[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 1298 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                S. 1298

  To amend the Social Security Act to establish a Federal Reinsurance 
              Program for Catastrophic Health Care Costs.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 3, 2007

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

_______________________________________________________________________

                                 A BILL


 
  To amend the Social Security Act to establish a Federal Reinsurance 
              Program for Catastrophic Health Care Costs.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Healthy Businesses, Healthy Workers 
Reinsurance Act of 2007''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) The cost of health insurance premiums for families has 
        risen 87 percent since 2000, nearly 4 times the growth in 
        overall inflation and workers earnings.
            (2) Health insurance premium increases have resulted in a 
        nearly 10 percentage point drop in the number of firms choosing 
        to offer coverage to their workers over that time period.
            (3) Today, just 48 percent of firms with between 3 and 9 
        employees offer health insurance benefits, down from 58 percent 
        in 2001.
            (4) The decline in employer-sponsored coverage has added to 
        the growing problem of the uninsured. An additional 4 million 
        Americans have been added to the ranks of the uninsured since 
        2001.
            (5) Health care costs are highly concentrated. Twenty 
        percent of the population that is catastrophically or 
        chronically ill accounts for 80 percent of the health care 
        spending, with just 1 percent driving a full 22 percent of 
        health care costs.

SEC. 3. FEDERAL REINSURANCE PROGRAM FOR CATASTROPHIC HEALTH CARE COSTS.

    (a) Program.--The Social Security Act (42 U.S.C. 301 et seq.) is 
amended by adding at the end the following new title:

``TITLE XXII--FEDERAL REINSURANCE PROGRAM FOR CATASTROPHIC HEALTH CARE 
                                 COSTS

``SEC. 2201. OFFICE OF FEDERAL REINSURANCE.

    ``(a) In General.--There is established within the Department of 
Health and Human Services an office to be known as the `Office of 
Federal Reinsurance'.
    ``(b) Duty.--The Office of Federal Reinsurance shall establish and 
administer the Federal Reinsurance Program for Catastrophic Health Care 
Costs in accordance with the provisions of this title.

``SEC. 2202. PROGRAM.

    ``(a) Establishment.--
            ``(1) In general.--The Office shall establish and 
        administer a Federal Reinsurance Program for Catastrophic 
        Health Care Costs under which reinsurance payments are provided 
        to eligible health plans that experience catastrophic health 
        care costs during a year with respect to an individual covered 
        under the plan. For purposes of this title, the term 
        `individual covered under the plan' includes employees, 
        retirees, spouses, and dependants.
            ``(2) Program to begin in 2009.--The Office shall establish 
        the Program in a manner so that reinsurance payments are made 
        with respect to catastrophic health care costs occurring on or 
        after January 1, 2009.
            ``(3) Eligible health plan.--
                    ``(A) In general.--In this title, the term 
                `eligible health plan' means any of the following:
                            ``(i) A group health plan that meets the 
                        requirements described in subparagraph (B).
                            ``(ii) A governmental plan (as defined in 
                        section 3(32) of the Employee Retirement Income 
                        Security Act of 1974) that meets the 
                        requirements described in subparagraph (B).
                            ``(iii) A multiemployer plan (as defined in 
                        section 3(37) of the Employee Retirement Income 
                        Security Act of 1974) that meets the 
                        requirements described in subparagraph (B).
                            ``(iv) A plan that offers coverage through 
                        health purchasing cooperatives in conjunction 
                        with a State health program that makes 
                        available health insurance coverage to the 
                        small group market and the individual market on 
                        the same terms and that meets the requirements 
                        described in subparagraph (B).
                    ``(B) Requirements.--The requirements described in 
                this subparagraph are that--
                            ``(i) the plan involved--
                                    ``(I) provides eligibility for 
                                health insurance coverage (after any 
                                waiting period (as defined in section 
                                9801(b)(4))) to all full-time employees 
                                of the employer maintaining or 
                                contributing to the plan;
                                    ``(II) ensures that if there is a 
                                deductible under the plan, such 
                                deductible does not exceed $1,000 for 
                                an individual and $2,000 for a family;
                                    ``(III) ensures that the plan 
                                offers preventative benefits; and
                                    ``(IV) ensures that the plan 
                                employs effective high-cost case 
                                management tools (in accordance with 
                                the definition of disease management by 
                                the Disease Management Association of 
                                America) in order to reduce costs over 
                                time; and
                            ``(ii) the employer maintaining or 
                        contributing to the plan involved pays at least 
                        50 percent of the costs of health insurance 
                        coverage for each employee covered under the 
                        plan (regardless of whether the employee is a 
                        full-time or part-time employee).
                    ``(C) Cost-of-living adjustment.--
                            ``(i) In general.--In the case of any 
                        calendar year after 2009. each dollar amount in 
                        subparagraph (B)(ii) shall be increased by an 
                        amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) of the Internal Revenue Code of 
                                1986 for such calendar year determined 
                                by substituting `calendar year 2008' 
                                for `calendar year 1992' in 
                                subparagraph (B) thereof.
                            ``(ii) Date for determination.--For 
                        purposes of clause (i), section 1(f)(4) of such 
                        Code shall be applied by substituting `March 
                        31' for `August 31', and the Secretary of the 
                        Treasury shall publish the adjusted amounts 
                        under subparagraph (B)(ii) for the calendar 
                        year not later than June 1 of the preceding 
                        calendar year.
                            ``(iii) Rounding.--If any increase under 
                        clause (i) is not a multiple of $50, such 
                        increase shall be rounded to the nearest 
                        multiple of $50.
                    ``(D) Employer.--For purposes of this title, the 
                term `employer' includes the Federal government and any 
                other governmental entity (within the meaning of 
                section 5000(d) of Internal Revenue Code of 1986).
    ``(b) Enrollment.--
            ``(1) Procedures.--The Office shall establish procedures 
        for the enrollment of eligible health plans in the Program.
            ``(2) Application and annual recertification.--
                    ``(A) In general.--The procedures established under 
                paragraph (1) shall include a process for an eligible 
                health plan--
                            ``(i) to submit an application to the 
                        Office for enrollment in the Program; and
                            ``(ii) to be annually recertified for 
                        enrollment in the Program.
                    ``(B) Requirement.--The application and 
                recertification process under subparagraph (A) shall 
                require that an eligible health plan submit to the 
                Office--
                            ``(i) a detailed description of the 
                        projected and actual reduction in total costs 
                        under the plan that are a result of the 
                        Program, including both individual and employer 
                        portions; and
                            ``(ii) such other information determined 
                        appropriate by the Office.
            ``(3) Approval.--
                    ``(A) In general.--The procedures established under 
                paragraph (1) shall provide for the approval or 
                disapproval of applications and requests for 
                recertification submitted by eligible health plans 
                under paragraph (2).
                    ``(B) Specific requirement.--The Office shall not 
                approve an application or a request for recertification 
                unless the Office finds that the eligible health plan 
                is reducing total costs under the plan, based on the 
                information submitted under paragraph (2)(B) and audits 
                conducted under paragraph (4).
            ``(4) Audits.--The Office shall conduct audits of claims 
        data of eligible health plans in order to ensure that the 
        eligible health plan is in compliance with the requirements 
        under the Program, including the requirement under paragraph 
        (3)(B). An eligible health plan shall not be eligible for 
        reinsurance payments unless it provides the Office with access 
        to such data.
    ``(c) Cost-Sharing in Costs of Program.--
            ``(1) In general.--An eligible health plan that 
        participates in the Program shall pay the fee established by 
        the Office under paragraph (2).
            ``(2) Authorization.--The Office is authorized to charge a 
        fee to each eligible health plan that participates in the 
        Program. Any amounts collected shall be deposited into the 
        Trust Fund.
            ``(3) Requirements.--In establishing the fee under 
        paragraph (2)--
                    ``(A) the Office shall consult with interested 
                parties; and
                    ``(B) shall ensure that the amount of such fee is 
                not excessive so as to unduly discourage eligible 
                health plans from enrolling in the Program.
    ``(d) Appeals Process.--The Office shall establish an appeals 
process under the Program.
    ``(e) Procedures to Protect Against Fraud, Waste, and Abuse.--The 
Office shall establish procedures to protect against fraud, waste, and 
abuse under the Program.

``SEC. 2203. REINSURANCE PAYMENTS.

    ``(a) Amount.--
            ``(1) In general.--The amount of a reinsurance payment 
        under the Program to an eligible health plan that experiences 
        catastrophic health care costs in a year with respect to an 
        individual covered under the plan shall be an amount equal to 
        75 percent of such costs.
            ``(2) Catastrophic health care costs.--
                    ``(A) In general.--In this title, the term 
                `catastrophic health care costs' means, with respect to 
                a year, costs for medical care (as defined in section 
                9832(d)(3) of the Internal Revenue Code of 1986) 
                provided under an eligible health plan to an individual 
                covered under the plan, but only with respect to such 
                costs which exceed $50,000.
                    ``(B) Negotiated prices.--In determining the amount 
                of catastrophic health care costs under the Program, 
                the eligible health care plan shall take into account 
                any negotiated price concessions, such as discounts, 
                direct or indirect subsidies, rebates, and direct or 
                indirect remunerations, obtained by the plan.
                    ``(C) Inflation adjustment.--
                            ``(i) In general.--In the case of a 
                        calendar year after 2009, the $50,000 amount in 
                        subparagraph (A) shall be increased by an 
                        amount equal to--
                                    ``(I) such dollar amount; 
                                multiplied by
                                    ``(II) the percentage (if any) by 
                                which the average of the medical care 
                                component of the Consumer Price Index 
                                for all urban consumers (United States 
                                city average) for the 12-month period 
                                ending with August of the preceding 
                                calendar year exceeds such average for 
                                the 12-month period ending with August 
                                2008.
                            ``(ii) Rounding.--If any dollar amount 
                        after being increased under clause (i) is not a 
                        multiple of $1,000, such dollar amount shall be 
                        rounded to the nearest multiple of $1,000.
    ``(b) Requests for Payment.--To be eligible for a reinsurance 
payment with respect to an individual for a year, an eligible health 
plan shall submit to the Office, at a time and in a manner determined 
appropriate by the Office, a request for payment that contains--
            ``(1) a certification--
                    ``(A) that the plan paid or incurred catastrophic 
                health care costs during the year with respect to the 
                individual; and
                    ``(B) of the amount of such costs; and
            ``(2) such other information determined appropriate by the 
        Office.
    ``(c) Payments From Trust Fund.--
            ``(1) In general.--Payments to eligible health plans under 
        the Program shall be made from the Trust Fund.
            ``(2) Tax treatment.--For purposes of the Internal Revenue 
        Code of 1986--
                    ``(A) payments from the Trust Fund to the eligible 
                health plan shall not be included in gross income; and
                    ``(B) no deduction shall be allowed to the eligible 
                health plan with respect to the payment of any 
                catastrophic health care costs for the portion of such 
                costs which was reimbursed from the Trust Fund.

``SEC. 2204. FEDERAL REINSURANCE FOR CATASTROPHIC HEALTH CARE COSTS 
              TRUST FUND.

    ``(a) Creation of Trust Fund.--There is established in the Treasury 
of the United States a trust fund to be known as the `Federal 
Reinsurance for Catastrophic Health Care Costs Trust Fund', consisting 
of such amounts as may be appropriated or credited to the Trust Fund 
(including any fees deposited under section 2202(c)).
    ``(b) Mandatory Appropriations.--There are appropriated to the 
Trust Fund such sums as may be necessary in order to make the 
reinsurance payments required under section 2203.
    ``(c) Rules Regarding Transfers to and Management of Trust Fund.--
For purposes of this section, rules similar to the rules of sections 
9601 and 9602 of the Internal Revenue Code of 1986 shall apply.
    ``(d) Distribution of Amounts in Trust Fund.--Amounts in the Trust 
Fund shall be available for making payments under section 2203.

``SEC. 2205. REPORTS.

    ``(a) Secretary.--
            ``(1) In general.--Not later than March 1, 2011, and 
        biennially thereafter, the Secretary shall submit to Congress a 
        report on the Program.
            ``(2) Requirements.--
                    ``(A) In general.--Each report submitted under 
                paragraph (1) shall contain--
                            ``(i) a detailed description of the 
                        Program, including a detailed description of 
                        the impact the Program has had on reducing 
                        premiums for health insurance coverage and 
                        increasing the number of individuals with 
                        health insurance coverage; and
                            ``(ii) any other information or 
                        recommendations determined appropriate by the 
                        Secretary.
                    ``(B) Individual market.--The first report 
                submitted under paragraph (1) shall also contain 
                recommendations regarding expanding the Program to the 
                individual market.
                    ``(C) Consultation.--The Secretary shall consult 
                with the National Association of Insurance 
                Commissioners in preparing each report under paragraph 
                (1).
    ``(b) GAO.--
            ``(1) In general.--Not later than March 1, 2011, and 
        biennially thereafter, the Comptroller General of the United 
        States shall submit to Congress and the Secretary a report on 
        the Program.
            ``(2) Requirements.--
                    ``(A) In general.--Each report submitted under 
                paragraph (1) shall contain--
                            ``(i) a detailed description of the 
                        Program, including a detailed description of 
                        the impact the Program has had on reducing 
                        premiums for health insurance coverage and 
                        increasing the number of individuals with 
                        health insurance coverage; and
                            ``(ii) any other information or 
                        recommendations determined appropriate by the 
                        Comptroller General.
                    ``(B) Individual market.--The first report 
                submitted under paragraph (1) shall also contain 
                recommendations regarding expanding the Program to the 
                individual market.

``SEC. 2206. DEFINITIONS.

    ``In this title:
            ``(1) Group health plan.--The term `group health plan' has 
        the meaning given such term by section 5000(b)(1) of the 
        Internal Revenue Code of 1986.
            ``(2) Individual market; small group market.--The terms 
        `individual market' and `small group market' have the meanings 
        given such terms by section 2791 of the Public Health Service 
        Act.
            ``(3) Office.--The term `Office' means the Office of 
        Federal Reinsurance established under section 2201.
            ``(4) Program.--The term `Program' means the Federal 
        Reinsurance Program for Catastrophic Health Care Costs under 
        this title.
            ``(5) Trust fund.--The term `Trust Fund' means the Federal 
        Reinsurance for Catastrophic Health Care Costs Trust Fund 
        established under section 2204.''.
    (b) Funding Start-Up Administrative Costs for Program.--
            (1) In general.--There are appropriated to the Secretary of 
        Health and Human Services $200,000,000 to carry out the 
        provisions of, and amendments made by, this Act.
            (2) Availability.--Amounts appropriated under paragraph (1) 
        shall remain available until September 30, 2009.
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