates on a cooperative basis 
        (within the meaning of section 1381 of the Internal Revenue 
        Code of 1986)), for substantial purposes other than that of 
        obtaining medical care;
            ``(2) is established as a permanent entity which receives 
        the active support of its members and requires for membership 
        payment on a periodic basis of dues or payments necessary to 
        maintain eligibility for membership;
            ``(3) does not condition membership, such dues or payments, 
        or coverage under the plan on the basis of health status-
        related factors with respect to the employees of its members 
        (or affiliated members), or the dependents of such employees, 
        and does not condition such dues or payments on the basis of 
        group health plan participation; and
            ``(4) does not condition membership on the basis of a 
        minimum group size.
Any sponsor consisting of an association of entities which meet the 
requirements of paragraphs (1), (2), (3), and (4) shall be deemed to be 
a sponsor described in this subsection.

``SEC. 802. ALTERNATIVE MARKET POOLING ORGANIZATIONS.

    ``(a) In General.--The Secretary, not later than 1 year after the 
date of enactment of this part, shall promulgate regulations that apply 
the rules and standards of this part, as necessary, to circumstances in 
which a pooling entity other (hereinafter `Alternative Market Pooling 
Organizations') is not made up principally of employers and their 
employees, or not a professional organization or such small business 
health plan entity identified in section 801.
    ``(b) Adaption of Standards.--In developing and promulgating 
regulations pursuant to subsection (a), the Secretary, in consultation 
with the Secretary of Health and Human Services, small business health 
plans, small and large employers, large and small insurance issuers, 
consumer representatives, and state insurance commissioners, shall--
            ``(1) adapt the standards of this part, to the maximum 
        degree practicable, to assure balanced and comparable oversight 
        standards for both small business health plans and alternative 
        market pooling organizations;
            ``(2) permit the participation as alternative market 
        pooling organizations unions, churches and other faith-based 
        organizations, or other organizations composed of individuals 
        and groups which may have little or no association with 
        employment, provided however, that such alternative market 
        pooling organizations meet, and continue meeting on an ongoing 
        basis, to satisfy standards, rules, and requirements materially 
        equivalent to those set forth in this part with respect to 
        small business health plans;
            ``(3) conduct periodic verification of such compliance by 
        alternative market pooling organizations, in consultation with 
        the Secretary of Health and Human Services and the National 
        Association of Insurance Commissioners, except that such 
        periodic verification shall not materially impede market entry 
        or participation as pooling entities comparable to that of 
        small business health plans;
            ``(4) assure that consistent, clear, and regularly 
        monitored standards are applied with respect to alternative 
        market pooling organizations to avert material risk-selection 
        within or among the composition of such organizations;
            ``(5) the expedited and deemed certification procedures 
        provided in section 805(d) shall not apply to alternative 
        market pooling organizations until sooner of the promulgation 
        of regulations under this subsection or the expiration of one 
        year following enactment of this Act; and
            ``(6) make such other appropriate adjustments to the 
        requirements of this part as the Secretary may reasonably deem 
        appropriate to fit the circumstances of an individual 
        alternative market pooling organization or category of such 
        organization, including but not limited to the application of 
        the membership payment requirements of section 801(b)(2) to 
        alternative market pooling organizations composed primarily of 
        church- or faith-based membership.

``SEC. 803. CERTIFICATION OF SMALL BUSINESS HEALTH PLANS.

    ``(a) In General.--Not later than 6 months after the date of 
enactment of this part, the applicable authority shall prescribe by 
interim final rule a procedure under which the applicable authority 
shall certify small business health plans which apply for certification 
as meeting the requirements of this part.
    ``(b) Requirements Applicable to Certified Plans.--A small business 
health plan with respect to which certification under this part is in 
effect shall meet the applicable requirements of this part, effective 
on the date of certification (or, if later, on the date on which the 
plan is to commence operations).
    ``(c) Requirements for Continued Certification.--The applicable 
authority may provide by regulation for continued certification of 
small business health plans under this part. Such regulation shall 
provide for the revocation of a certification if the applicable 
authority finds that the small business health plan involved is failing 
to comply with the requirements of this part.
    ``(d) Expedited and Deemed Certification.--
            ``(1) In general.--If the Secretary fails to act on an 
        application for certification under this section within 90 days 
        of receipt of such application, the applying small business 
        health plan shall be deemed certified until such time as the 
        Secretary may deny for cause the application for certification.
            ``(2) Civil penalty.--The Secretary may assess a civil 
        penalty against the board of trustees and plan sponsor (jointly 
        and severally) of a small business health plan that is deemed 
        certified under paragraph (1) of up to $500,000 in the event 
        the Secretary determines that the application for certification 
        of such small business health plan was willfully or with gross 
        negligence incomplete or inaccurate.

``SEC. 804. REQUIREMENTS RELATING TO SPONSORS AND BOARDS OF TRUSTEES.

    ``(a) Sponsor.--The requirements of this subsection are met with 
respect to a small business health plan if the sponsor has met (or is 
deemed under this part to have met) the requirements of section 801(b) 
for a continuous period of not less than 3 years ending with the date 
of the application for certification under this part.
    ``(b) Board of Trustees.--The requirements of this subsection are 
met with respect to a small business health plan if the following 
requirements are met:
            ``(1) Fiscal control.--The plan is operated, pursuant to a 
        plan document, by a board of trustees which pursuant to a trust 
        agreement has complete fiscal control over the plan and which 
        is responsible for all operations of the plan.
            ``(2) Rules of operation and financial controls.--The board 
        of trustees has in effect rules of operation and financial 
        controls, based on a 3-year plan of operation, adequate to 
        carry out the terms of the plan and to meet all requirements of 
        this title applicable to the plan.
            ``(3) Rules governing relationship to participating 
        employers and to contractors.--
                    ``(A) Board membership.--
                            ``(i) In general.--Except as provided in 
                        clauses (ii) and (iii), the members of the 
                        board of trustees are individuals selected from 
                        individuals who are the owners, officers, 
                        directors, or employees of the participating 
                        employers or who are partners in the 
                        participating employers and actively 
                        participate in the business.
                            ``(ii) Limitation.--
                                    ``(I) General rule.--Except as 
                                provided in subclauses (II) and (III), 
                                no such member is an owner, officer, 
                                director, or employee of, or partner 
                                in, a contract administrator or other 
                                service provider to the plan.
                                    ``(II) Limited exception for 
                                providers of services solely on behalf 
                                of the sponsor.--Officers or employees 
                                of a sponsor which is a service 
                                provider (other than a contract 
                                administrator) to the plan may be 
                                members of the board if they constitute 
                                not more than 25 percent of the 
                                membership of the board and they do not 
                                provide services to the plan other than 
                                on behalf of the sponsor.
                                    ``(III) Treatment of providers of 
                                medical care.--In the case of a sponsor 
                                which is an association whose 
                                membership consists primarily of 
                                providers of medical care, subclause 
                                (I) shall not apply in the case of any 
                                service provider described in subclause 
                                (I) who is a provider of medical care 
                                under the plan.
                            ``(iii) Certain plans excluded.--Clause (i) 
                        shall not apply to a small business health plan 
                        which is in existence on the date of the 
                        enactment of this part.
                    ``(B) Sole authority.--The board has sole authority 
                under the plan to approve applications for 
                participation in the plan and to contract with 
                insurers.
    ``(c) Treatment of Franchises.--In the case of a group health plan 
which is established and maintained by a franchiser for a franchisor or 
for its franchisees--
            ``(1) the requirements of subsection (a) and section 801(a) 
        shall be deemed met if such requirements would otherwise be met 
        if the franchisor were deemed to be the sponsor referred to in 
        section 801(b) and each franchisee were deemed to be a member 
        (of the sponsor) referred to in section 801(b); and
            ``(2) the requirements of section 804(a)(1) shall be deemed 
        met.
For purposes of this subsection the terms `franchisor' and `franchisee' 
shall have the meanings given such terms for purposes of sections 
436.2(a) through 436.2(c) of title 16, Code of Federal Regulations 
(including any such amendments to such regulation after the date of 
enactment of this part).

``SEC. 805. PARTICIPATION AND COVERAGE REQUIREMENTS.

    ``(a) Covered Employers and Individuals.--The requirements of this 
subsection are met with respect to a small business health plan if, 
under the terms of the plan--
            ``(1) each participating employer must be--
                    ``(A) a member of the sponsor;
                    ``(B) the sponsor; or
                    ``(C) an affiliated member of the sponsor, except 
                that, in the case of a sponsor which is a professional 
                association or other individual-based association, if 
                at least one of the officers, directors, or employees 
                of an employer, or at least one of the individuals who 
                are partners in an employer and who actively 
                participates in the business, is a member or such an 
                affiliated member of the sponsor, participating 
                employers may also include such employer; and
            ``(2) all individuals commencing coverage under the plan 
        after certification under this part must be--
                    ``(A) active or retired owners (including self-
                employed individuals), officers, directors, or 
                employees of, or partners in, participating employers; 
                or
                    ``(B) the dependents of individuals described in 
                subparagraph (A).
    ``(b) Individual Market Unaffected.--The requirements of this 
subsection are met with respect to a small business health plan if, 
under the terms of the plan, no participating employer may provide 
health insurance coverage in the individual market for any employee not 
covered under the plan which is similar to the coverage 
contemporaneously provided to employees of the employer under the plan, 
if such exclusion of the employee from coverage under the plan is based 
on a health status-related factor with respect to the employee and such 
employee would, but for such exclusion on such basis, be eligible for 
coverage under the plan.
    ``(c) Prohibition of Discrimination Against Employers and Employees 
Eligible To Participate.--The requirements of this subsection are met 
with respect to a small business health plan if--
            ``(1) under the terms of the plan, all employers meeting 
        the preceding requirements of this section are eligible to 
        qualify as participating employers for all geographically 
        available coverage options, unless, in the case of any such 
        employer, participation or contribution requirements of the 
        type referred to in section 2711 of the Public Health Service 
        Act are not met;
            ``(2) information regarding all coverage options available 
        under the plan is made readily available to any employer 
        eligible to participate; and
            ``(3) the applicable requirements of sections 701, 702, and 
        703 are met with respect to the plan.

``SEC. 806. OTHER REQUIREMENTS RELATING TO PLAN DOCUMENTS, CONTRIBUTION 
              RATES, AND BENEFIT OPTIONS.

    ``(a) In General.--The requirements of this section are met with 
respect to a small business health plan if the following requirements 
are met:
            ``(1) Contents of governing instruments.--
                    ``(A) In general.--The instruments governing the 
                plan include a written instrument, meeting the 
                requirements of an instrument required under section 
                402(a)(1), which--
                            ``(i) provides that the board of trustees 
                        serves as the named fiduciary required for 
                        plans under section 402(a)(1) and serves in the 
                        capacity of a plan administrator (referred to 
                        in section 3(16)(A)); and
                            ``(ii) provides that the sponsor of the 
                        plan is to serve as plan sponsor (referred to 
                        in section 3(16)(B)).
                    ``(B) Description of material provisions.--The 
                terms of the health insurance coverage (including the 
                terms of any individual certificates that may be 
                offered to individuals in connection with such 
                coverage) describe the material benefit and rating, and 
                other provisions set forth in this section and such 
                material provisions are included in the summary plan 
                description.
            ``(2) Contribution rates must be nondiscriminatory.--
                    ``(A) In general.--The contribution rates for any 
                participating small employer shall not vary on the 
                basis of any health status-related factor in relation 
                to employees of such employer or their beneficiaries 
                and shall not vary on the basis of the type of business 
                or industry in which such employer is engaged, subject 
                to subparagraph (B) and the terms of this title.
                    ``(B) Effect of title.--Nothing in this title or 
                any other provision of law shall be construed to 
                preclude a health insurance issuer offering health 
                insurance coverage in connection with a small business 
                health plan that meets the requirements of this part, 
                and at the request of such small business health plan, 
                from--
                            ``(i) setting contribution rates for the 
                        small business health plan based on the claims 
                        experience of the small business health plan so 
                        long as any variation in such rates for 
                        participating small employers complies with the 
                        requirements of clause (ii), except that small 
                        business health plans shall not be subject, in 
                        non-adopting states, to subparagraphs (A)(ii) 
                        and (C) of section 2912(a)(2) of the Public 
                        Health Service Act, and in adopting states, to 
                        any State law that would have the effect of 
                        imposing requirements as outlined in such 
                        subparagraphs (A)(ii) and (C); or
                            ``(ii) varying contribution rates for 
                        participating small employers in a small 
                        business health plan in a State to the extent 
                        that such rates could vary using the same 
                        methodology employed in such State for 
                        regulating small group premium rates, subject 
                        to the terms of part I of subtitle A of title 
                        XXX of the Public Health Service Act (relating 
                        to rating requirements), as added by subtitle B 
                        of title II of the Health Security for All 
                        Americans Act of 2008.
            ``(3) Exceptions regarding self-employed and large 
        employers.--
                    ``(A) Self-employed.--
                            ``(i) In general.--Small business health 
                        plans with participating employers who are 
                        self-employed individuals (and their 
                        dependents) shall enroll such self-employed 
                        participating employers in accordance with 
                        rating rules that do not violate the rating 
                        rules for self-employed individuals in the 
                        State in which such self-employed participating 
                        employers are located.
                            ``(ii) Guarantee issue.--Small business 
                        health plans with participating employers who 
                        are self-employed individuals (and their 
                        dependents) may decline to guarantee issue to 
                        such participating employers in States in which 
                        guarantee issue is not otherwise required for 
                        the self-employed in that State.
                    ``(B) Large employers.--Small business health plans 
                with participating employers that are larger than small 
                employers (as defined in section 808(a)(10)) shall 
                enroll such large participating employers in accordance 
                with rating rules that do not violate the rating rules 
                for large employers in the State in which such large 
                participating employers are located.
            ``(4) Regulatory requirements.--Such other requirements as 
        the applicable authority determines are necessary to carry out 
        the purposes of this part, which shall be prescribed by the 
        applicable authority by regulation.
    ``(b) Ability of Small Business Health Plans To Design Benefit 
Options.--Nothing in this part or any provision of State law (as 
defined in section 514(c)(1)) shall be construed to preclude a small 
business health plan or a health insurance issuer offering health 
insurance coverage in connection with a small business health plan from 
exercising its sole discretion in selecting the specific benefits and 
services consisting of medical care to be included as benefits under 
such plan or coverage, except that such benefits and services must meet 
the terms and specifications of part II of subtitle A of title XXX of 
the Public Health Service Act (relating to lower cost plans), as added 
by subtitle B of title II of the Health Security for All Americans Act 
of 2008.
    ``(c) Domicile and Non-Domicile States.--
            ``(1) Domicile state.--Coverage shall be issued to a small 
        business health plan in the State in which the sponsor's 
        principal place of business is located.
            ``(2) Non-domicile states.--With respect to a State (other 
        than the domicile State) in which participating employers of a 
        small business health plan are located but in which the insurer 
        of the small business health plan in the domicile State is not 
        yet licensed, the following shall apply:
                    ``(A) Temporary preemption.--If, upon the 
                expiration of the 90-day period following the 
                submission of a licensure application by such insurer 
                (that includes a certified copy of an approved 
                licensure application as submitted by such insurer in 
                the domicile State) to such State, such State has not 
                approved or denied such application, such State's 
                health insurance licensure laws shall be temporarily 
                preempted and the insurer shall be permitted to operate 
                in such State, subject to the following terms:
                            ``(i) Application of non-domicile state 
                        law.--Except with respect to licensure and with 
                        respect to the terms of subtitle A of title XXX 
                        of the Public Health Service Act (relating to 
                        rating and benefits as added by subtitle B of 
                        title II of the Health Security for All 
                        Americans Act of 2008), the laws and authority 
                        of the non-domicile State shall remain in full 
                        force and effect.
                            ``(ii) Revocation of preemption.--The 
                        preemption of a non-domicile State's health 
                        insurance licensure laws pursuant to this 
                        subparagraph, shall be terminated upon the 
                        occurrence of either of the following:
                                    ``(I) Approval or denial of 
                                application.--The approval of denial of 
                                an insurer's licensure application, 
                                following the laws and regulations of 
                                the non-domicile State with respect to 
                                licensure.
                                    ``(II) Determination of material 
                                violation.--A determination by a non-
                                domicile State that an insurer 
                                operating in a non-domicile State 
                                pursuant to the preemption provided for 
                                in this subparagraph is in material 
                                violation of the insurance laws (other 
                                than licensure and with respect to the 
                                terms of subtitle A of title XXX of the 
                                Public Health Service Act (relating to 
                                rating and benefits added by subtitle B 
                                of title II of the Health Security for 
                                All Americans Act of 2008)) of such 
                                State.
                    ``(B) No prohibition on promotion.--Nothing in this 
                paragraph shall be construed to prohibit a small 
                business health plan or an insurer from promoting 
                coverage prior to the expiration of the 90-day period 
                provided for in subparagraph (A), except that no 
                enrollment or collection of contributions shall occur 
                before the expiration of such 90-day period.
                    ``(C) Licensure.--Except with respect to the 
                application of the temporary preemption provision of 
                this paragraph, nothing in this part shall be construed 
                to limit the requirement that insurers issuing coverage 
                to small business health plans shall be licensed in 
                each State in which the small business health plans 
                operate.
                    ``(D) Servicing by licensed insurers.--
                Notwithstanding subparagraph (C), the requirements of 
                this subsection may also be satisfied if the 
                participating employers of a small business health plan 
                are serviced by a licensed insurer in that State, even 
                where such insurer is not the insurer of such small 
                business health plan in the State in which such small 
                business health plan is domiciled.

``SEC. 807. REQUIREMENTS FOR APPLICATION AND RELATED REQUIREMENTS.

    ``(a) Filing Fee.--Under the procedure prescribed pursuant to 
section 802(a), a small business health plan shall pay to the 
applicable authority at the time of filing an application for 
certification under this part a filing fee in the amount of $5,000, 
which shall be available in the case of the Secretary, to the extent 
provided in appropriation Acts, for the sole purpose of administering 
the certification procedures applicable with respect to small business 
health plans.
    ``(b) Information To Be Included in Application for 
Certification.--An application for certification under this part meets 
the requirements of this section only if it includes, in a manner and 
form which shall be prescribed by the applicable authority by 
regulation, at least the following information:
            ``(1) Identifying information.--The names and addresses 
        of--
                    ``(A) the sponsor; and
                    ``(B) the members of the board of trustees of the 
                plan.
            ``(2) States in which plan intends to do business.--The 
        States in which participants and beneficiaries under the plan 
        are to be located and the number of them expected to be located 
        in each such State.
            ``(3) Bonding requirements.--Evidence provided by the board 
        of trustees that the bonding requirements of section 412 will 
        be met as of the date of the application or (if later) 
        commencement of operations.
            ``(4) Plan documents.--A copy of the documents governing 
        the plan (including any bylaws and trust agreements), the 
        summary plan description, and other material describing the 
        benefits that will be provided to participants and 
        beneficiaries under the plan.
            ``(5) Agreements with service providers.--A copy of any 
        agreements between the plan, health insurance issuer, and 
        contract administrators and other service providers.
    ``(c) Filing Notice of Certification With States.--A certification 
granted under this part to a small business health plan shall not be 
effective unless written notice of such certification is filed with the 
applicable State authority of each State in which the small business 
health plans operate.
    ``(d) Notice of Material Changes.--In the case of any small 
business health plan certified under this part, descriptions of 
material changes in any information which was required to be submitted 
with the application for the certification under this part shall be 
filed in such form and manner as shall be prescribed by the applicable 
authority by regulation. The applicable authority may require by 
regulation prior notice of material changes with respect to specified 
matters which might serve as the basis for suspension or revocation of 
the certification.

``SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION.

    ``A small business health plan which is or has been certified under 
this part may terminate (upon or at any time after cessation of 
accruals in benefit liabilities) only if the board of trustees, not 
less than 60 days before the proposed termination date--
            ``(1) provides to the participants and beneficiaries a 
        written notice of intent to terminate stating that such 
        termination is intended and the proposed termination date;
            ``(2) develops a plan for winding up the affairs of the 
        plan in connection with such termination in a manner which will 
        result in timely payment of all benefits for which the plan is 
        obligated; and
            ``(3) submits such plan in writing to the applicable 
        authority.
Actions required under this section shall be taken in such form and 
manner as may be prescribed by the applicable authority by regulation.

``SEC. 809. IMPLEMENTATION AND APPLICATION AUTHORITY BY SECRETARY.

    ``The Secretary shall, through promulgation and implementation of 
such regulations as the Secretary may reasonably determine necessary or 
appropriate, and in consultation with a balanced spectrum of effected 
entities and persons, modify the implementation and application of this 
part to accommodate with minimum disruption such changes to State or 
Federal law provided in this part and the (and the amendments made by 
such Act) or in regulations issued thereto.

``SEC. 810. DEFINITIONS AND RULES OF CONSTRUCTION.

    ``(a) Definitions.--For purposes of this part--
            ``(1) Affiliated member.--The term `affiliated member' 
        means, in connection with a sponsor--
                    ``(A) a person who is otherwise eligible to be a 
                member of the sponsor but who elects an affiliated 
                status with the sponsor, or
                    ``(B) in the case of a sponsor with members which 
                consist of associations, a person who is a member or 
                employee of any such association and elects an 
                affiliated status with the sponsor.
            ``(2) Applicable authority.--The term `applicable 
        authority' means the Secretary of Labor, except that, in 
        connection with any exercise of the Secretary's authority with 
        respect to which the Secretary is required under section 506(d) 
        to consult with a State, such term means the Secretary, in 
        consultation with such State.
            ``(3) Applicable state authority.--The term `applicable 
        State authority' means, with respect to a health insurance 
        issuer in a State, the State insurance commissioner or official 
        or officials designated by the State to enforce the 
        requirements of title XXVII of the Public Health Service Act 
        for the State involved with respect to such issuer.
            ``(4) Group health plan.--The term `group health plan' has 
        the meaning provided in section 733(a)(1) (after applying 
        subsection (b) of this section).
            ``(5) Health insurance coverage.--The term `health 
        insurance coverage' has the meaning provided in section 
        733(b)(1), except that such term shall not include excepted 
        benefits (as defined in section 733(c)).
            ``(6) Health insurance issuer.--The term `health insurance 
        issuer' has the meaning provided in section 733(b)(2).
            ``(7) Individual market.--
                    ``(A) In general.--The term `individual market' 
                means the market for health insurance coverage offered 
                to individuals other than in connection with a group 
                health plan.
                    ``(B) Treatment of very small groups.--
                            ``(i) In general.--Subject to clause (ii), 
                        such term includes coverage offered in 
                        connection with a group health plan that has 
                        fewer than 2 participants as current employees 
                        or participants described in section 732(d)(3) 
                        on the first day of the plan year.
                            ``(ii) State exception.--Clause (i) shall 
                        not apply in the case of health insurance 
                        coverage offered in a State if such State 
                        regulates the coverage described in such clause 
                        in the same manner and to the same extent as 
                        coverage in the small group market (as defined 
                        in section 2791(e)(5) of the Public Health 
                        Service Act) is regulated by such State.
            ``(8) Medical care.--The term `medical care' has the 
        meaning provided in section 733(a)(2).
            ``(9) Participating employer.--The term `participating 
        employer' means, in connection with a small business health 
        plan, any employer, if any individual who is an employee of 
        such employer, a partner in such employer, or a self-employed 
        individual who is such employer (or any dependent, as defined 
        under the terms of the plan, of such individual) is or was 
        covered under such plan in connection with the status of such 
        individual as such an employee, partner, or self-employed 
        individual in relation to the plan.
            ``(10) Small employer.--The term `small employer' means, in 
        connection with a group health plan with respect to a plan 
        year, a small employer as defined in section 2791(e)(4).
            ``(11) Trade association and professional association.--The 
        terms `trade association' and `professional association' mean 
        an entity that meets the requirements of section 1.501(c)(6)-1 
        of title 26, Code of Federal Regulations (as in effect on the 
        date of enactment of this Act).
    ``(b) Rule of Construction.--For purposes of determining whether a 
plan, fund, or program is an employee welfare benefit plan which is a 
small business health plan, and for purposes of applying this title in 
connection with such plan, fund, or program so determined to be such an 
employee welfare benefit plan--
            ``(1) in the case of a partnership, the term `employer' (as 
        defined in section 3(5)) includes the partnership in relation 
        to the partners, and the term `employee' (as defined in section 
        3(6)) includes any partner in relation to the partnership; and
            ``(2) in the case of a self-employed individual, the term 
        `employer' (as defined in section 3(5)) and the term `employee' 
        (as defined in section 3(6)) shall include such individual.
    ``(c) Renewal.--Notwithstanding any provision of law to the 
contrary, a participating employer in a small business health plan 
shall not be deemed to be a plan sponsor in applying requirements 
relating to coverage renewal.
    ``(d) Health Savings Accounts.--Nothing in this part shall be 
construed to create any mandates for coverage of benefits for HSA-
qualified health plans that would require reimbursements in violation 
of section 223(c)(2) of the Internal Revenue Code of 1986.''.
    (b) Conforming Amendments to Preemption Rules.--
            (1) Section 514(b)(6) of such Act (29 U.S.C. 1144(b)(6)) is 
        amended by adding at the end the following new subparagraph:
    ``(E) The preceding subparagraphs of this paragraph do not apply 
with respect to any State law in the case of a small business health 
plan which is certified under part 8.''.
            (2) Section 514 of such Act (29 U.S.C. 1144) is amended--
                    (A) in subsection (b)(4), by striking ``Subsection 
                (a)'' and inserting ``Subsections (a) and (d)'';
                    (B) in subsection (b)(5), by striking ``subsection 
                (a)'' in subparagraph (A) and inserting ``subsection 
                (a) of this section and subsections (a)(2)(B) and (b) 
                of section 805'', and by striking ``subsection (a)'' in 
                subparagraph (B) and inserting ``subsection (a) of this 
                section or subsection (a)(2)(B) or (b) of section 
                805'';
                    (C) by redesignating subsection (d) as subsection 
                (e); and
                    (D) by inserting after subsection (c) the following 
                new subsection:
    ``(d)(1) Except as provided in subsection (b)(4), the provisions of 
this title shall supersede any and all State laws insofar as they may 
now or hereafter preclude a health insurance issuer from offering 
health insurance coverage in connection with a small business health 
plan which is certified under part 8.
    ``(2) In any case in which health insurance coverage of any policy 
type is offered under a small business health plan certified under part 
8 to a participating employer operating in such State, the provisions 
of this title shall supersede any and all laws of such State insofar as 
they may establish rating and benefit requirements that would otherwise 
apply to such coverage, provided the requirements of subtitle A of 
title XXX of the Public Health Service Act (as added by title II of the 
Health Security for All Americans Act of 2008) (concerning health plan 
rating and benefits) are met.''.
    (c) Plan Sponsor.--Section 3(16)(B) of such Act (29 U.S.C. 
102(16)(B)) is amended by adding at the end the following new sentence: 
``Such term also includes a person serving as the sponsor of a small 
business health plan under part 8.''.
    (d) Savings Clause.--Section 731(c) of such Act is amended by 
inserting ``or part 8'' after ``this part''.
    (e) Clerical Amendment.--The table of contents in section 1 of the 
Employee Retirement Income Security Act of 1974 is amended by inserting 
after the item relating to section 734 the following new items:

         ``Part 8--Rules Governing Small Business Health Plans

``801. Small business health plans.
``802. Alternative market pooling organizations.
``803. Certification of small business health plans.
``804. Requirements relating to sponsors and boards of trustees.
``805. Participation and coverage requirements.
``806. Other requirements relating to plan documents, contribution 
                            rates, and benefit options.
``807. Requirements for application and related requirements.
``808. Notice requirements for voluntary termination.
``809. Implementation and application authority by Secretary.
``810. Definitions and rules of construction.''.

SEC. 202. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

    Section 506 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1136) is amended by adding at the end the following new 
subsection:
    ``(d) Consultation With States With Respect to Small Business 
Health Plans.--
            ``(1) Agreements with states.--The Secretary shall consult 
        with the State recognized under paragraph (2) with respect to a 
        small business health plan regarding the exercise of--
                    ``(A) the Secretary's authority under sections 502 
                and 504 to enforce the requirements for certification 
                under part 8; and
                    ``(B) the Secretary's authority to certify small 
                business health plans under part 8 in accordance with 
                regulations of the Secretary applicable to 
                certification under part 8.
            ``(2) Recognition of domicile state.--In carrying out 
        paragraph (1), the Secretary shall ensure that only one State 
        will be recognized, with respect to any particular small 
        business health plan, as the State with which consultation is 
        required. In carrying out this paragraph such State shall be 
        the domicile State, as defined in section 805(c).''.

SEC. 203. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.

    (a) Effective Date.--The amendments made by this subtitle shall 
take effect 12 months after the date of the enactment of this Act. The 
Secretary of Labor shall first issue all regulations necessary to carry 
out the amendments made by this subtitle within 6 months after the date 
of the enactment of this Act.
    (b) Treatment of Certain Existing Health Benefits Programs.--
            (1) In general.--In any case in which, as of the date of 
        the enactment of this Act, an arrangement is maintained in a 
        State for the purpose of providing benefits consisting of 
        medical care for the employees and beneficiaries of its 
        participating employers, at least 200 participating employers 
        make contributions to such arrangement, such arrangement has 
        been in existence for at least 10 years, and such arrangement 
        is licensed under the laws of one or more States to provide 
        such benefits to its participating employers, upon the filing 
        with the applicable authority (as defined in section 808(a)(2) 
        of the Employee Retirement Income Security Act of 1974 (as 
        amended by this subtitle)) by the arrangement of an application 
        for certification of the arrangement under part 8 of subtitle B 
        of title I of such Act--
                    (A) such arrangement shall be deemed to be a group 
                health plan for purposes of title I of such Act;
                    (B) the requirements of sections 801(a) and 803(a) 
                of the Employee Retirement Income Security Act of 1974 
                shall be deemed met with respect to such arrangement;
                    (C) the requirements of section 803(b) of such Act 
                shall be deemed met, if the arrangement is operated by 
                a board of trustees which has control over the 
                arrangement;
                    (D) the requirements of section 804(a) of such Act 
                shall be deemed met with respect to such arrangement; 
                and
                    (E) the arrangement may be certified by any 
                applicable authority with respect to its operations in 
                any State only if it operates in such State on the date 
                of certification.
        The provisions of this subsection shall cease to apply with 
        respect to any such arrangement at such time after the date of 
        the enactment of this Act as the applicable requirements of 
        this subsection are not met with respect to such arrangement or 
        at such time that the arrangement provides coverage to 
        participants and beneficiaries in any State other than the 
        States in which coverage is provided on such date of enactment.
            (2) Definitions.--For purposes of this subsection, the 
        terms ``group health plan'', ``medical care'', and 
        ``participating employer'' shall have the meanings provided in 
        section 808 of the Employee Retirement Income Security Act of 
        1974, except that the reference in paragraph (7) of such 
        section to an ``small business health plan'' shall be deemed a 
        reference to an arrangement referred to in this subsection.

                       Subtitle B--Market Relief

SEC. 211. MARKET RELIEF.

    The Public Health Service Act (42 U.S.C. 201 et seq.) is amended by 
adding at the end the following:

      ``TITLE XXX--HEALTH CARE INSURANCE MARKETPLACE MODERNIZATION

``SEC. 3001. GENERAL INSURANCE DEFINITIONS.

    ``In this title, the terms `health insurance coverage', `health 
insurance issuer', `group health plan', and `individual health 
insurance' shall have the meanings given such terms in section 2791.

``SEC. 3002. IMPLEMENTATION AND APPLICATION AUTHORITY BY SECRETARY.

    ``The Secretary shall, through promulgation and implementation of 
such regulations as the Secretary may reasonably determine necessary or 
appropriate, and in consultation with a balanced spectrum of effected 
entities and persons, modify the implementation and application of this 
title to accommodate with minimum disruption such changes to State or 
Federal law provided in this title and the (and the amendments made by 
such Act) or in regulations issued thereto.

                      ``Subtitle A--Market Relief

                     ``PART I--RATING REQUIREMENTS

``SEC. 3011. DEFINITIONS.

    ``In this part:
            ``(1) Adopting state.--The term `adopting State' means a 
        State that, with respect to the small group market, has enacted 
        small group rating rules that meet the minimum standards set 
        forth in section 3012(a)(1) or, as applicable, transitional 
        small group rating rules set forth in section 3012(b).
            ``(2) Applicable state authority.--The term `applicable 
        State authority' means, with respect to a health insurance 
        issuer in a State, the State insurance commissioner or official 
        or officials designated by the State to enforce the insurance 
        laws of such State.
            ``(3) Base premium rate.--The term `base premium rate' 
        means, for each class of business with respect to a rating 
        period, the lowest premium rate charged or that could have been 
        charged under a rating system for that class of business by the 
        small employer carrier to small employers with similar case 
        characteristics for health benefit plans with the same or 
        similar coverage.
            ``(4) Eligible insurer.--The term `eligible insurer' means 
        a health insurance issuer that is licensed in a State and 
        that--
                    ``(A) notifies the Secretary, not later than 30 
                days prior to the offering of coverage described in 
                this subparagraph, that the issuer intends to offer 
                health insurance coverage consistent with the Model 
                Small Group Rating Rules or, as applicable, 
                transitional small group rating rules in a State;
                    ``(B) notifies the insurance department of a 
                nonadopting State (or other State agency), not later 
                than 30 days prior to the offering of coverage 
                described in this subparagraph, that the issuer intends 
                to offer small group health insurance coverage in that 
                State consistent with the Model Small Group Rating 
                Rules, and provides with such notice a copy of any 
                insurance policy that it intends to offer in the State, 
                its most recent annual and quarterly financial reports, 
                and any other information required to be filed with the 
                insurance department of the State (or other State 
                agency); and
                    ``(C) includes in the terms of the health insurance 
                coverage offered in nonadopting States (including in 
                the terms of any individual certificates that may be 
                offered to individuals in connection with such group 
                health coverage) and filed with the State pursuant to 
                subparagraph (B), a description in the insurer's 
                contract of the Model Small Group Rating Rules and an 
                affirmation that such Rules are included in the terms 
                of such contract.
            ``(5) Health insurance coverage.--The term `health 
        insurance coverage' means any coverage issued in the small 
        group health insurance market, except that such term shall not 
        include excepted benefits (as defined in section 2791(c)).
            ``(6) Index rate.--The term `index rate' means for each 
        class of business with respect to the rating period for small 
        employers with similar case characteristics, the arithmetic 
        average of the applicable base premium rate and the 
        corresponding highest premium rate.
            ``(7)  Model Small Group Rating Rules.--The term `Model 
        Small Group Rating Rules' means the rules set forth in section 
        3012(a)(2).
            ``(8) Nonadopting state.--The term `nonadopting State' 
        means a State that is not an adopting State.
            ``(9) Small group insurance market.--The term `small group 
        insurance market' shall have the meaning given the term `small 
        group market' in section 2791(e)(5).
            ``(10) State law.--The term `State law' means all laws, 
        decisions, rules, regulations, or other State actions 
        (including actions by a State agency) having the effect of law, 
        of any State.
            ``(11) Variation limits.--
                    ``(A) Composite variation limit.--
                            ``(i) In general.--The term `composite 
                        variation limit' means the total variation in 
                        premium rates charged by a health insurance 
                        issuer in the small group market as permitted 
                        under applicable State law based on the 
                        following factors or case characteristics:
                                    ``(I) Age.
                                    ``(II) Duration of coverage.
                                    ``(III) Claims experience.
                                    ``(IV) Health status.
                            ``(ii) Use of factors.--With respect to the 
                        use of the factors described in clause (i) in 
                        setting premium rates, a health insurance 
                        issuer shall use one or both of the factors 
                        described in subclauses (I) or (IV) of such 
                        clause and may use the factors described in 
                        subclauses (II) or (III) of such clause.
                    ``(B) Total variation limit.--The term `total 
                variation limit' means the total variation in premium 
                rates charged by a health insurance issuer in the small 
                group market as permitted under applicable State law 
                based on all factors and case characteristics (as 
                described in section 3012(a)(1)).

``SEC. 3012. RATING RULES.

    ``(a) Establishment of Minimum Standards for Premium Variations and 
Model Small Group Rating Rules.--Not later than 6 months after the date 
of enactment of this title, the Secretary shall promulgate regulations 
establishing the following Minimum Standards and Model Small Group 
Rating Rules:
            ``(1) Minimum standards for premium variations.--
                    ``(A) Composite variation limit.--The composite 
                variation limit shall not be less than 3:1.
                    ``(B) Total variation limit.--The total variation 
                limit shall not be less than 5:1.
                    ``(C) Prohibition on use of certain case 
                characteristics.--For purposes of this paragraph, in 
                calculating the total variation limit, the State shall 
                not use case characteristics other than those used in 
                calculating the composite variation limit and industry, 
                geographic area, group size, participation rate, class 
                of business, and participation in wellness programs.
            ``(2) Model small group rating rules.--The following apply 
        to an eligible insurer in a non-adopting State:
                    ``(A) Premium rates.--Premium rates for small group 
                health benefit plans to which this title applies shall 
                comply with the following provisions relating to 
                premiums, except as provided for under subsection (b):
                            ``(i) Variation in premium rates.--The plan 
                        may not vary premium rates by more than the 
                        minimum standards provided for under paragraph 
                        (1).
                            ``(ii) Index rate.--The index rate for a 
                        rating period for any class of business shall 
                        not exceed the index rate for any other class 
                        of business by more than 20 percent, excluding 
                        those classes of business related to 
                        association groups under this title.
                            ``(iii) Class of businesses.--With respect 
                        to a class of business, the premium rates 
                        charged during a rating period to small 
                        employers with similar case characteristics for 
                        the same or similar coverage or the rates that 
                        could be charged to such employers under the 
                        rating system for that class of business, shall 
                        not vary from the index rate by more than 25 
                        percent of the index rate under clause (ii).
                            ``(iv) Increases for new rating periods.--
                        The percentage increase in the premium rate 
                        charged to a small employer for a new rating 
                        period may not exceed the sum of the following:
                                    ``(I) The percentage change in the 
                                new business premium rate measured from 
                                the first day of the prior rating 
                                period to the first day of the new 
                                rating period. In the case of a health 
                                benefit plan into which the small 
                                employer carrier is no longer enrolling 
                                new small employers, the small employer 
                                carrier shall use the percentage change 
                                in the base premium rate, except that 
                                such change shall not exceed, on a 
                                percentage basis, the change in the new 
                                business premium rate for the most 
                                similar health benefit plan into which 
                                the small employer carrier is actively 
                                enrolling new small employers.
                                    ``(II) Any adjustment, not to 
                                exceed 15 percent annually and adjusted 
                                pro rata for rating periods of less 
                                then 1 year, due to the claim 
                                experience, health status or duration 
                                of coverage of the employees or 
                                dependents of the small employer as 
                                determined from the small employer 
                                carrier's rate manual for the class of 
                                business involved.
                                    ``(III) Any adjustment due to 
                                change in coverage or change in the 
                                case characteristics of the small 
                                employer as determined from the small 
                                employer carrier's rate manual for the 
                                class of business.
                            ``(v) Uniform application of adjustments.--
                        Adjustments in premium rates for claim 
                        experience, health status, or duration of 
                        coverage shall not be charged to individual 
                        employees or dependents. Any such adjustment 
                        shall be applied uniformly to the rates charged 
                        for all employees and dependents of the small 
                        employer.
                            ``(vi) Prohibition on use of certain case 
                        characteristic.--A small employer carrier shall 
                        not utilize case characteristics, other than 
                        those permitted under paragraph (1)(C), without 
                        the prior approval of the applicable State 
                        authority.
                            ``(vii) Consistent application of 
                        factors.--Small employer carriers shall apply 
                        rating factors, including case characteristics, 
                        consistently with respect to all small 
                        employers in a class of business. Rating 
                        factors shall produce premiums for identical 
                        groups which differ only by the amounts 
                        attributable to plan design and do not reflect 
                        differences due to the nature of the groups 
                        assumed to select particular health benefit 
                        plans.
                            ``(viii) Treatment of plans as having same 
                        rating period.--A small employer carrier shall 
                        treat all health benefit plans issued or 
                        renewed in the same calendar month as having 
                        the same rating period.
                            ``(ix) Require compliance.--Premium rates 
                        for small business health benefit plans shall 
                        comply with the requirements of this subsection 
                        notwithstanding any assessments paid or payable 
                        by a small employer carrier as required by a 
                        State's small employer carrier reinsurance 
                        program.
                    ``(B) Establishment of separate class of 
                business.--Subject to subparagraph (C), a small 
                employer carrier may establish a separate class of 
                business only to reflect substantial differences in 
                expected claims experience or administrative costs 
                related to the following:
                            ``(i) The small employer carrier uses more 
                        than one type of system for the marketing and 
                        sale of health benefit plans to small 
                        employers.
                            ``(ii) The small employer carrier has 
                        acquired a class of business from another small 
                        employer carrier.
                            ``(iii) The small employer carrier provides 
                        coverage to one or more association groups that 
                        meet the requirements of this title.
                    ``(C) Limitation.--A small employer carrier may 
                establish up to 9 separate classes of business under 
                subparagraph (B), excluding those classes of business 
                related to association groups under this title.
                    ``(D) Limitation on transfers.--A small employer 
                carrier shall not transfer a small employer 
                involuntarily into or out of a class of business. A 
                small employer carrier shall not offer to transfer a 
                small employer into or out of a class of business 
                unless such offer is made to transfer all small 
                employers in the class of business without regard to 
                case characteristics, claim experience, health status 
                or duration of coverage since issue.
    ``(b) Transitional Model Small Group Rating Rules.--
            ``(1) In general.--Not later than 6 months after the date 
        of enactment of this title and to the extent necessary to 
        provide for a graduated transition to the minimum standards for 
        premium variation as provided for in subsection (a)(1), the 
        Secretary, in consultation with the National Association of 
        Insurance Commissioners (NAIC), shall promulgate State-specific 
        transitional small group rating rules in accordance with this 
        subsection, which shall be applicable with respect to non-
        adopting States and eligible insurers operating in such States 
        for a period of not to exceed 3 years from the date of the 
        promulgation of the minimum standards for premium variation 
        pursuant to subsection (a).
            ``(2) Compliance with transitional model small group rating 
        rules.--During the transition period described in paragraph 
        (1), a State that, on the date of enactment of this title, has 
        in effect a small group rating rules methodology that allows 
        for a variation that is less than the variation provided for 
        under subsection (a)(1) (concerning minimum standards for 
        premium variation), shall be deemed to be an adopting State if 
        the State complies with the transitional small group rating 
        rules as promulgated by the Secretary pursuant to paragraph 
        (1).
            ``(3) Transitioning of old business.--
                    ``(A) In general.--In developing the transitional 
                small group rating rules under paragraph (1), the 
                Secretary shall, after consultation with the National 
                Association of Insurance Commissioners and 
                representatives of insurers operating in the small 
                group health insurance market in non-adopting States, 
                promulgate special transition standards with respect to 
                independent rating classes for old and new business, to 
                the extent reasonably necessary to protect health 
                insurance consumers and to ensure a stable and fair 
                transition for old and new market entrants.
                    ``(B) Period for operation of independent rating 
                classes.--In developing the special transition 
                standards pursuant to subparagraph (A), the Secretary 
                shall permit a carrier in a non-adopting State, at its 
                option, to maintain independent rating classes for old 
                and new business for a period of up to 5 years, with 
                the commencement of such 5-year period to begin at such 
                time, but not later than the date that is 3 years after 
                the date of enactment of this title, as the carrier 
                offers a book of business meeting the minimum standards 
                for premium variation provided for in subsection (a)(1) 
                or the transitional small group rating rules under 
                paragraph (1).
            ``(4) Other transitional authority.--In developing the 
        transitional small group rating rules under paragraph (1), the 
        Secretary shall provide for the application of the transitional 
        small group rating rules in transition States as the Secretary 
        may determine necessary for a an effective transition.
    ``(c) Market Re-Entry.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, a health insurance issuer that has voluntarily withdrawn 
        from providing coverage in the small group market prior to the 
        date of enactment of this title shall not be excluded from re-
        entering such market on a date that is more than 180 days after 
        such date of enactment.
            ``(2) Termination.--The provision of this subsection shall 
        terminate on the date that is 24 months after the date of 
        enactment of this title.

``SEC. 3013. APPLICATION AND PREEMPTION.

    ``(a) Superseding of State Law.--
            ``(1) In general.--This part shall supersede any and all 
        State laws of a non-adopting State insofar as such State laws 
        (whether enacted prior to or after the date of enactment of 
        this subtitle) relate to rating in the small group insurance 
        market as applied to an eligible insurer, or small group health 
        insurance coverage issued by an eligible insurer, including 
        with respect to coverage issued to a small employer through a 
        small business health plan, in a State.
            ``(2) Nonadopting states.--This part shall supersede any 
        and all State laws of a nonadopting State insofar as such State 
        laws (whether enacted prior to or after the date of enactment 
        of this subtitle)--
                    ``(A) prohibit an eligible insurer from offering, 
                marketing, or implementing small group health insurance 
                coverage consistent with the Model Small Group Rating 
                Rules or transitional model small group rating rules; 
                or
                    ``(B) have the effect of retaliating against or 
                otherwise punishing in any respect an eligible insurer 
                for offering, marketing, or implementing small group 
                health insurance coverage consistent with the Model 
                Small Group Rating Rules or transitional model small 
                group rating rules.
    ``(b) Savings Clause and Construction.--
            ``(1) Nonapplication to adopting states.--Subsection (a) 
        shall not apply with respect to adopting states.
            ``(2) Nonapplication to certain insurers.--Subsection (a) 
        shall not apply with respect to insurers that do not qualify as 
        eligible insurers that offer small group health insurance 
        coverage in a nonadopting State.
            ``(3) Nonapplication where obtaining relief under state 
        law.--Subsection (a)(1) shall not supercede any State law in a 
        nonadopting State to the extent necessary to permit individuals 
        or the insurance department of the State (or other State 
        agency) to obtain relief under State law to require an eligible 
        insurer to comply with the Model Small Group Rating Rules or 
        transitional model small group rating rules.
            ``(4) No effect on preemption.--In no case shall this part 
        be construed to limit or affect in any manner the preemptive 
        scope of sections 502 and 514 of the Employee Retirement Income 
        Security Act of 1974. In no case shall this part be construed 
        to create any cause of action under Federal or State law or 
        enlarge or affect any remedy available under the Employee 
        Retirement Income Security Act of 1974.
            ``(5) Preemption limited to rating.--Subsection (a) shall 
        not preempt any State law that does not have a reference to or 
        a connection with State rating rules that would otherwise apply 
        to eligible insurers.
    ``(c) Effective Date.--This section shall apply, at the election of 
the eligible insurer, beginning in the first plan year or the first 
calendar year following the issuance of the final rules by the 
Secretary under the Model Small Group Rating Rules or, as applicable, 
the Transitional Model Small Group Rating Rules, but in no event 
earlier than the date that is 12 months after the date of enactment of 
this title.

``SEC. 3014. CIVIL ACTIONS AND JURISDICTION.

    ``(a) In General.--The courts of the United States shall have 
exclusive jurisdiction over civil actions involving the interpretation 
of this part.
    ``(b) Actions.--An eligible insurer may bring an action in the 
district courts of the United States for injunctive or other equitable 
relief against any officials or agents of a nonadopting State in 
connection with any conduct or action, or proposed conduct or action, 
by such officials or agents which violates, or which would if 
undertaken violate, section 3013.
    ``(c) Direct Filing in Court of Appeals.--At the election of the 
eligible insurer, an action may be brought under subsection (b) 
directly in the United States Court of Appeals for the circuit in which 
the nonadopting State is located by the filing of a petition for review 
in such Court.
    ``(d) Expedited Review.--
            ``(1) District court.--In the case of an action brought in 
        a district court of the United States under subsection (b), 
        such court shall complete such action, including the issuance 
        of a judgment, prior to the end of the 120-day period beginning 
        on the date on which such action is filed, unless all parties 
        to such proceeding agree to an extension of such period.
            ``(2) Court of appeals.--In the case of an action brought 
        directly in a United States Court of Appeal under subsection 
        (c), or in the case of an appeal of an action brought in a 
        district court under subsection (b), such Court shall complete 
        all action on the petition, including the issuance of a 
        judgment, prior to the end of the 60-day period beginning on 
        the date on which such petition is filed with the Court, unless 
        all parties to such proceeding agree to an extension of such 
        period.
    ``(e) Standard of Review.--A court in an action filed under this 
section, shall render a judgment based on a review of the merits of all 
questions presented in such action and shall not defer to any conduct 
or action, or proposed conduct or action, of a nonadopting State.

``SEC. 3015. ONGOING REVIEW.

    ``Not later than 5 years after the date on which the Model Small 
Group Rating Rules are issued under this part, and every 5 years 
thereafter, the Secretary, in consultation with the National 
Association of Insurance Commissioners, shall prepare and submit to the 
appropriate committees of Congress a report that assesses the effect of 
the Model Small Group Rating Rules on access, cost, and market 
functioning in the small group market. Such report may, if the 
Secretary, in consultation with the National Association of Insurance 
Commissioners, determines such is appropriate for improving access, 
costs, and market functioning, contain legislative proposals for 
recommended modification to such Model Small Group Rating Rules.

                      ``PART II--AFFORDABLE PLANS

``SEC. 3021. DEFINITIONS.

    ``In this part:
            ``(1) Adopting state.--The term `adopting State' means a 
        State that has enacted a law providing that small group, 
        individual, and large group health insurers in such State may 
        offer and sell products in accordance with the List of Required 
        Benefits and the Terms of Application as provided for in 
        section 3022(b).
            ``(2) Eligible insurer.--The term `eligible insurer' means 
        a health insurance issuer that is licensed in a nonadopting 
        State and that--
                    ``(A) notifies the Secretary, not later than 30 
                days prior to the offering of coverage described in 
                this subparagraph, that the issuer intends to offer 
                health insurance coverage consistent with the List of 
                Required Benefits and Terms of Application in a 
                nonadopting State;
                    ``(B) notifies the insurance department of a 
                nonadopting State (or other applicable State agency), 
                not later than 30 days prior to the offering of 
                coverage described in this subparagraph, that the 
                issuer intends to offer health insurance coverage in 
                that State consistent with the List of Required 
                Benefits and Terms of Application, and provides with 
                such notice a copy of any insurance policy that it 
                intends to offer in the State, its most recent annual 
                and quarterly financial reports, and any other 
                information required to be filed with the insurance 
                department of the State (or other State agency) by the 
                Secretary in regulations; and
                    ``(C) includes in the terms of the health insurance 
                coverage offered in nonadopting States (including in 
                the terms of any individual certificates that may be 
                offered to individuals in connection with such group 
                health coverage) and filed with the State pursuant to 
                subparagraph (B), a description in the insurer's 
                contract of the List of Required Benefits and a 
                description of the Terms of Application, including a 
                description of the benefits to be provided, and that 
                adherence to such standards is included as a term of 
                such contract.
            ``(3) Health insurance coverage.--The term `health 
        insurance coverage' means any coverage issued in the small 
        group, individual, or large group health insurance markets, 
        including with respect to small business health plans, except 
        that such term shall not include excepted benefits (as defined 
        in section 2791(c)).
            ``(4) List of required benefits.--The term `List of 
        Required Benefits' means the List issued under section 3022(a).
            ``(5) Nonadopting state.--The term `nonadopting State' 
        means a State that is not an adopting State.
            ``(6) State law.--The term `State law' means all laws, 
        decisions, rules, regulations, or other State actions 
        (including actions by a State agency) having the effect of law, 
        of any State.
            ``(7) State provider freedom of choice law.--The term 
        `State Provider Freedom of Choice Law' means a State law 
        requiring that a health insurance issuer, with respect to 
        health insurance coverage, not discriminate with respect to 
        participation, reimbursement, or indemnification as to any 
        provider who is acting within the scope of the provider's 
        license or certification under applicable State law.
            ``(8) Terms of application.--The term `Terms of 
        Application' means terms provided under section 3022(a).

``SEC. 3022. OFFERING AFFORDABLE PLANS.

    ``(a) List of Required Benefits.--Not later than 3 months after the 
date of enactment of this title, the Secretary, in consultation with 
the National Association of Insurance Commissioners, shall issue by 
interim final rule a list (to be known as the `List of Required 
Benefits') of covered benefits, services, or categories of providers 
that are required to be provided by health insurance issuers, in each 
of the small group, individual, and large group markets, in at least 26 
States as a result of the application of State covered benefit, 
service, and category of provider mandate laws. With respect to plans 
sold to or through small business health plans, the List of Required 
Benefits applicable to the small group market shall apply.
    ``(b) Terms of Application.--
            ``(1) State with mandates.--With respect to a State that 
        has a covered benefit, service, or category of provider mandate 
        in effect that is covered under the List of Required Benefits 
        under subsection (a), such State mandate shall, subject to 
        paragraph (3) (concerning uniform application), apply to a 
        coverage plan or plan in, as applicable, the small group, 
        individual, or large group market or through a small business 
        health plan in such State.
            ``(2) States without mandates.--With respect to a State 
        that does not have a covered benefit, service, or category of 
        provider mandate in effect that is covered under the List of 
        Required Benefits under subsection (a), such mandate shall not 
        apply, as applicable, to a coverage plan or plan in the small 
        group, individual, or large group market or through a small 
        business health plan in such State.
            ``(3) Uniform application of laws.--
                    ``(A) In general.--With respect to a State 
                described in paragraph (1), in applying a covered 
                benefit, service, or category of provider mandate that 
                is on the List of Required Benefits under subsection 
                (a) the State shall permit a coverage plan or plan 
                offered in the small group, individual, or large group 
                market or through a small business health plan in such 
                State to apply such benefit, service, or category of 
                provider coverage in a manner consistent with the 
                manner in which such coverage is applied under one of 
                the three most heavily subscribed national health plans 
                offered under the Federal Employee Health Benefits 
                Program under chapter 89 of title 5, United States Code 
                (as determined by the Secretary in consultation with 
                the Director of the Office of Personnel Management), 
                and consistent with the Publication of Benefit 
                Applications under subsection (c). In the event a 
                covered benefit, service, or category of provider 
                appearing in the List of Required Benefits is not 
                offered in one of the three most heavily subscribed 
                national health plans offered under the Federal 
                Employees Health Benefits Program, such covered 
                benefit, service, or category of provider requirement 
                shall be applied in a manner consistent with the manner 
                in which such coverage is offered in the remaining most 
                heavily subscribed plan of the remaining Federal 
                Employees Health Benefits Program plans, as determined 
                by the Secretary, in consultation with the Director of 
                the Office of Personnel Management.
                    ``(B) Exception regarding state provider freedom of 
                choice laws.--Notwithstanding subparagraph (A), in the 
                event a category of provider mandate is included in the 
                List of Covered Benefits, any State Provider Freedom of 
                Choice Law (as defined in section 3021(7)) that is in 
                effect in any State in which such category of provider 
                mandate is in effect shall not be preempted, with 
                respect to that category of provider, by this part.
    ``(c) Publication of Benefit Applications.--Not later than 3 months 
after the date of enactment of this title, and on the first day of 
every calendar year thereafter, the Secretary, in consultation with the 
Director of the Office of Personnel Management, shall publish in the 
Federal Register a description of such covered benefits, services, and 
categories of providers covered in that calendar year by each of the 
three most heavily subscribed nationally available Federal Employee 
Health Benefits Plan options which are also included on the List of 
Required Benefits.
    ``(d) Effective Dates.--
            ``(1) Small business health plans.--With respect to health 
        insurance provided to participating employers of small business 
        health plans, the requirements of this part (concerning lower 
        cost plans) shall apply beginning on the date that is 12 months 
        after the date of enactment of this title.
            ``(2) Non-association coverage.--With respect to health 
        insurance provided to groups or individuals other than 
        participating employers of small business health plans, the 
        requirements of this part shall apply beginning on the date 
        that is 15 months after the date of enactment of this title.
    ``(e) Updating of List of Required Benefits.--Not later than 2 
years after the date on which the list of required benefits is issued 
under subsection (a), and every 2 years thereafter, the Secretary, in 
consultation with the National Association of Insurance Commissioners, 
shall update the list based on changes in the laws and regulations of 
the States. The Secretary shall issue the updated list by regulation, 
and such updated list shall be effective upon the first plan year 
following the issuance of such regulation.

``SEC. 3023. APPLICATION AND PREEMPTION.

    ``(a) Superceding of State Law.--
            ``(1) In general.--This part shall supersede any and all 
        State laws insofar as such laws relate to mandates relating to 
        covered benefits, services, or categories of provider in the 
        health insurance market as applied to an eligible insurer, or 
        health insurance coverage issued by an eligible insurer, 
        including with respect to coverage issued to a small business 
        health plan, in a nonadopting State.
            ``(2) Nonadopting states.--This part shall supersede any 
        and all State laws of a nonadopting State (whether enacted 
        prior to or after the date of enactment of this title) insofar 
        as such laws--
                    ``(A) prohibit an eligible insurer from offering, 
                marketing, or implementing health insurance coverage 
                consistent with the Benefit Choice Standards, as 
                provided for in section 3022(a); or
                    ``(B) have the effect of retaliating against or 
                otherwise punishing in any respect an eligible insurer 
                for offering, marketing, or implementing health 
                insurance coverage consistent with the Benefit Choice 
                Standards.
    ``(b) Savings Clause and Construction.--
            ``(1) Nonapplication to adopting states.--Subsection (a) 
        shall not apply with respect to adopting States.
            ``(2) Nonapplication to certain insurers.--Subsection (a) 
        shall not apply with respect to insurers that do not qualify as 
        eligible insurers who offer health insurance coverage in a 
        nonadopting State.
            ``(3) Nonapplication where obtaining relief under state 
        law.--Subsection (a)(1) shall not supercede any State law of a 
        nonadopting State to the extent necessary to permit individuals 
        or the insurance department of the State (or other State 
        agency) to obtain relief under State law to require an eligible 
        insurer to comply with the Benefit Choice Standards.
            ``(4) No effect on preemption.--In no case shall this part 
        be construed to limit or affect in any manner the preemptive 
        scope of sections 502 and 514 of the Employee Retirement Income 
        Security Act of 1974. In no case shall this part be construed 
        to create any cause of action under Federal or State law or 
        enlarge or affect any remedy available under the Employee 
        Retirement Income Security Act of 1974.
            ``(5) Preemption limited to benefits.--Subsection (a) shall 
        not preempt any State law that does not have a reference to or 
        a connection with State mandates regarding covered benefits, 
        services, or categories of providers that would otherwise apply 
        to eligible insurers.

``SEC. 3024. CIVIL ACTIONS AND JURISDICTION.

    ``(a) In General.--The courts of the United States shall have 
exclusive jurisdiction over civil actions involving the interpretation 
of this part.
    ``(b) Actions.--An eligible insurer may bring an action in the 
district courts of the United States for injunctive or other equitable 
relief against any officials or agents of a nonadopting State in 
connection with any conduct or action, or proposed conduct or action, 
by such officials or agents which violates, or which would if 
undertaken violate, section 3023.
    ``(c) Direct Filing in Court of Appeals.--At the election of the 
eligible insurer, an action may be brought under subsection (b) 
directly in the United States Court of Appeals for the circuit in which 
the nonadopting State is located by the filing of a petition for review 
in such Court.
    ``(d) Expedited Review.--
            ``(1) District court.--In the case of an action brought in 
        a district court of the United States under subsection (b), 
        such court shall complete such action, including the issuance 
        of a judgment, prior to the end of the 120-day period beginning 
        on the date on which such action is filed, unless all parties 
        to such proceeding agree to an extension of such period.
            ``(2) Court of appeals.--In the case of an action brought 
        directly in a United States Court of Appeal under subsection 
        (c), or in the case of an appeal of an action brought in a 
        district court under subsection (b), such Court shall complete 
        all action on the petition, including the issuance of a 
        judgment, prior to the end of the 60-day period beginning on 
        the date on which such petition is filed with the Court, unless 
        all parties to such proceeding agree to an extension of such 
        period.
    ``(e) Standard of Review.--A court in an action filed under this 
section, shall render a judgment based on a review of the merits of all 
questions presented in such action and shall not defer to any conduct 
or action, or proposed conduct or action, of a nonadopting State.

``SEC. 3025. RULES OF CONSTRUCTION.

    ``(a) In General.--Notwithstanding any other provision of Federal 
or State law, a health insurance issuer in an adopting State or an 
eligible insurer in a non-adopting State may amend its existing 
policies to be consistent with the terms of this subtitle (concerning 
rating and benefits).
    ``(b) Health Savings Accounts.--Nothing in this subtitle shall be 
construed to create any mandates for coverage of benefits for HSA-
qualified health plans that would require reimbursements in violation 
of section 223(c)(2) of the Internal Revenue Code of 1986.''.

        Subtitle C--Harmonization of Health Insurance Standards

SEC. 221. HEALTH INSURANCE STANDARDS HARMONIZATION.

    Title XXX of the Public Health Service Act (as added by section 
211) is amended by adding at the end the following:

                 ``Subtitle B--Standards Harmonization

``SEC. 3031. DEFINITIONS.

    ``In this subtitle:
            ``(1) Adopting state.--The term `adopting State' means a 
        State that has enacted the harmonized standards adopted under 
        this subtitle in their entirety and as the exclusive laws of 
        the State that relate to the harmonized standards.
            ``(2) Eligible insurer.--The term `eligible insurer' means 
        a health insurance issuer that is licensed in a nonadopting 
        State and that--
                    ``(A) notifies the Secretary, not later than 30 
                days prior to the offering of coverage described in 
                this subparagraph, that the issuer intends to offer 
                health insurance coverage consistent with the 
                harmonized standards in a nonadopting State;
                    ``(B) notifies the insurance department of a 
                nonadopting State (or other State agency), not later 
                than 30 days prior to the offering of coverage 
                described in this subparagraph, that the issuer intends 
                to offer health insurance coverage in that State 
                consistent with the harmonized standards published 
                pursuant to section 3033(d), and provides with such 
                notice a copy of any insurance policy that it intends 
                to offer in the State, its most recent annual and 
                quarterly financial reports, and any other information 
                required to be filed with the insurance department of 
                the State (or other State agency) by the Secretary in 
                regulations; and
                    ``(C) includes in the terms of the health insurance 
                coverage offered in nonadopting States (including in 
                the terms of any individual certificates that may be 
                offered to individuals in connection with such health 
                coverage) and filed with the State pursuant to 
                subparagraph (B), a description of the harmonized 
                standards published pursuant to section 3033(g)(2) and 
                an affirmation that such standards are a term of the 
                contract.
            ``(3) Harmonized standards.--The term `harmonized 
        standards' means the standards certified by the Secretary under 
        section 3033(d).
            ``(4) Health insurance coverage.--The term `health 
        insurance coverage' means any coverage issued in the health 
        insurance market, except that such term shall not include 
        excepted benefits (as defined in section 2791(c).
            ``(5) Nonadopting state.--The term `nonadopting State' 
        means a State that fails to enact, within 18 months of the date 
        on which the Secretary certifies the harmonized standards under 
        this subtitle, the harmonized standards in their entirety and 
        as the exclusive laws of the State that relate to the 
        harmonized standards.
            ``(6) State law.--The term `State law' means all laws, 
        decisions, rules, regulations, or other State actions 
        (including actions by a State agency) having the effect of law, 
        of any State.

``SEC. 3032. HARMONIZED STANDARDS.

    ``(a) Board.--
            ``(1) Establishment.--Not later than 3 months after the 
        date of enactment of this title, the Secretary, in consultation 
        with the NAIC, shall establish the Health Insurance Consensus 
        Standards Board (referred to in this subtitle as the `Board') 
        to develop recommendations that harmonize inconsistent State 
        health insurance laws in accordance with the procedures 
        described in subsection (b).
            ``(2) Composition.--
                    ``(A) In general.--The Board shall be composed of 
                the following voting members to be appointed by the 
                Secretary after considering the recommendations of 
                professional organizations representing the entities 
                and constituencies described in this paragraph:
                            ``(i) Four State insurance commissioners as 
                        recommended by the National Association of 
                        Insurance Commissioners, of which 2 shall be 
                        Democrats and 2 shall be Republicans, and of 
                        which one shall be designated as the 
                        chairperson and one shall be designated as the 
                        vice chairperson.
                            ``(ii) Four representatives of State 
                        government, two of which shall be governors of 
                        States and two of which shall be State 
                        legislators, and two of which shall be 
                        Democrats and two of which shall be 
                        Republicans.
                            ``(iii) Four representatives of health 
                        insurers, of which one shall represent insurers 
                        that offer coverage in the small group market, 
                        one shall represent insurers that offer 
                        coverage in the large group market, one shall 
                        represent insurers that offer coverage in the 
                        individual market, and one shall represent 
                        carriers operating in a regional market.
                            ``(iv) Two representatives of insurance 
                        agents and brokers.
                            ``(v) Two independent representatives of 
                        the American Academy of Actuaries who have 
                        familiarity with the actuarial methods 
                        applicable to health insurance.
                    ``(B) Ex officio member.--A representative of the 
                Secretary shall serve as an ex officio member of the 
                Board.
            ``(3) Advisory panel.--The Secretary shall establish an 
        advisory panel to provide advice to the Board, and shall 
        appoint its members after considering the recommendations of 
        professional organizations representing the entities and 
        constituencies identified in this paragraph:
                    ``(A) Two representatives of small business health 
                plans.
                    ``(B) Two representatives of employers, of which 
                one shall represent small employers and one shall 
                represent large employers.
                    ``(C) Two representatives of consumer 
                organizations.
                    ``(D) Two representatives of health care providers.
            ``(4) Qualifications.--The membership of the Board shall 
        include individuals with national recognition for their 
        expertise in health finance and economics, actuarial science, 
        health plans, providers of health services, and other related 
        fields, who provide a mix of different professionals, broad 
        geographic representation, and a balance between urban and 
        rural representatives.
            ``(5) Ethical disclosure.--The Secretary shall establish a 
        system for public disclosure by members of the Board of 
        financial and other potential conflicts of interest relating to 
        such members. Members of the Board shall be treated as 
        employees of Congress for purposes of applying title I of the 
        Ethics in Government Act of 1978 (Public Law 95-521).
            ``(6) Director and staff.--Subject to such review as the 
        Secretary deems necessary to assure the efficient 
        administration of the Board, the chair and vice-chair of the 
        Board may--
                    ``(A) employ and fix the compensation of an 
                Executive Director (subject to the approval of the 
                Comptroller General) and such other personnel as may be 
                necessary to carry out its duties (without regard to 
                the provisions of title 5, United States Code, 
                governing appointments in the competitive service);
                    ``(B) seek such assistance and support as may be 
                required in the performance of its duties from 
                appropriate Federal departments and agencies;
                    ``(C) enter into contracts or make other 
                arrangements, as may be necessary for the conduct of 
                the work of the Board (without regard to section 3709 
                of the Revised Statutes (41 U.S.C. 5));
                    ``(D) make advance, progress, and other payments 
                which relate to the work of the Board;
                    ``(E) provide transportation and subsistence for 
                persons serving without compensation; and
                    ``(F) prescribe such rules as it deems necessary 
                with respect to the internal organization and operation 
                of the Board.
            ``(7) Terms.--The members of the Board shall serve for the 
        duration of the Board. Vacancies in the Board shall be filled 
        as needed in a manner consistent with the composition described 
        in paragraph (2).
    ``(b) Development of Harmonized Standards.--
            ``(1) In general.--In accordance with the process described 
        in subsection (c), the Board shall identify and recommend 
        nationally harmonized standards for each of the following 
        process categories:
                    ``(A) Form filing and rate filing.--Form and rate 
                filing standards shall be established which promote 
                speed to market and include the following defined areas 
                for States that require such filings:
                            ``(i) Procedures for form and rate filing 
                        pursuant to a streamlined administrative filing 
                        process.
                            ``(ii) Timeframes for filings to be 
                        reviewed by a State if review is required 
                        before they are deemed approved.
                            ``(iii) Timeframes for an eligible insurer 
                        to respond to State requests following its 
                        review.
                            ``(iv) A process for an eligible insurer to 
                        self-certify.
                            ``(v) State development of form and rate 
                        filing templates that include only non-
                        preempted State law and Federal law 
                        requirements for eligible insurers with timely 
                        updates.
                            ``(vi) Procedures for the resubmission of 
                        forms and rates.
                            ``(vii) Disapproval rationale of a form or 
                        rate filing based on material omissions or 
                        violations of non-preempted State law or 
                        Federal law with violations cited and 
                        explained.
                            ``(viii) For States that may require a 
                        hearing, a rationale for hearings based on 
                        violations of non-preempted State law or 
                        insurer requests.
                    ``(B) Market conduct review.--Market conduct review 
                standards shall be developed which provide for the 
                following:
                            ``(i) Mandatory participation in national 
                        databases.
                            ``(ii) The confidentiality of examination 
                        materials.
                            ``(iii) The identification of the State 
                        agency with primary responsibility for 
                        examinations.
                            ``(iv) Consultation and verification of 
                        complaint data with the eligible insurer prior 
                        to State actions.
                            ``(v) Consistency of reporting requirements 
                        with the recordkeeping and administrative 
                        practices of the eligible insurer.
                            ``(vi) Examinations that seek to correct 
                        material errors and harmful business practices 
                        rather than infrequent errors.
                            ``(vii) Transparency and publishing of the 
                        State's examination standards.
                            ``(viii) Coordination of market conduct 
                        analysis.
                            ``(ix) Coordination and nonduplication 
                        between State examinations of the same eligible 
                        insurer.
                            ``(x) Rationale and protocols to be met 
                        before a full examination is conducted.
                            ``(xi) Requirements on examiners prior to 
                        beginning examinations such as budget planning 
                        and work plans.
                            ``(xii) Consideration of methods to limit 
                        examiners' fees such as caps, competitive 
                        bidding, or other alternatives.
                            ``(xiii) Reasonable fines and penalties for 
                        material errors and harmful business practices.
                    ``(C) Prompt payment of claims.--The Board shall 
                establish prompt payment standards for eligible 
                insurers based on standards similar to those applicable 
                to the Social Security Act as set forth in section 
                1842(c)(2) of such Act (42 U.S.C. 1395u(c)(2)). Such 
                prompt payment standards shall be consistent with the 
                timing and notice requirements of the claims procedure 
                rules to be specified under subparagraph (D), and shall 
                include appropriate exceptions such as for fraud, 
                nonpayment of premiums, or late submission of claims.
                    ``(D) Internal review.--The Board shall establish 
                standards for claims procedures for eligible insurers 
                that are consistent with the requirements relating to 
                initial claims for benefits and appeals of claims for 
                benefits under the Employee Retirement Income Security 
                Act of 1974 as set forth in section 503 of such Act (29 
                U.S.C. 1133) and the regulations thereunder.
            ``(2) Recommendations.--The Board shall recommend 
        harmonized standards for each element of the categories 
        described in subparagraph (A) through (D) of paragraph (1) 
        within each such market. Notwithstanding the previous sentence, 
        the Board shall not recommend any harmonized standards that 
        disrupt, expand, or duplicate the benefit, service, or provider 
        mandate standards provided in the Benefit Choice Standards 
        pursuant to section 3022(a).
    ``(c) Process for Identifying Harmonized Standards.--
            ``(1) In general.--The Board shall develop recommendations 
        to harmonize inconsistent State insurance laws with respect to 
        each of the process categories described in subparagraphs (A) 
        through (D) of subsection (b)(1).
            ``(2) Requirements.--In adopting standards under this 
        section, the Board shall consider the following:
                    ``(A) Any model acts or regulations of the National 
                Association of Insurance Commissioners in each of the 
                process categories described in subparagraphs (A) 
                through (D) of subsection (b)(1).
                    ``(B) Substantially similar standards followed by a 
                plurality of States, as reflected in existing State 
                laws, relating to the specific process categories 
                described in subparagraphs (A) through (D) of 
                subsection (b)(1).
                    ``(C) Any Federal law requirement related to 
                specific process categories described in subparagraphs 
                (A) through (D) of subsection (b)(1).
                    ``(D) In the case of the adoption of any standard 
                that differs substantially from those referred to in 
                subparagraphs (A), (B), or (C), the Board shall provide 
                evidence to the Secretary that such standard is 
                necessary to protect health insurance consumers or 
                promote speed to market or administrative efficiency.
                    ``(E) The criteria specified in clauses (i) through 
                (iii) of subsection (d)(2)(B).
    ``(d) Recommendations and Certification by Secretary.--
            ``(1) Recommendations.--Not later than 18 months after the 
        date on which all members of the Board are selected under 
        subsection (a), the Board shall recommend to the Secretary the 
        certification of the harmonized standards identified pursuant 
        to subsection (c).
            ``(2) Certification.--
                    ``(A) In general.--Not later than 120 days after 
                receipt of the Board's recommendations under paragraph 
                (1), the Secretary shall certify the recommended 
                harmonized standards as provided for in subparagraph 
                (B), and issue such standards in the form of an interim 
                final regulation.
                    ``(B) Certification process.--The Secretary shall 
                establish a process for certifying the recommended 
                harmonized standard, by category, as recommended by the 
                Board under this section. Such process shall--
                            ``(i) ensure that the certified standards 
                        for a particular process area achieve 
                        regulatory harmonization with respect to health 
                        plans on a national basis;
                            ``(ii) ensure that the approved standards 
                        are the minimum necessary, with regard to 
                        substance and quantity of requirements, to 
                        protect health insurance consumers and maintain 
                        a competitive regulatory environment; and
                            ``(iii) ensure that the approved standards 
                        will not limit the range of group health plan 
                        designs and insurance products, such as 
                        catastrophic coverage only plans, health 
                        savings accounts, and health maintenance 
                        organizations, that might otherwise be 
                        available to consumers.
            ``(3) Application and effective date.--The standards 
        certified by the Secretary under paragraph (2) shall apply and 
        become effective on the date that is 18 months after the date 
        on which the Secretary certifies the harmonized standards.
    ``(e) Termination.--The Board shall terminate and be dissolved 
after making the recommendations to the Secretary pursuant to 
subsection (d)(1).
    ``(f) Ongoing Review.--Not earlier than 3 years after the 
termination of the Board under subsection (e), and not earlier than 
every 3 years thereafter, the Secretary, in consultation with the 
National Association of Insurance Commissioners and the entities and 
constituencies represented on the Board and the Advisory Panel, shall 
prepare and submit to the appropriate committees of Congress a report 
that assesses the effect of the harmonized standards applied under this 
section on access, cost, and health insurance market functioning. The 
Secretary may, based on such report and applying the process 
established for certification under subsection (d)(2)(B), in 
consultation with the National Association of Insurance Commissioners 
and the entities and constituencies represented on the Board and the 
Advisory Panel, update the harmonized standards through notice and 
comment rulemaking.
    ``(g) Publication.--
            ``(1) Listing.--The Secretary shall maintain an up to date 
        listing of all harmonized standards certified under this 
        section on the Internet website of the Department of Health and 
        Human Services.
            ``(2) Sample contract language.--The Secretary shall 
        publish on the Internet website of the Department of Health and 
        Human Services sample contract language that incorporates the 
        harmonized standards certified under this section, which may be 
        used by insurers seeking to qualify as an eligible insurer. The 
        types of harmonized standards that shall be included in sample 
        contract language are the standards that are relevant to the 
        contractual bargain between the insurer and insured.
    ``(h) State Adoption and Enforcement.--Not later than 18 months 
after the certification by the Secretary of harmonized standards under 
this section, the States may adopt such harmonized standards (and 
become an adopting State) and, in which case, shall enforce the 
harmonized standards pursuant to State law.

``SEC. 3033. APPLICATION AND PREEMPTION.

    ``(a) Superceding of State Law.--
            ``(1) In general.--The harmonized standards certified under 
        this subtitle and applied as provided for in section 
        3033(d)(3), shall supersede any and all State laws of a non-
        adopting State insofar as such State laws relate to the areas 
        of harmonized standards as applied to an eligible insurer, or 
        health insurance coverage issued by a eligible insurer, 
        including with respect to coverage issued to a small business 
        health plan, in a nonadopting State.
            ``(2) Nonadopting states.--This subtitle shall supersede 
        any and all State laws of a nonadopting State (whether enacted 
        prior to or after the date of enactment of this title) insofar 
        as they may--
                    ``(A) prohibit an eligible insurer from offering, 
                marketing, or implementing health insurance coverage 
                consistent with the harmonized standards; or
                    ``(B) have the effect of retaliating against or 
                otherwise punishing in any respect an eligible insurer 
                for offering, marketing, or implementing health 
                insurance coverage consistent with the harmonized 
                standards under this subtitle.
    ``(b) Savings Clause and Construction.--
            ``(1) Nonapplication to adopting states.--Subsection (a) 
        shall not apply with respect to adopting States.
            ``(2) Nonapplication to certain insurers.--Subsection (a) 
        shall not apply with respect to insurers that do not qualify as 
        eligible insurers who offer health insurance coverage in a 
        nonadopting State.
            ``(3) Nonapplication where obtaining relief under state 
        law.--Subsection (a)(1) shall not supercede any State law of a 
        nonadopting State to the extent necessary to permit individuals 
        or the insurance department of the State (or other State 
        agency) to obtain relief under State law to require an eligible 
        insurer to comply with the harmonized standards under this 
        subtitle.
            ``(4) No effect on preemption.--In no case shall this 
        subtitle be construed to limit or affect in any manner the 
        preemptive scope of sections 502 and 514 of the Employee 
        Retirement Income Security Act of 1974. In no case shall this 
        subtitle be construed to create any cause of action under 
        Federal or State law or enlarge or affect any remedy available 
        under the Employee Retirement Income Security Act of 1974.
    ``(c) Effective Date.--This section shall apply beginning on the 
date that is 18 months after the date on harmonized standards are 
certified by the Secretary under this subtitle.

``SEC. 3034. CIVIL ACTIONS AND JURISDICTION.

    ``(a) In General.--The district courts of the United States shall 
have exclusive jurisdiction over civil actions involving the 
interpretation of this subtitle.
    ``(b) Actions.--An eligible insurer may bring an action in the 
district courts of the United States for injunctive or other equitable 
relief against any officials or agents of a nonadopting State in 
connection with any conduct or action, or proposed conduct or action, 
by such officials or agents which violates, or which would if 
undertaken violate, section 3033.
    ``(c) Direct Filing in Court of Appeals.--At the election of the 
eligible insurer, an action may be brought under subsection (b) 
directly in the United States Court of Appeals for the circuit in which 
the nonadopting State is located by the filing of a petition for review 
in such Court.
    ``(d) Expedited Review.--
            ``(1) District court.--In the case of an action brought in 
        a district court of the United States under subsection (b), 
        such court shall complete such action, including the issuance 
        of a judgment, prior to the end of the 120-day period beginning 
        on the date on which such action is filed, unless all parties 
        to such proceeding agree to an extension of such period.
            ``(2) Court of appeals.--In the case of an action brought 
        directly in a United States Court of Appeal under subsection 
        (c), or in the case of an appeal of an action brought in a 
        district court under subsection (b), such Court shall complete 
        all action on the petition, including the issuance of a 
        judgment, prior to the end of the 60-day period beginning on 
        the date on which such petition is filed with the Court, unless 
        all parties to such proceeding agree to an extension of such 
        period.
    ``(e) Standard of Review.--A court in an action filed under this 
section, shall render a judgment based on a review of the merits of all 
questions presented in such action and shall not defer to any conduct 
or action, or proposed conduct or action, of a nonadopting State.

``SEC. 3035. AUTHORIZATION OF APPROPRIATIONS; RULE OF CONSTRUCTION.

    ``(a) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary to carry out this subtitle.
    ``(b) Health Savings Accounts.--Nothing in this subtitle shall be 
construed to create any mandates for coverage of any benefits below the 
deductible levels set for any health savings account-qualified health 
plan pursuant to section 223 of the Internal Revenue Code of 1986.''.

                TITLE III--TAX-RELATED HEALTH INCENTIVES

SEC. 301. SECA TAX DEDUCTION FOR HEALTH INSURANCE COSTS.

    (a) In General.--Subsection (l) of section 162 of the Internal 
Revenue Code of 1986 (relating to special rules for health insurance 
costs of self-employed individuals) is amended by striking paragraph 
(4) and by redesignating paragraph (5) as paragraph (4).
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2008.

SEC. 302. DEDUCTION FOR QUALIFIED HEALTH INSURANCE COSTS OF 
              INDIVIDUALS.

    (a) In General.--Part VII of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to additional itemized 
deductions for individuals) is amended by redesignating section 224 as 
section 225 and by inserting after section 223 the following new 
section:

``SEC. 224. COSTS OF QUALIFIED HEALTH INSURANCE.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a deduction an amount equal to the amount paid during the 
taxable year for coverage for the taxpayer, his spouse, and dependents 
under qualified health insurance.
    ``(b) Qualified Health Insurance.--For purposes of this section, 
the term `qualified health insurance' means insurance which constitutes 
medical care, other than insurance substantially all of the coverage of 
which is of excepted benefits described in section 9832(c).
    ``(c) 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 162(l) 
        or 213(a). Any amount taken into account in determining the 
        credit allowed under section 35 shall not be taken into account 
        for purposes of this section.
            ``(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.''.
    (b) Deduction Allowed in Computing Adjusted Gross Income.--
Subsection (a) of section 62 of such Code is amended by inserting 
before the last sentence the following new paragraph:
            ``(22) Costs of qualified health insurance.--The deduction 
        allowed by section 224.''.
    (c) Clerical Amendment.--The table of sections for part VII of 
subchapter B of chapter 1 of such Code is amended by redesignating the 
item relating to section 224 as an item relating to section 225 and 
inserting before such item the following new item:

``Sec. 224. Costs of qualified health insurance.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2008.

             TITLE IV--INCREASING ACCESS TO VA HEALTH CARE

SEC. 401. REQUIREMENT FOR PAYMENTS TO FACILITIES OTHER THAN THE 
              DEPARTMENT OF VETERANS AFFAIRS FOR COVERED HEALTH 
              SERVICES.

    (a) Requirement To Authorize Receipt of Covered Health Services at 
Non-Department Facilities Pursuant to Contracts With Such Facilities.--
Subsection (a) of section 1703 of title 38, United States Code, is 
amended to read as follows:
    ``(a) An enrolled veteran may elect to receive covered health 
services through a non-Department facility. Such an election shall be 
made by submission to the Secretary of an application in accordance 
with such regulations as the Secretary prescribes. The Secretary shall 
authorize such services to be furnished to such veteran pursuant to 
contracting with such a facility to furnish such services to such a 
veteran, as authorized in section 1710 of this title.''.
    (b) Descriptions of Covered Health Services and Enrolled 
Veterans.--Such section is further amended by adding at the end the 
following new subsection:
    ``(e) For purposes of subsection (a)--
            ``(1) a covered health service is any hospital care, 
        medical service, rehabilitative service, or preventative health 
        service for which the veteran described in such subsection is 
        eligible under this title; and
            ``(2) an enrolled veteran is a veteran who is enrolled in 
        the system of patient enrollment established under section 
        1705(a) of this title.''.
    (c) Effective Date.--The Secretary of Veterans Affairs shall 
implement the amendments made by subsections (a) and (b) in order for 
enrolled veterans described in section 1703(e)(2) of title 38, United 
States Code, as added by subsection (b), to receive covered health 
services in accordance with section 1703(a) of such title, as amended 
by subsection (a), not later than 180 days after the date of the 
enactment of this Act.

SEC. 402. AUTHORITY OF DEPARTMENT OF VETERANS AFFAIRS PHARMACIES TO 
              DISPENSE MEDICATIONS TO VETERANS ON PRESCRIPTIONS WRITTEN 
              BY PRIVATE PRACTITIONERS.

    Section 1712 of title 38, United States Code, is amended by adding 
at the end the following new subsection:
    ``(f) Subject to section 1722A of this title, the Secretary shall 
furnish to a veteran, through a Department health-care facility, such 
drugs and medicines as may be ordered on prescription of a duly 
licensed physician in the treatment of any illness or injury of the 
veteran provided pursuant to the authority to contract with a non-
Department facility for such treatment under section 1703 of this 
title.''.

                       TITLE V--NURSING SHORTAGE

SEC. 501. CHILD CARE ASSISTANCE FOR INDIVIDUALS PURSUING ADVANCED 
              NURSING DEGREES.

    Part E of title VIII of the Public Health Service Act (42 U.S.C. 
297a et seq.) is amended--
            (1) by redesignating section 810 (relating to a prohibition 
        against discrimination by schools) as section 846B; and
            (2) by adding at the end the following:

``SEC. 846C. CHILD CARE ASSISTANCE FOR INDIVIDUALS PURSUING ADVANCED 
              NURSING DEGREES.

    ``(a) In General.--The Secretary may carry out a program of 
entering into contracts with eligible individuals under which--
            ``(1) the Secretary agrees to provide child care vouchers 
        to the eligible individual for each month during which the 
        individual is a student in an advanced nursing degree program; 
        and
            ``(2) the eligible individual agrees to serve, at the 
        completion of such program, as a faculty member at a school of 
        nursing for a period of 4 years.
    ``(b) Vouchers.--Vouchers provided to an eligible individual under 
this section--
            ``(1) shall be for child care expenses; and
            ``(2) shall be for not more than $500 per month.
    ``(c) Definition.--In this section, the term `eligible individual' 
means an individual who is enrolled or accepted for enrollment as a 
full-time student in an advanced nursing degree program.
    ``(d) Authorization of Appropriations.--To carry out this section, 
there are authorized to be appropriated such sums as may be necessary 
for each of fiscal years 2009 through 2013.''.

SEC. 502. NURSE FACULTY PROGRAM.

    Title VII of the Higher Education Act of 1965 (20 U.S.C. 1133 et 
seq.) is amended by adding at the end the following new part:

                    ``PART E--NURSE FACULTY PROJECT

``SEC. 771. PURPOSES.

    ``The purposes of this part are to create a program--
            ``(1) to provide scholarships to qualified nurses in 
        pursuit of an advanced degree with the goal of becoming faculty 
        members in an accredited nursing program; and
            ``(2) to provide grants to partnerships between accredited 
        schools of nursing and hospitals or health facilities to fund 
        release time for qualified nurse employees, so that those 
        employees can earn a salary while obtaining an advanced degree 
        in nursing with the goal of becoming nurse faculty.

``SEC. 772. ASSISTANCE AUTHORIZED.

    ``(a) Competitive Grants Authorized.--The Secretary may, on a 
competitive basis, award grants to, and enter into contracts and 
cooperative agreements with, partnerships composed of an accredited 
school of nursing at an institution of higher education and a hospital 
or health facility to establish projects to enable such hospital or 
health facility to retain its staff of experienced nurses while 
providing a mechanism to have these individuals become, through an 
accelerated nursing education program, faculty members of an accredited 
school of nursing.
    ``(b) Duration; Evaluation and Dissemination.--
            ``(1) Duration.--Grants under this part shall be awarded 
        for a period of 3 to 5 years.
            ``(2) Mandatory evaluation and dissemination.--Grants under 
        this part shall be primarily used for evaluation, and 
        dissemination to other institutions of higher education, of the 
        information obtained through the activities described in 
        section 771(2).
    ``(c) Considerations in Making Awards.--In awarding grants and 
entering into contracts and cooperative agreements under this section, 
the Secretary shall consider the following:
            ``(1) Geographic distribution.--Providing an equitable 
        geographic distribution of such grants.
            ``(2) Rural and urban areas.--Distributing such grants to 
        urban and rural areas.
            ``(3) Range and type of institution.--Ensuring that the 
        activities to be assisted are developed for a range of types 
        and sizes of institutions of higher education.
            ``(4) Prior experience or exceptional programs.--
        Institutions of higher education with demonstrated prior 
        experience in providing advanced nursing education programs to 
        prepare nurses interested in pursuing a faculty role.
    ``(d) Uses of Funds.--Funds made available by grant, contract, or 
cooperative agreement under this part may be used--
            ``(1) to develop a new national demonstration initiative to 
        align nursing education with the emerging challenges of 
        healthcare delivery; and
            ``(2) for any one or more of the following innovations in 
        educational programs:
                    ``(A) to develop a clinical simulation laboratory 
                in a hospital, health facility, or accredited school of 
                nursing;
                    ``(B) to purchase distance learning technologies;
                    ``(C) to fund release time for qualified nurses 
                enrolled in the graduate nursing program;
                    ``(D) to provide for faculty salaries; and
                    ``(E) to collect and analyze data on educational 
                outcomes.

``SEC. 773. APPLICATIONS.

    ``Each partnership desiring to receive a grant, contract, or 
cooperative agreement under this part shall submit an application to 
the Secretary at such time, in such manner, and accompanied by such 
information as the Secretary may require. Each application shall 
include assurances that--
            ``(1) the individuals enrolled in the program will be 
        qualified nurses in pursuit of a master's or doctoral degree in 
        nursing and have a contractual obligation with the hospital or 
        health facility that is in partnership with the institution of 
        higher education;
            ``(2) the hospital or health facility of employment would 
        be the clinical site for the accredited school of nursing 
        program;
            ``(3) individuals will also maintain their employment on a 
        part time basis to the hospital or health facility that allowed 
        them to participate in the program, and will receive an income 
        from the hospital or health facility, as a part time employee, 
        and release times or flexible schedules to accommodate their 
        class schedule; and
            ``(4) upon completion of the program, individuals agree to 
        teach for 2 years in an accredited school of nursing for each 
        year of support the individual received under this program.

``SEC. 774. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated for this part not more 
than $10,000,000 for fiscal year 2009 and such sums as may be necessary 
for each of the 4 succeeding fiscal years.

``SEC. 775. DEFINITION.

    ``For purposes of this part, the term `health facility' means an 
Indian Health Service health service center, a Native Hawaiian health 
center, a hospital, a federally qualified health center, a rural health 
clinic, a nursing home, a home health agency, a hospice program, a 
public health clinic, a State or local department of public health, a 
skilled nursing facility, or ambulatory surgical center.''.

SEC. 503. ADDITIONAL CAPACITY FOR R.N. STUDENTS OR GRADUATE-LEVEL 
              NURSING STUDENTS.

    Title VII of the Higher Education Act of 1965 (20 U.S.C. 1133 et 
seq.), as amended by section 502, is further amended by adding at the 
end the following new part:

   ``PART F--ADDITIONAL CAPACITY FOR R.N. STUDENTS OR GRADUATE-LEVEL 
                            NURSING STUDENTS

``SEC. 781. ADDITIONAL CAPACITY FOR R.N. STUDENTS OR GRADUATE-LEVEL 
              NURSING STUDENTS.

    ``(a) Authorization.--The Secretary shall award grants to 
institutions of higher education that offer--
            ``(1) a R.N. nursing program at the baccalaureate or 
        associate degree level to enable such program to expand the 
        faculty and facilities of such program to accommodate 
        additional R.N. nursing program students; or
            ``(2) a graduate-level nursing program to accommodate 
        advanced practice degrees for R.N.s or to accommodate students 
        enrolled in a graduate-level nursing program to provide 
        teachers of nursing students.
    ``(b) Determination of Number of Students and Application.--Each 
institution of higher education that offers a program described in 
subsection (a) that desires to receive a grant under this section 
shall--
            ``(1) determine for the 4 academic years preceding the 
        academic year for which the determination is made the average 
        number of matriculated nursing program students at such 
        institution for such academic years; and
            ``(2) submit an application to the Secretary at such time, 
        in such manner, and accompanied by such information as the 
        Secretary may require, including the average number determined 
        under paragraph (1).
    ``(c) Grant Amount; Award Basis.--
            ``(1) Grant amount.--For each academic year after academic 
        year 2006-2007, the Secretary shall provide to each institution 
        of higher education awarded a grant under this section an 
        amount that is equal to $3,000 multiplied by the number of 
        matriculated nursing program students at such institution for 
        such academic year that is more than the average number 
        determined with respect to such institution under subsection 
        (b)(1). Such amount shall be used for the purposes described in 
        subsection (a).
            ``(2) Distribution of grants among different degree 
        programs.--
                    ``(A) In general.--Subject to subparagraph (B), 
                from the funds available to award grants under this 
                section for each fiscal year, the Secretary shall--
                            ``(i) use 20 percent of such funds to award 
                        grants under this section to institutions of 
                        higher education for the purpose of 
                        accommodating advanced practice degrees or 
                        students in graduate-level nursing programs;
                            ``(ii) use 40 percent of such funds to 
                        award grants under this section to institutions 
                        of higher education for the purpose of 
                        expanding R.N. nursing programs at the 
                        baccalaureate degree level; and
                            ``(iii) use 40 percent of such funds to 
                        award grants under this section to institutions 
                        of higher education for the purpose of 
                        expanding R.N. nursing programs at the 
                        associate degree level.
                    ``(B) Distribution of excess funds.--If, for a 
                fiscal year, funds described in clause (i), (ii), or 
                (iii) of subparagraph (A) remain after the Secretary 
                awards grants under this section to all applicants for 
                the particular category of nursing programs described 
                in such clause, the Secretary shall use equal amounts 
                of the remaining funds to award grants under this 
                section to applicants for the remaining categories of 
                nursing programs.
                    ``(C) Equitable distribution.--In awarding grants 
                under this section, the Secretary shall, to the extent 
                practicable, ensure--
                            ``(i) an equitable geographic distribution 
                        of the grants among the States; and
                            ``(ii) an equitable distribution of the 
                        grants among different types of institutions of 
                        higher education.
    ``(d) Prohibition.--
            ``(1) In general.--Funds provided under this section may 
        not be used for the construction of new facilities.
            ``(2) Rule of construction.--Nothing in paragraph (1) shall 
        be construed to prohibit funds provided under this section from 
        being used for the repair or renovation of facilities.
    ``(e) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section such sums as may be 
necessary.''.

SEC. 504. PROGRAMS TO INCREASE THE NUMBER OF NURSES WITHIN THE ARMED 
              FORCES.

    (a) In General.--The Secretary of Defense may provide for the 
carrying out of each of the programs described in subsections (b) 
through (f).
    (b) Service of Nurse Officers as Faculty in Exchange for Commitment 
to Additional Service in the Armed Forces.--
            (1) In general.--One of the programs under this section may 
        be a program in which covered commissioned officers with a 
        graduate degree in nursing or a related field who are in the 
        nurse corps of the Armed Force concerned serve a tour of duty 
        of two years as a full-time faculty member of an accredited 
        school of nursing.
            (2) Covered officers.--A commissioned officer of the nurse 
        corps of the Armed Forces described in this paragraph is a 
        nurse officer on active duty who has served for more than nine 
        years on active duty in the Armed Forces as an officer of the 
        nurse corps at the time of the commencement of the tour of duty 
        described in paragraph (1).
            (3) Benefits and privileges.--An officer serving on the 
        faculty of an accredited school or nursing under this 
        subsection shall be accorded all the benefits, privileges, and 
        responsibilities (other than compensation and compensation-
        related benefits) of any other comparably situated individual 
        serving a full-time faculty member of such school.
            (4) Agreement for additional service.--Each officer who 
        serves a tour of duty on the faculty of a school of nursing 
        under this subsection shall enter into an agreement with the 
        Secretary to serve upon the completion of such tour of duty for 
        a period of four years for such tour of duty as a member of the 
        nurse corps of the Armed Force concerned. Any service agreed to 
        by an officer under this paragraph is in addition to any other 
        service required of the officer under law.
    (c) Service of Nurse Officers as Faculty in Exchange for 
Scholarships for Nurse Officer Candidates.--
            (1) In general.--One of the programs under this section may 
        be a program in which commissioned officers with a graduate 
        degree in nursing or a related field who are in the nurse corps 
        of the Armed Force concerned serve while on active duty a tour 
        of duty of two years as a full-time faculty member of an 
        accredited school of nursing.
            (2) Benefits and privileges.--An officer serving on the 
        faculty of an accredited school of nursing under this 
        subsection shall be accorded all the benefits, privileges, and 
        responsibilities (other than compensation and compensation-
        related benefits) of any other comparably situated individual 
        serving as a full-time faculty member of such school.
            (3) Scholarships for nurse officer candidates.--(A) Each 
        accredited school of nursing at which an officer serves on the 
        faculty under this subsection shall provide scholarships to 
        individuals undertaking an educational program at such school 
        leading to a degree in nursing who agree, upon completion of 
        such program, to accept a commission as an officer in the nurse 
        corps of the Armed Forces.
            (B) The total amount of funds made available for 
        scholarships by an accredited school of nursing under 
        subparagraph (A) for each officer serving on the faculty of 
        that school under this subsection shall be not less than the 
        amount equal to an entry-level full-time faculty member of that 
        school for each year that such officer so serves on the faculty 
        of that school.
            (C) The total number of scholarships provided by an 
        accredited school of nursing under subparagraph (A) for each 
        officer serving on the faculty of that school under this 
        subsection shall be such number as the Secretary of Defense 
        shall specify for purposes of this subsection.
    (d) Scholarships for Certain Nurse Officers for Education as 
Nurses.--
            (1) In general.--One of the programs under this section may 
        be a program in which the Secretary provides scholarships to 
        commissioned officers of the nurse corps of the Armed Force 
        concerned described in paragraph (2) who enter into an 
        agreement described in paragraph (4) for the participation of 
        such officers in an educational program of an accredited school 
        of nursing leading to a graduate degree in nursing.
            (2) Covered nurse officers.--A commissioned officer of the 
        nurse corps of the Armed Forces described in this paragraph is 
        a nurse officer who has served not less than 20 years on active 
        duty in the Armed Forces and is otherwise eligible for 
        retirement from the Armed Forces.
            (3) Scope of scholarships.--Amounts in a scholarship 
        provided a nurse officer under this subsection may be utilized 
        by the officer to pay the costs of tuition, fees, and other 
        educational expenses of the officer in participating in an 
        educational program described in paragraph (1).
            (4) Agreement.--An agreement of a nurse officer described 
        in this paragraph is the agreement of the officer--
                    (A) to participate in an educational program 
                described in paragraph (1); and
                    (B) upon graduation from such educational program--
                            (i) to serve not less than two years as a 
                        full-time faculty member of an accredited 
                        school of nursing; and
                            (ii) to undertake such activities as the 
                        Secretary considers appropriate to encourage 
                        current and prospective nurses to pursue 
                        service in the nurse corps of the Armed Forces.
    (e) Transition Assistance for Retiring Nurse Officers Qualified as 
Faculty.--
            (1) In general.--One of the programs under this section may 
        be a program in which the Secretary provides to commissioned 
        officers of the nurse corps of the Armed Force concerned 
        described in paragraph (2) the assistance described in 
        paragraph (3) to assist such officers in obtaining and 
        fulfilling positions as full-time faculty members of an 
        accredited school of nursing after retirement from the Armed 
        Forces.
            (2) Covered nurse officers.--A commissioned officer of the 
        nurse corps of the Armed Forces described in this paragraph is 
        a nurse officer who--
                    (A) has served an aggregate of at least 20 years on 
                active duty or in reserve active status in the Armed 
                Forces;
                    (B) is eligible for retirement from the Armed 
                Forces; and
                    (C) possesses a doctoral or master degree in 
                nursing or a related field which qualifies the nurse 
                officer to discharge the position of nurse instructor 
                at an accredited school of nursing.
            (3) Assistance.--The assistance described in this paragraph 
        is assistance as follows:
                    (A) Career placement assistance.
                    (B) Continuing education.
                    (C) Stipends (in an amount specified by the 
                Secretary).
            (4) Agreement.--A nurse officer provided assistance under 
        this subsection shall enter into an agreement with the 
        Secretary to serve as a full-time faculty member of an 
        accredited school of nursing for such period as the Secretary 
        shall provide in the agreement.
    (f) Benefits for Retired Nurse Officers Accepting Appointment as 
Faculty.--
            (1) In general.--One of the programs under this section may 
        be a program in which the Secretary provides to any individual 
        described in paragraph (2) the benefits specified in paragraph 
        (3).
            (2) Covered individuals.--An individual described in this 
        paragraph is an individual who--
                    (A) is retired from the Armed Forces after service 
                as a commissioned officer in the nurse corps of the 
                Armed Forces;
                    (B) holds a graduate degree in nursing; and
                    (C) serves as a full-time faculty member of an 
                accredited school of nursing.
            (3) Benefits.--The benefits specified in this paragraph 
        shall include the following:
                    (A) Payment of retired or retirement pay without 
                reduction based on receipt of pay or other compensation 
                from the institution of higher education concerned.
                    (B) Payment by the institution of higher education 
                concerned of a salary and other compensation to which 
                other similarly situated faculty members of the 
                institution of higher education would be entitled.
                    (C) If the amount of pay and other compensation 
                payable by the institution of higher education 
                concerned for service as an associate full-time faculty 
                member is less than the basic pay to which the 
                individual was entitled immediately before retirement 
                from the Armed Forces, payment of an amount equal to 
                the difference between such basic pay and such payment 
                and other compensation.
    (g) Administration and Duration of Programs.--
            (1) In general.--The Secretary shall establish requirements 
        and procedures for the administration of the programs 
        authorized by this section. Such requirements and procedures 
        shall include procedures for selecting participating schools of 
        nursing.
            (2) Duration.--Any program carried out under this section 
        shall continue for not less than two years.
            (3) Assessment.--Not later than two years after commencing 
        any program under this section, the Secretary shall assess the 
        results of such program and determine whether or not to 
        continue such program. The assessment of any program shall be 
        based on measurable criteria, information concerning results, 
        and such other matters as the Secretary considers appropriate.
            (4) Continuation.--The Secretary may continue carrying out 
        any program under this section that the Secretary determines, 
        pursuant to an assessment under paragraph (3), to continue to 
        carry out. In continuing to carry out a program, the Secretary 
        may modify the terms of the program within the scope of this 
        section. The continuation of any program may include its 
        expansion to include additional participating schools of 
        nursing.
    (h) Definitions.--In this section, the terms ``school of nursing'' 
and ``accredited'' have the meaning given those terms in section 801 of 
the Public Health Service Act (42 U.S.C. 296).

            TITLE VI--RESERVE COMPONENTS OF THE ARMED FORCES

SEC. 601. EFFECTIVE DATE OF ACTIVE DUTY FOR PURPOSES OF ENTITLEMENT TO 
              ACTIVE DUTY HEALTH CARE OF MEMBERS OF THE RESERVE 
              COMPONENTS OF THE ARMED FORCES RECEIVING ALERT ORDER 
              ANTICIPATING A CALL OR ORDER TO ACTIVE DUTY IN SUPPORT OF 
              A CONTINGENCY OPERATION.

    Subsection (d) of section 1074 of title 10, United States Code, is 
amended to read as follows:
    ``(d)(1) For purposes of this chapter, a member of a reserve 
component of the armed forces shall be treated as a member of the armed 
forces on active duty as follows:
            ``(A) On the date of the issuance of the alert order for 
        the member's unit in anticipation of the mobilization of the 
        unit for service for a period of more than 30 days in support 
        of a contingency operation.
            ``(B) On the date of the issuance of the order providing 
        for the assignment or attachment of the member to a unit 
        subject to an alert order described in paragraph (1).
    ``(2) If the alert order for a member's unit (or the unit to which 
the member is assigned or attached) is rescinded, the member shall 
cease to be treated on active duty for purposes of this chapter as of 
the date of the issuance of the order rescinding such alert order.''.
                                 <all>